András Fekete-Győr, leader of the Momentum faction, explained that if the left was in power, Hungary “would have definitely joined the oil embargo”, following the Bulgarian example, while Márton Gyöngyösi, a Member of the European Parliament for Jobbik, said about the sanctions package in Brussels that “the proposed sanctions are good and effective”. Bence Tordai, leader of the Párbeszéd faction, interpreted the Hungarian government’s efforts to achieve an exemption from the oil embargo by saying that “after 12 years of guilty inertia, the government blackmails the EU, taking the Hungarian people hostage”. According to former left-wing foreign minister Péter Balázs, failing to adopt the sixth sanction package in Brussels would be a failure. We must see it clearly that, in the absence of an exemption, the oil embargo would have fundamentally endangered the functioning of the Hungarian economy and the guarantee for the country’s energy security and would have made it impossible to preserve the fuel price cap, which would have caused the Hungarian people to suffer most. At the same time, the above-mentioned manifestations of the left are less surprising in light of the fact that
The overhead policy of the left that supports embargos would increase household expenses by an average of HUF 79,000 per month
From the outset, the Hungarian government has opposed Brussels’ proposals for sanctions on Russian energy supplies, as they would cause considerable damage to Hungary. The measures supported by the Hungarian left would make it impossible to maintain the utility price cap and fuel price cap, which would dramatically increase the burden on Hungarian families. Századvég has found out how the utility expenses would have developed in May in the absence of a utility price cap, i.e., if world market prices had applied.
The left-liberal bloc would have put the utility price cap and fuel price cap at risk
Recently, several left-wing politicians and influencers have put Brussels’ proposals on energy embargo in a positive light.
the left-liberal parties and politicians have long been attacking the utility price cap and fuel price cap, thus the opinions supporting embargos can be interpreted as a continuation of their previous policies.
Also, Péter Márki-Zay, former candidate for prime minister of the left-wing coalition bloc, said earlier that “We would not like to maintain the form of the utility price cap that Viktor Orbán has invented” and called the fuel price cap “a failed solution”. Similarly, former Prime Minister Ferenc Gyurcsány simply called the utility price cap “stupid”.
Applying market prices would lead to a dramatic increase in overhead costs
If the left was in power in Hungary and official overhead prices were eliminated, electricity tariffs would more than triple, while the price of natural gas services would increase by five and a half times.
The introduction of market prices would thus lead to a total cost increase of four and a half times in an average Hungarian household.
In practice, this would mean that, without the utility price cap, the electricity expenses of an average Hungarian household would increase from HUF 9,000 to HUF 30,000, while the natural gas bill would increase from HUF 13,000 to HUF 71,000. Thus,
the total overhead bill would increase from HUF 22,000 to HUF 101,000 per month, which would cause an average Hungarian household an additional cost of HUF 79,000 per month and HUF 948,000 per year.
We should also emphasise that, in addition to the additional costs of overhead market pricing,
Hungarians would have to pay an average of HUF 21,000 more for fuel in June, based on their average monthly fuel consumption of 76 litres
if, as a result of the oil embargo, the official price cap could not apply to petrol and diesel.
The left’s political gambling would significantly increase the burden on families
The energy consumption of households is greatly influenced by the number of people living under the same roof, as the more people make up a household, the higher the energy consumption regarding both electricity and natural gas.
Thus, the increase in prices caused by the introduction of market prices would be more detrimental to households with families, especially with large families.
In the absence of the utility price cap program, the monthly expenditure of a one-person household on electricity and gas would increase from HUF 16,000 to HUF 72,000 (this would mean an additional expenditure of HUF 56,000), while the fee would increase from HUF 28,000 to HUF 126,000 per month for a four-person household.
A family of eight (of multi-generation for example) would have to pay a higher fee of HUF 138,000
if official overhead prices did not apply.
It is also important to highlight that
with the elimination of official prices, hundreds of thousands of households would have to give up sufficient heating, lighting, and the use of technical equipment in their homes for financial reasons,
which would lead to significant social tensions. If the price of electricity and natural gas were to increase by four and a half times due to market pricing, the direct consequence would be that, according to the calculations of Századvég, the current 4.2 percent energy poverty rate would increase by five times, almost 22 percent, i.e., one in five people in Hungary would become energy poor. As a result of the left’s proposal,
900,000 households, or about 2.1 million people, would have to give up the comfort of a sufficiently heated home.
Data used and method applied
To determine the tariffs calculated on the basis of market prices, the item of “energy charge” included in the components of electricity and natural gas tariffs in households and published by Eurostat in the first half of 2021, has been adjusted based on the 2022 average monthly prices of the Hungarian Power Exchange and CEEGEX (Central Eastern European Gas Exchange). The rate of the VAT of the tariffs have been modified proportionately. The euro exchange rate has been calculated based on the monthly average data of the Magyar Nemzeti Bank. The breakdown of household expenditure by income and living together has been carried out on the basis of the latest available Household Budget and Living Conditions Survey of 2019 conducted by the Central Statistical Office. The source of energy poverty data is Eurostat. The estimated value of the indicator for 2022 has been estimated on the basis of the co-movement between the price changes before the utility price cap and the past evolution of the proportion of households with heating difficulties.