Redpill me on price caps, how this even works? is it just cope and seethe, or can it ever work?

redpill me on price caps, how this even works? is it just cope and seethe, or can it ever work?

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Yes in the short term but it always leads to shortages

>how this even works?
Sure.

Do you want the "pro free market" explaination or do you want the "statist cope" explaination?

>how this even works
Intervention spiral
It works until it doesn't
Better be ready

They're gonna enforce energy passports to reduce demand peaks so that small businesses dont get too rekt by energy prices.
You vill be cold and you vill be happy

please refer to highschool economics supply demand curve

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it works real good if you are connected
when prices are capped you get more buyers than sellers, and most buyers cant find a seller. The trick is to have vitamin C so you can skip the queue. Praise Ursula and she might let you have some gas

how can there be diagonal axes for supply and demand when the vertical one is price and horizontal is quantity?

is supply a product of price * quantity?
can you explain this?

>t. 6 figure software engineer bootcamper

sorry I'm not even kidding I don't get it. I just write SQL

Well, i guess it's the same.

Basically a price cap is a limit that your government set about the price of the a good or service, and you can't sell above that. They do this to not let their industries and population go broke when the price skyrockets, since they developed their own economy according to low prices.

The problem is under a market economy the pricing system is also a way to transfer information, it tells you how much of X good is available locally, so you can adapt according to the current availability of that good and re-evaluate your actions, as a consumer you will choose alternative products and consume less or find ways to be more efficient, and as a producer it's going to incentivize the production of that good since it is scarce and people is willing to pay 600€/MWh in electricity which is potentially a lot of profit.

Price ceiling historically resulted in a shortage crisis because consumers will suck the reserves dry and producers do not produce shit if they're at loss.

The only way to reduce electricity demand is if you a) increase the €/kWh price or b) force people to ration electricity and punish those who use more than they are allotted to.
Either this is batshit insane. My hatred for Jews grows every day.

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The fact that Russia immediately started to seethe about it is saying that is will likely work
simple as

Ah yes, the rěddit take. Back you go.

The only ones seething will be northern Yuropoors come December/January.

You vill buy American LNG and you vill be American serfs.

ah yes, cope
nice, please stay and give more

This won't even work in the short term. The short term effectiveness is due to stranded assets sellers must move. Gas in a pipeline can be turned off, or redirected very quickly. In this case they can simply sell it to anyone but Europe, who will then mark it up to the new even higher free market rate, and sell it to them. Which is already happening via China so they are essentially saying we would like to transfer European wealth to China via a new gas tax.

>or can it ever work?
Only other alternative for Russia is just burning gas for free instead of selling it. Only leverage Russia had on EU is now gone. Basically what she said is SHORT GAS YOU NIGGERS

it never works. first it leads to rationing and substitution, then it leads to shortages when substitutes are stamped out, too.
the only reason that isn't likely to happen to europe right now is because
1. politicians just straight up make bullshit up in order to spread FUD. they have no other power anymore; they set themselves up as having the solution (to the problem they created)
2. LNG is already moving to europe on ships, and plenty of it. china is shipping it there. and most of it is russian gas that they just bought from russia. lmao
they're trying to engineer as-fake-as-possible problems to keep you permanently dependent on their systems and ideas. it will spin out of control someday when the gamble has more dangerous odds than this one.

It really do be like this with Russia
Based on their reaction, they are fucked if this goes through

damn, you're dumb as fuck. what a disaster for my esteemed profession.
E is equilibrium. does that help?

pure cope.

Kek, cant argue with this. This who seethes is always losing lol.

they can use the gas themselves?

t. putinbot
whats russia gonna do? burn gas? EU said they are not buying. They hopped off oil already and now russia is selling urals at $40 premium to china and india. Now they are hopping off gas. FYI france is gonna restart their nuclear reactors and germany is restarting its coal plants.
We are burning gas already, theres no more storages left and internal supply is fully met.

because you can visualize changes like price ceilings and floors by drawing a line from the y axis across, and seeing where it intercepts with the supply and demand curves. E where the curves cross are the equilibrium, where supply equals demand. If price is set at a ceiling, this means the price of the good is forced below equilibrium, as it can't go beyond the ceiling. This creates a gap between the supply and demand curves, which represents an inefficiency in the market. In the case of a price floor, it is a shortage as the new price level intersects the supply curve before the demand curve, supply does not meet demand. The supply and demand curves can also represent supply or demand shocks in the market. A natural disaster destroying a banana plantation for example would be a negative supply shock, and the entire supply curve moves to the left. You can see the equilibrium would move up and to the left, where the price of bananas is now higher, and now fewer bananas are demanded at this price to accommodate the lower supply

>theres no more storages left and internal supply is fully met.
build some industry to use the cheap energy? or they are too retarded to do that?

Of course war is not profitable for peaceful businesses. Both Russia and Europe are losing a good convenient just for political reasons, political incentives are not economical incentives we can agree on that.

*losing a convenient deal

Building industry requires resources. A nation at war isolated from tech needed to build industry, materials to build it, know how to build and people to build it might struggle with that!
Euros wanted to get off russian gas for quite a while because Russia is not a reliable partner, this will hurt EU for a year or two no doubt but will also push development of new energy sources. Considering France is restarting their nuclear reactors one doesn't need to guess twice where EU gonna go for their energy. And thats a good thing.

its a graph that tries to show three/four variables
these axes are supplied quantity, demanded quantity, price
the line labeled "supply" basically says that at price X, the supplied quantity is Y
the line labeled "demand" says that at price X, the demanded quantity is Z