A video shows the responsibility of the gas companies, and not the electricity companies, in the increase in prices

A revealing video, made by the Cara B Team, as they say, in which students of Economic Sciences have participated, demonstrates the abuse of gas and oil companies, and not of electricity companies, as it was falsely argued by the Government, Podemos and related media.

Here is the video:

The escalation of gas prices seems to have no end and has direct consequences, strangling dependent companies. Especially the tile companies that see the viability of their business, 9% of the national industrial GDP, in the balance while the big suppliers recapitalise themselves and strengthen their position in the markets. To get an idea of the impact, dependent industry consumes 8% of the total gas burnt in Spain.

It is not for nothing that electricity companies such as Endesa and Iberdrola have seen their profits shrink, while Naturgy and Repsol are literally making a killing. The video also explains why the marginalist market is the most appropriate, contrary to what the ignorant and laymen in economics think.

As the video says, if for the same quality of product, we buy melons, electricity or pipes, we buy the cheapest first and at that time we are charged cheaply. But if we have to buy when there is not enough demand, we have to use the most expensive ones, energy with gas, and in that hour and only in that hour, the marketer will charge us the most expensive price because if they bought it cheaper, they would not buy it and the market would be out of supply.

A video that has been trending-topic and has left all those who tried to blame the electricity companies out of the loop. As the video says, they have kept 80% of the electricity demand at fixed prices, supporting the increase in gas prices against their results.

The indicator of the Iberian gas market (Mibgas) shows record after record in its price, which is already close to 140 euros per megawatt hour. Last Friday the MWh reached 138.68 euros. To get an idea and look at the matter with some perspective, suffice it to say that its price has shot up 600% since last March.
 
A few days ago, Alberto Echeverría, the general secretary of the association that brings together the tile industry, shouted out loud in an interview with Efe. The high energy costs suffered by the tile sector, especially gas, are already "strangling" the profit and loss accounts of its companies and not only raise fears of a 2022 with "dramatic" falls in profitability, but also make some of them consider production stoppages in the coming months, he said.

The ceramic tile and flooring sector employed more than 60,000 people in Spain in 2019, of which almost 43,000 were in the Valencian Community - specifically in Castellón, where the headquarters of the tile employers' association, ASCER, is located. Its impact on the Spanish economy amounted to more than 3,800 million euros, equivalent to 2.7% of Spain's industrial GDP and half of the direct contribution of the construction sector in the Valencian Community.

Echeverría assures that, despite the weight of the sector, they feel disadvantaged compared to others when it comes to compensating for these high energy prices and thus avoiding their direct repercussion both on the companies' workforces and on the final price of their products.

Echevarría recalls that for a sector that "has to fire ceramics", gas costs represent "a very serious problem" that already amounts to 700 million euros in cost overruns in an industry with a turnover of around 3,800 million euros.

The situation, moreover, will worsen in the coming months because winter has arrived "already with very high prices" and traditionally these "skyrocket in the coldest periods". "We are scared of what could come from December onwards", he adds.

All the companies warn that they have been producing at a loss for a season, and it is a situation that "can be maintained for a while if it is commercially interesting, but it cannot be maintained indefinitely"; and the problem, added the secretary general, "is that we don't know when gas prices will fall".

Different industrial sectors have called for the intercession of the central government to mitigate the economic impact. The Association for Competitive Industrial Gas has urged the government to take measures. The organisation brings together around 40 of the main companies that use gas for production, from Cosentino, through Azucarera, Mahou San Miguel, Roca to Seat. Of course, Spain's leading ceramics companies are also members of the association.

The association demands that VAT and hydrocarbon taxes be lowered and that temporary flexibility be given to the contracted flow rate in industries. They point out that this is "a measure that already worked in the confinement and that would alleviate production costs". It also calls for a reduction in tolls without waiting until October 2022, since Circular 6/2020 on gas tolls enables the CNMC to modify them exceptionally. In his opinion, this is an effective measure that does not create a deficit, is not structural and is permitted by regulation. Finally, he believes it is necessary to regulate the figure of the gas-intensive consumer.

"The industry needs these measures to be able to continue producing and exporting. GasIndustrial hopes that the Spanish government will take into account the situation and what the gas consuming industry means for the country's economy and employment, as well as being key to the sustainability of the gas system," it says at the end of a statement that clearly shows the pressure from the sector.