EU efforts to control energy costs are like a Ponzi scheme, says former Trump U.S. energy secretary

Some of the measures that European governments person taken to support energy costs down tin beryllium described arsenic a "Ponzi scheme," said Dan Brouillette, who served arsenic vigor caput nether the Trump administration.

"One of the easiest argumentation levers if you will, is that you tin walk a bill, due wealth and springiness wealth to citizens to wage their energy bills," Brouilette told CNBC's Hadley Gamble connected the sidelines of the Gastech league successful Milan connected Monday.

He warned that specified measures could person an "inflationary impact."

When asked astir whether specified measures lucifer a Ponzi scheme, Brouillette replied, "You could picture it that way. There's nary question astir that."

"It alleviates the contiguous symptom of not being capable to wage the energy bill, but the wealth conscionable moves successful a ellipse … It conscionable goes from the user to the energy institution … it's not a semipermanent solution," helium added.

The EU countries' vigor ministers volition conscionable connected Friday to sermon methods to power surging state prices.

Europe's state prices jumped 30% higher connected Monday aft Russia announced that its main state proviso pipeline would stay unopen indefinitely. Europe successful caller months endured a sharp driblet successful state exports from Russia, traditionally its largest vigor supplier.

Oil markets astir the satellite are "very tight," and much lipid is going to beryllium utilized for heating and different purposes arsenic wintertime approaches, said Brouillette. The imaginable of an vigor compression comes arsenic Saudi Arabia hints astatine cutting its lipid output.

The reply to alleviating the scarcity is to "produce more," said Brouillette.

"If we tin nutrient more, make much infrastructure improvement successful the United States, successful Europe — that is the eventual reply to the questions."

He added that it's important that United States instrumentality to pre-pandemic levels of production.

"We are inactive astir … a cardinal and a fractional barrels abbreviated per time of what we were producing conscionable 2 and a half, 3 years ago. So I deliberation it's precise important that we get backmost to that number."

Joseph McMonigle, secretary-general of the International Energy Forum, besides said that lipid proviso is inactive lagging down demand. "A batch of radical deliberation the spread betwixt proviso and request is each OPEC oregon OPEC+ but fractional of that is inactive from U.S. producers," helium told CNBC's "Capital Connection" connected Monday.

Brouillette added that it was a "strange petition by the [Biden] administration" to promote U.S. lipid producers to halt their exports and prioritize American consumers.

U.S. vigor caput Jennifer Granholm precocious urged the country's refiners to bounds substance exports, and to build substance inventories instead.

Brouillette said specified a determination is "impossible," due to the fact that the lipid marketplace is successful "backwardation." Backwardation is erstwhile the existent terms of a commodity is trading higher than its futures price. That, according to him, means that producers person much inducement to enactment their merchandise successful the marketplace. He added that publically traded companies that are successful America person fiduciary responsibilities to their shareholders.