Energy crisis and Journalism must control the powerful
Energy crisis: market intervention by policymakers is necessary!

by Josef Thoman
[This article published on 7/21/2022 is translated from the German on the Internet,]

We are in the middle of a multiple energy crisis. The supply of energy is in danger, and prices will continue to rise. This is not only a problem for private households and companies; rather, there is a danger that the persistently high inflation will become entrenched. Then we will be faced with a severe economic depression, which will lead to a noticeable loss of prosperity. Tough measures are needed now to prevent the worst. And above all, the political will to override the interests of powerful companies in the energy industry.

The price of gas and electricity is determined on international exchanges. Even the price for private end consumers is regularly tied to stock market prices by the energy supply companies by means of indexation. This is a consequence of the liberalization of the energy sector over the past 30 years, which was pushed by liberal economic forces, the energy industry.

The most powerful company on the gas market is Russia’s Gazprom. It does not act according to market rules, but manipulates for political reasons. Last year, Gazprom already made less gas available to the market and did not replenish its own storage facilities. With Russia’s war of aggression on Ukraine, it finally became obvious to everyone how dependent Europe is on Gazprom. Uncertainty about the future supply of gas has driven up the exchange price of natural gas.

Added to this are speculative derivative transactions whose purpose is to make short-term profits by exploiting price fluctuations. It is companies from the financial sector, as well as the energy companies themselves, that are driving the uncertainty, volatility and prices here, including with computer-controlled high-frequency trading.

In turn, the fossil energy industry benefits from the high prices. OMV, for example, was already able to almost triple its profit (after special effects) in the first quarter of 2022. But not only have gas prices risen massively from less than 25 euros/MWh in recent years to around 180 euros/MWh today, the price of electricity has also reached a level that was previously unimaginable. In recent years, the price was less than 50 euros/MWh, and is currently just under 400 euros/MWh.

The fact that the exchange price for electricity has also risen so sharply is initially surprising, especially since more than 80 percent of domestic electricity production comes from renewable sources such as hydropower, wind energy and photovoltaics. But the exchange price for electricity is determined according to the merit order system. The production costs of the most expensive power plant still needed determine the price. Due to the fluctuating feed-in of renewable energy, this is usually a gas-fired power plant. The price of electricity therefore rises with the price of gas, even though the production costs for more than 80 percent of domestic electricity production have not changed. This applies to private wind power operators, whose plants were financed by subsidies, as well as to very large green power producers, such as Verbund AG. Its former CEO, Christian Kern, estimates that Verbund will make 7.2 billion euros more profit.

Consumers are footing the bill. Around two-thirds of the current inflation is due to the effects of high energy prices. But that is just the beginning. Energy suppliers pass on stock market prices with a time lag, and the high wholesale prices will not reach private households until next year. A doubling of gas and electricity prices must be expected. If companies then reduce production because of rising prices, prices will continue to rise, economic growth will decline, unemployment will increase and inflation will rise. We then find ourselves in stagflation, a prolonged economic depression – with corresponding social, societal and political consequences.

What is needed, therefore, are quickly implementable, pragmatic solutions at the national level (1-4) and systemic interventions at the European level (5-6) that will lead to a tangible reduction in energy prices. In this context, the energy industry must also be held accountable.

Legal requirements that oblige gas importers to assume their responsibility for security of supply. OMV is responsible for more than two thirds of gas imports to Austria. Hand in hand with politics and business, it has increased its dependence on Russian gas from about 50 percent to over 80 percent in recent years. Despite the current supply crisis, OMV does not appear to be prepared to sufficiently diversify its supply sources or to store significantly more gas.
Regulated tariffs for end consumers. The next massive price increases for private consumers can be expected in the coming year, making energy unaffordable for ever larger sections of society. The EU Commission has also recognized this and created the possibility of introducing regulated tariffs for private households. Austria should also make use of this option.
Adjustment of social benefits: Vulnerable groups need additional support, social benefits must take account of price trends and be raised to a living wage level.
A high tax on irresponsibly high windfall profits. In the current crisis, it is a necessity to skim off excess profits and use the funds for measures to reduce energy prices. Italy, Greece or Great Britain show that this is possible.
Decouple electricity price from gas price. Spain and Portugal have demonstrated it with the “electricity price cap,” and it works. The fears expressed, such as displacing renewables or supply problems, have not materialized. The price of electricity on the Iberian Peninsula is currently half that of the rest of Europe. Austria must therefore advocate at the European level for a Europe-wide implementation of the “Iberian model” and prepare the technical implementation.
Financial transaction tax and exclusion of non-market players. Price-driving speculative transactions with energy derivatives must be stopped. As also proposed by the German Institute for Economic Research, speculative transactions should be made unprofitable by introducing a financial transaction tax.

One thing is clear here: The energy minister alone will not be able to remedy the problems, which are essentially due to past failures. This multiple energy crisis can only be overcome if particular interests are put aside and the federal government can stand up together against the interests of large corporations!

Josef Thoman is a consultant in the Department of Economic Policy of AK Vienna with a focus on energy policy.

Journalists must control the powerful, not the other way around
by David Goeßmann
[This article published on 7/22/2022 is translated from the German on the Internet, Die Journalisten müssen die Mächtigen kontrollieren und nicht umgekehrt.]

