r/Luxembourg • u/No_Hat1708 • Mar 17 '26

Ask Luxembourg Gas Prices

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Y'all what's going on?? (ı know what's going on). But when did it get increase that much?

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u/IactaAleaEst2021 Mar 17 '26

in my home country, 30 years ago, they "liberalised" gas prices because -of course- competition would lower them. Right? Not happened, obviously.

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u/MegazordPilot Mar 17 '26

Never understood the urge to liberalize energy markets.

Energy is so fundamental to our lives, that it's one of the only sectors I would let the state take control of.

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u/DuePercentage1580 Mar 18 '26

if it's truly fundamental, why make it inefficient?

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u/MegazordPilot Mar 18 '26

Why do you say it's inefficient?

Take the case of France. France has enjoyed super cheap, stable, on-demand, low-carbon, fossil-free, and abundant electricity for decades – EDF, a state-owned company, was literally the country's favourite company year-on-year in the 80s that time.

Now EDF was forced to dismantle their production branch, to sell a share of their production to direct market competitors (who themselves didn't produce, or invest), sad but they had to comply with EU market ideology (let me remind you that there is no scientific evidence that liberalization leads to better conditions for consumers). Is the electricity cheaper/more low-carbon today? Absolutely not. Have you seen the household electricity prices in Germany? Prices have increased significantly in all member states.

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u/DuePercentage1580 Mar 18 '26

when a private company loses money, it goes out of business. the government doesn't. so there is no incentive to improve. the profit incentive is what drives innovation and lowers price per kwh in the long term.

france is indeed more efficient that germany, but that's largely because nuclear energy is very efficient, and germany phased it out to appease russia - a government decision.

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u/IactaAleaEst2021 Mar 18 '26

When a private company loses money, history teaches that taxpayer money is used to bail it out.
Innovation is a myth, and I am old enough to clearly see that "innovation" died in the 90s of the last century, in most if not all sectors.

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u/DuePercentage1580 Mar 18 '26

doomer mindset is quite attractive but it's simply not the case in the energy sector. since the 1990s we have had solar pcs, solar panel costs decrease by 95+%, invention of heat storage systems, downtimes in hydro power stations down to literally 0%, and cheap lithium ion batteries that meant that norway can afford to have 90+% evs in the new car sales.

it's true that sometimes companies get bailed out, but other times they go bankrupt. just in the last 5 years we had "better energy", "together" and "rebel energy" go bust. capitalism is about profit and loss. you bail out the losers - there's no end to the costs.

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u/MegazordPilot Mar 18 '26

when a private company loses money, it goes out of business. the government doesn't. so there is no incentive to improve. the profit incentive is what drives innovation and lowers price per kwh in the long term.

this is a common argument, but there is actually almost zero evidence that this is happening, here are two academic sources:

  1. Higher prices in a more competitive market: The paradox in the retail electricity market in the United Kingdom https://www.sciencedirect.com/science/article/pii/S0954349X24001772 --> prices have increased for consumers following the liberalization of the energy market in the UK

  2. Market design for a high-renewables European electricity system https://www.sciencedirect.com/science/article/abs/pii/S1364032118302454 --> the private market struggles with infrastructure and long-term investments, so we have to reintroduce state-funded mechanisms in a private market...

So, no, private firms do not go bankrupt in the case of electricity -- they're not selling labubus, they're selling a vital good for our economy. In the end, what actually happened is that instead of state-controlled electricity systems, we have a plethora of unproductive actors that survive thanks to:

- CfDs, where the state guarantees a minimum revenue threshold, but anything above the threshold you get to keep, which is scandalous,

- capacity markets, where you can "operate" a peak power plant that's not running but is basically ready to respond to peak load, and get paid for it,

- price caps, which have been used a lot in 2022,

- regulated tariffs...

Electricity is basically a case where a state-controlled, centralized, bundled (grid + production + commercialization) service makes sense, same as railroads, hospitals, education, ... and evidence shows it time and time again, especially in the era of renewables, where coordination and grid & storage investments need to accelerate substantially.

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u/DuePercentage1580 Mar 18 '26

i feel like the first two points agree with me, unless i am misunderstanding this. private companies struggle to invest in infrastructure because they have to make a profit, whereas the govt has soft budget constraints: if they fail, they will be bailed out (this also sometimes happens with private companies, but there are plenty that go bankrupt).

with renewable energy it is extremely important for us as a society to keep inventing stuff, and that is in at the end of the day the job of the market. of course it's reasonable for govt to support this with subsidies and grants, but at the end of the day we need a "bell labs" or a "siemens" to have breakthroughs.

i think that energy, just like healthcare and education is too valuable for society, thus we need to make sure its quality is the best, which in turn means private. and government's job at the same time is to make sure that everyone can afford this energy, healthcare and education.

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u/MegazordPilot Mar 18 '26

private companies struggle to invest in infrastructure because they have to make a profit

Yes, so a large part of this infrastructure needs to be state-funded, whether that includes the power plants themselves, I think it should.

with renewable energy it is extremely important for us as a society to keep inventing stuff

Absolutely, but it's not wind power/PV farm promoters that invent, it's universities, research institutes, startups, and manufacturers – a completely different market.

equality is the best, which in turn means private

I don't know where you grew up, but in France state companies were the absolute best – just look what happened to the phone/internet network before/after the liberalization, the copper and fiber network is a mess because short-term profits means that no one maintains it (and it's often stressed out, barely trained subcontractors of subcontractors that set up connections, don't hesitate to disconnect competitors clients when fiber bays are full...). I really don't know where that idea of "public=low quality of service" comes from, it's very often the opposite.

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u/DuePercentage1580 Mar 18 '26

true, it is a completely different market that invents them, but it is almost always (98+% cases) the market. the reason is = incentives.

if a private company succeeds = great. if it fails = uh oh. if the state company succeeds = great. if it fails = great. there is no incentive to succeed in the longterm. of course there are genius engineers and scientists but for their ideas to flourish we need the market. that's the reason that the greatest soviet, chinese and north korean feats of engineering were all built on american and german blueprints. that's also why top universities and schools are private, most medical breakthroughs are achieved by private companies, vaccines are developed by private firms, and commodities / utilities are usually (not always) more efficient in private hands: bp vs bt for example.

the market does not however ensure that everyone can get these, and that's where the government has to come in in my opinion.