Across my long career in the field of public policy analysis and outreach, I frequently have felt the need to point out that companies in the energy business (or any other business, for that matter) are not social programs or charitable organizations, as liberal politicians and even some conservatives, often appear to want them to be. They are in fact either privately-owned companies or corporations, all of which are in business to — guess what? — make a profit.
In the business world as we have known it, making a profit is not merely an option or a guideline for any business — it is in fact a requirement. Either the business takes in more money than it spends, or it soon goes out of business. This does not seem to me to be either complex or difficult to understand.
Yet, for some political figures in the U.S. and elsewhere, it obviously is. Take French President Emmanuel Macron as a current example. Macron is making news this week by proposing a new, “non-punitive” green transition plan that, in part, would have France’s central government coercing energy companies to “sell at cost price, that is to say that no one makes a margin,” Macron told reporters with France’s TF1 and France 2 television stations.
Reuters reports that Macron had hoped to encourage energy producers to voluntarily take this step towards non-profitability and financial ruin by removing a ban on selling their products at below cost prices, but that brilliant plan was roundly rejected by the companies since — get this — they actually want to remain in business. Man, nobody could have seen that one coming!
These stories honestly read like something out of a Saturday Night Live skit — an old skit, back when the show was actually funny. It is difficult to imagine how anyone could believe such a scheme could work in practice.
But Macron’s plan gets even more ridiculous. The French President also says he wants to negotiate a deal with grocery retailers to make only what he would consider to be “moderate margins,” while simultaneously accusing them of maintaining unreasonably high margins as inflation has moderated. In plain English, he is accusing supermarkets of engaging in price gouging and demanding they un-gouge them.
But the grocery retailers aren’t going along with the gag. The central problem here is that, while the French government claims overall inflation has moderated, costs for fuel and transportation have continued to rise. Reuters quotes Michel-Edouard Leclerc, the head of hypermarket giant E.Leclerc, as saying in a Sunday interview that fuel and transportation costs make up roughly 20% to 25% of sales, and that it is “inconceivable for the balance of our accounts to sell at a loss.”
The Macron government will of course offer tax incentives and subsidies to these fuel and food companies to cooperate in this non-market-based effort to force a green transition into reality, but everyone involved knows that such a plan in and of itself cannot be sustained indefinitely. As former British Prime Minister Margaret Thatcher famously said, “the problem with socialism is you eventually run out of other people’s money.”
This reality also ultimately renders other aspects of Macron’s plan unsustainable over time, including his offers of big consumer subsidies related to replacing gas boilers with heat pumps and a plan to allow low-income households to lease electric vehicles for just €100 per month. When combined with all the other energy-related subsidy schemes offered in Macron’s plan, how many years would pass before France’s debt load becomes overwhelming?
It is easy to poke fun at Macron for presenting such a hare-brained plan, but the truth is the western world is now overrun with similar schemes. None of this is sustainable in any real way without forcing the populations of these nations to meekly accept the living of much smaller, less mobile lives in vastly diminished living standards.
That is and always has been the end goal of every Green New Deal and energy transition-related scheme, and this reality explains why we are seeing more and more public protest and revolt as it all becomes clear.
Macron is not the problem, but a mere symptom of it.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
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