Minister: oil, gas prices soar because of the EU sanctions

It has been a fundamental mistake by Brussels to extend EU sanctions to include energy because prices started to soar as a result, the prime minister’s chief of staff said in a debate at a conference on Saturday.

Gergely Gulyás participated at a debate with Ferenc Gelencsér, the leader of opposition Momentum, at the annually-organised Tranzit festival in Tihany, at Lake Balaton, in western Hungary. Concerning the issue of the safety of energy supplies, Gulyás said the Hungarian state had purchased crude oil and natural gas at fixed prices. “The price to be paid for oil was about 21 dollars until April, and the price of gas was also fixed, around a tenth of today’s price,” Gulyás said. But after the EU extended the sanctions to the energy sector, energy prices began to go up, he said, calling the measure “a fundamental mistake”.

Gulyás said that looking at prices in international markets on Friday “it would cost more than 330,000 forints (EUR 807) to purchase electricity and gas at market prices”. But thanks to the government’s utility cap scheme, electricity and gas cost a combined 25,000 forints to each household which means that each household receives 300,000 forint support per month, he said.

Gelencsér responded saying that well before the April general election it could be predicted that the price of gas would start to soar in international markets. “Even though the government knew that it would phase out the utility cap scheme, it did not tell the truth, in order to win the election.” The Momentum leader also criticised the government for its decision to buy a stake in Vodafone “in the current difficult economic situation”.

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Gulyás said in response that what had to be assesed was whether it was a good investment or not and whether it was the right objective to ensure that the Hungarian state should have a stake of at least 50 percent in the banking, energy and media sectors. Asked about soaring food prices, Gulyás said that thanks to payments being made by oil and gas company Mol and banks, the government has been able to set up a fund for protecting the cap on utility bills. He recommended to Momentum to amend its programme which Gulyás said contained “tax increases in many areas”.