Representatives:inside of parties, state chancelleries and large associations sit in the control and administrative bodies of the public broadcasters. That should change.

The U.S. journalist I.F. Stone had an ironclad principle: reporters should go about their work with the premise that powerful institutions lie, not that they tell the truth. But the media follow a different principle. Why is that?

This is a slightly modified excerpt from an article in the book “The Misery of the Media”. It is a summary of some theses of a lecture I gave at the University of Munich.

It makes no sense to take the ideal of a free press for granted. Whoever owns the media, whoever manages them, whoever keeps the news flow going and, in case of doubt, can pay people to influence and discipline critical journalists, will make sure that nothing annoying appears there, especially since the most important target groups are those who are in charge anyway or who have the most money.

Those who set up the mass media the way they are have little interest in power control and democracy. Its real function is rather to tie citizens to the course of the elites, to create trust in the powerful and their good intentions, and to get unpleasant things out of the way.

Every society also has a power system. In Germany, the large corporations have accumulated an enormous amount of power. When you put the media in the hands of these corporations, they represent their interests. But these interests do not reflect the diversity of the 80 million people in our country.

The idea and the basic concept of public broadcasting are right in themselves. The frequencies belong to us, they are a public good. But this public good has been neutralized by politicizing and nationalizing the controlling bodies. The result: politics controls journalism. That is perfidious. It should be the other way around.

After this birth defect, there were many other mistakes. First ZDF as a kind of conservative state broadcasting without citizen participation, then dual broadcasting with the private broadcasters.

In the past 20 years, neoliberal policies have had an enormous impact on reporting. Agenda 2010, the wars of aggression, the refugee policy, the Ukraine crisis. Whether Süddeutsche, Spiegel or ARD: the reports almost always have a slant. Ideological presuppositions, filtering of content, double moral standards. One can go through this topic by topic.

As journalists, we cannot overcome the concentration of power. But we are not beholden to powerful institutions, we are beholden to citizens. We would need reporting that overcomes ideologies and one-sided framing. Ultimately, that can only be done with independently constructed media.

When I criticize my colleagues, I experience different reactions: When I exposed how private and public broadcasters take over foreign and PR material undeclared, it had an effect. That no longer happens today. You can always see the source when third-party material is taken over. For me, that was a success. Even if it was a small one.

But when I criticize my colleagues with Herman and Chomsky and reproach them with the fact that the task of modern media, according to their institutional set-up, is to bring the consensus of the elites among the people and to ensure consent, then I am no longer discussed with my research and books. Then I move outside the discourse framework, even if I provide good evidence for the findings.

Protective walls are needed against attempts to influence journalists

One can argue about whether it is clever as a media critic to use terms like lies or manipulation. That pours water on the mills of the right. What the modern media do is more of a concealment, an omission. This can be demonstrated quite well by input-output analyses. The selective use of information also occurs in alternative media. But there, the factors are different.

In the case of broadcasters, the first thing to change is the composition of the councils. The fact that politicians, representatives of state chancelleries and governments sit on them is a joke. We are supposed to control them. That there are also representatives of business lobbies and associations is laughable. They all have to get out. But with this demand, you won’t find any support at the political level.

Citizens’ or public councils would be needed. There would have to be elections for the councils. And we need civil disobedience. Flash mobs that march in front of the broadcasters and say: We want different reporting. ARD, ZDF and the broadcasting frequencies belong to us. That has to get into people’s consciousness. Otherwise nothing will change.

Journalism must be independent. But the corporate and state sectors will always try to prevent anything that runs counter to their interests. That means we have to build protective walls. That could be models with more audience participation or more protection through self-governance.

In addition, advertising in public broadcasting must be ended. And: abolish all commercial activities. This includes outsourcing TV productions to private companies. We should also rethink the licensing of private broadcasters, similar to the FCC in the USA. Especially at the regional level, broadcasters would have to justify themselves to the citizens. A licensing system could also be introduced for newspapers. Printing and distribution could be publicly financed and licensed on this basis.

Across the media, there needs to be safeguards if there are any attempts at influence from outside. As journalists, we must have the opportunity and the duty to make everything transparent. Calls from politicians, for example. There needs to be a website where that is documented. That way, the problem of influence would disappear very quickly. The goal must always be for journalists to control the powerful. And not that the powerful control us.

There is a lack of media criticism in academia. There is a study here and there. Afghanistan, Ukraine. That’s far too little fodder to show in public where things went wrong. For a media critic like me, it would be important to be able to fall back on studies that are methodologically clean. I try to provide the empiricism in books and articles, but that’s hard to do on my own. Communication scientists should be much more concerned with the errors in reporting. Exposing, describing the condition, generating attention.

Some time ago I was in Augsburg for a lecture. Afterwards, some students said: But what the Tagesschau says is true. It’s objective, serious and neutral. That shows: There is no awareness of the problem. People first have to see what’s going wrong.

That not all voices were represented in the Ukraine reporting. Or that a shipwreck involving refugees in the spring of 2015 was reported differently than a comparable case in the spring of 2016 because the EU-Turkey deal was being negotiated along the way. Science could also discuss how to break down institutional barriers and how to make reporting more independent and critical.

Sometimes I hear the objection: Isn’t too much criticism, also and especially of the media and journalists, counterproductive and destroys social cohesion? I don’t think there can be too much media criticism. Because: Democracy means friction. (David Goessmann)

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