The Price Cap Era And The Demise Of The Free Energy Market | OilPrice.com

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The very fact that the world’s seven wealthiest countries have come together to cap the price of the world’s most traded commodity is a big deal: in a way, it is a market intervention larger in scale than the EU gas price cap idea

The bigger problem is that this capping constitutes direct government interference in how markets operate, which prevents them from continuing to operate. And this risks a real breakdown.

Subsidizing a product or a service normally leads to greater demand for this product or service. But if supply is limited—and gas supply for Europe from producers other than Russia is indeed limited—market prices would go up. This is a highly fragile system, as evidenced by the breakdown of the economies of the former Soviet block after the fall of their totalitarian governments and the return to free markets where prices were determined by demand and supply after years of heavy subsidizing. It was not a pretty picture.

Of course, commentators have noted that buyers could also insure the cargos, meaning China and India could continue receiving Russian oil in substantial volumes as long as they can secure vessels, which might also be a challenge.

 

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Russia will gets its products made elsewhere, the unsanctioned free trade zones of the future. Magic!

Trump puts sanctions on Venezuelan Wax when the WTI price drops below the US wholesale price of ULSD? Let’s talk about mandates and the illusion of a Free Market.

The demise of neoclassical economics.

pure BS

define wealth

Price controls will lead to shortages in the EU as suppliers will find buyers elsewhere and cut production.

An agreement to eliminate the Market.

They will end up with nothing.

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