00:00As the Middle East war disrupts, global oil supplies and refining costs soar,
00:05European consumers are feeling the pinch more and more.
00:08In France, diesel prices have reached record levels, making them among the highest in Europe,
00:14prompting the government to call on the EU to do something.
00:18And in Belgium, energy costs for households are rising sharply,
00:21with a projected annual bill for a new electricity and gas contract approaching 3,300 euros.
00:28Many fear that prices will surge further.
00:32Joining me now from Lahore, Pakistan, is Osama Rizvi, global market and product strategist at Primary Vision.
00:39Good morning to you.
00:40Good morning to you as well, Stephen.
00:43So, energy prices keep rising for an average European household.
00:48Where will consumers feel the impact first? Electricity, gas, petrol or food prices?
00:54Well, unfortunately, all of them.
00:56The world of energy is such that the impacts spill over into all the domains.
01:02For instance, the households paying around 1,500 euros annually,
01:07they can see, unfortunately, anywhere between 250 to even 300 euros being added to their electricity bills,
01:14on average, if the price continues to increase.
01:17But Stephen, here is a way to guess more interesting.
01:19The businesses, the businesses, for instance, if they use 100,000 megawatt hour of electricity on an annual basis,
01:26even a 10 euro increase would result into an extra 1 million euro bill.
01:30Now, the businesses will have two options.
01:33Will they pass the cost to the consumers or will they bear it themselves?
01:36They will pass the cost to the consumers.
01:38So, you have inflation, you have cost of doing business increase,
01:42you have electricity pricing increasing and the policy effect of it is going to be an increase in interest rates
01:48as well.
01:49So, the consumer, unfortunately, finds itself in a very strained environment and there is no way out of it as
01:56of today.
01:57And, Osama, should governments intervene directly to cap energy prices or would that simply postpone the problem?
02:04Well, of course, I know this kicks in a debate between Milton Friedman versus those who follow Keynes,
02:11but I think we are living in an age of poly-crisis.
02:15There are multiple crises happening at the same point.
02:17It is happening in Pakistan as well where the petrol prices have shot up by, I don't know how many
02:23percentages,
02:24like 60-70 percent, but for a certain sector of the society, they have capped the prices.
02:30So, there is a whole mechanism through which they do it.
02:32And, I'm sure European countries have better data gathering, better data integration as well.
02:37So, the consumers on the lower end of earning, they definitely need to be protected.
02:43Otherwise, it can result into a social slash political problem as well.
02:49On that note, I mean, European governments have spent billions protecting consumers during the last energy crisis.
02:56The question is, can they afford to do that again?
02:59Well, if you look at the state of the European countries' coffers at the moment, I don't think so.
03:05They have much of a leverage there.
03:07The cost of energy ever since 2022 has continued to be on the upside.
03:13Then you have climate crisis, the drying up of River Rhine, the cost of freight going up.
03:17So many things happening at the same time.
03:19But, definitely, we will need to tap into some of those savings that we save for the rainy days and
03:26put it to work.
03:27Because, as I said, and I'll say it before, I'll say it again.
03:30This can result into a spillover increase in food prices.
03:33And an increase in food prices can also result in social unrest.
03:38This is practically proven.
03:40So, this becomes a policy metric.
03:42Very short, very short.
03:44I mean, the question consumers really want answered.
03:46Should people expect their energy bills to get significantly higher over the coming months?
03:50Short answer.
03:51Not significantly, but if this continues, then definitely it can.
03:56Perfect.
03:56Osama Rizvi, thank you very much for coming on today.
