From deglobalization to potential shortages, policymakers must be aware of the law of unintended consequences
The COVID-19 pandemic has led to increased government intervention in energy markets in economies around the world. After Russia’s invasion of Ukraine, state intervention – from sanctions to price caps – became even more intense, upending global oil and gas flows, and not necessarily in the ways desired or expected . Finding the right policy balance is at the heart of good energy policy. Examples of “bad” government interventions are efforts to influence energy prices, which often result in negative effects. Attempts at price caps fall into this category. Legislating to limit energy prices only reduces the incentive to provide more energy and encourages waste. Aggressive price freezes and caps can lead to
