Why energy bail-outs will do more harm than good

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  The Economist.

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  Hello and welcome to Editor's Picks.

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  Ethan Wu here.

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  I'm one of the hosts of Money Talks, our business and finance podcast.

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  You're about to hear an article from the latest edition of The Economist.

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  Thanks for listening.

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  During the COVID-19 pandemic and the energy crisis caused by Russia's invasion of Ukraine in 2022,

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  governments opened their checkbooks and made heavy-handed interventions as they sought to cushion the damage

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  that was being inflicted on households and businesses.

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  So it is with the energy crisis stemming from the Iran war,

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  which has sent the price of oil and liquefied natural gas, LNG, rocketing.

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  Spain has slashed VAT on fuel and household electricity.

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  Italy has cut petrol duties.

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  South Korea has capped prices at the pump, and Japan is spending more on subsidies to limit them.

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  Britain's government is considering subsidising the energy bills of welfare claimants

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  and promises to crack down on profiteering.

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  Even in energy-secure America, Democrats have called for windfall taxes on oil companies,

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  with the revenue channel to households.

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  Such interventions will do more harm than good.

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  High prices and fat profits tell consumers to economise on energy while encouraging producers to find and sell more.

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