Trajtenberg voices support for supervising natural gas prices

Renowned economist and Labor party candidate says supervision needed to ensure benefits of resource reach the public.

January 22, 2015 18:34
2 minute read.
Israel's natural gas

Israel's natural gas. (photo credit: MINISTRY OF NATIONAL INFRASTRUCTURES)


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Governmental supervision of natural gas prices is necessary to ensure that the benefits of the resource reach members of the public, economist Prof. Manuel Trajtenberg told environmental activists earlier this week.

“It cannot be that a natural resource that belongs to the State of Israel will not be supervised,” Trajtenberg said at a social-budgetary seminar at Tel Aviv University on Sunday.

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The Labor Party Knesset candidate was responding to a question posed by Omry Balely, who heads the Tel Aviv University cohort of Green Course, the nationwide student environmental movement. The supervision of gas prices has become a burning issue, since Antitrust Commissioner David Gilo last month said that he would be reexamining whether the ownership of the Delek Group and Noble Energy in the Leviathan gas reservoir qualified as a cartel – as the companies are the major shareholders of both Leviathan and its smaller neighbor, Tamar.

MK Avishay Braverman (Labor), who has decided not to run in the upcoming Knesset elections, has long been arguing for price supervision on natural gas, as a fair solution capable of lowering the cost of living and saving billions. A bill Braverman proposed regarding the supervision of natural gas was rejected by the Ministerial Committee for Legislation in November, despite receiving the support of 34 MKs.

In a November interview with The Jerusalem Post, Braverman argued that the price the Israel Electric Corporation was currently paying for natural gas, about $5.6 per mmBtu (1 million British thermal units), was far too high. Citing economic reports, he determined that a price should be between $3 and $3.50 per mmBtu, to fully compensate and provide a competitive rate of return for the producers and make gas affordable to Israeli consumers.

Following Gilo’s announcement regarding the Leviathan reservoir, Braverman told the Post he would be satisfied to see a price of $4 per mmBtu.

Emphasizing the importance of engaging in benevolent capitalism, Braverman said that such a price would be suitable for both the companies and members of the public.

Regarding the question of price supervision, Trajtenberg – who chaired a 2011 committee toward finding solutions toward Israel’s socioeconomic issues – said that “there are ways to do it.”

“It is possible to link this to the international prices that are relevant to the State of Israel and maintain it there...

for the value and benefit of such an important resource to reach all of us,” he added at Sunday’s seminar.

Yet others experts in the sector continue to maintain that it is impossible to compare Israel’s gas prices with those of other countries, because unlike oil, gas has no globally unified pricing mechanism.

Green Course activists argue, however, that gas is sold in Israel at exorbitant prices – which can easily be reduced by more than half.

With such a reduction, production costs and the cost of living would consequently drop, a statement from the group said.

“The struggle for gas is not only about the expensiveness of the cost of living,” said Balely.

“It is a struggle for democracy – the exercise of public sovereignty over its natural resources and the concern for the energy security of us all,” he said.

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