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”.

Gelencsér responded saying that tax hikes resulted in higher prices, as reflected by food prices. “The solution is therefore not to increase taxes,” he said. On the topic of teachers’ wages, Gulyás said the government’s first move was to increase them in 2010, to a level getting close to the average wage for degree holders. At the same time, he said it was a legitimate demand by teachers to get another pay rise. As a result, the government has promised that teachers’ wages will reach 80 percent of the average wage for degree holders by 2027, he added.

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Gulyás said that MEPs of the Momentum party were getting a five million forints net monthly pay while they were making every effort to prevent Hungary from getting access to EU funds. “If this changed, we could certainly move forward,” he said and asked for Momentum’s help.

Gelencser said the government was citing national sovereignty as the root cause for its every move and it is now waiting for help from Brussels it has been attacking for 12 years. As to what the opposition would do, he said they had been calling for a compromise with the EU for many years. Gulyás said Hungary was not waiting for help but to get the resources that it is entitled to. The operative programme submitted to the EU covers wage increase for health-care workers and teachers, he added.

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In response to criticism of fast-track legislation, he said that in the US, the increase of the federal debt rate was approved in a matter of hours and decisions were made about thousands of billions within a few hours. Hungary has clear and detailed regulations in what areas can such procedures applied, he added.

Gelencsér said that in 2010, he had voted for Fidesz but now believes that the party has entirely monopolised the concept of the nation. Gulyás asked in response whether one’s home country could be in opposition. “We are all part of the nation even if some members of the opposition make a lot of effort to question this from time to time,” he added.

Source: MTI