 Hello and welcome back. A surge in energy prices has left Europe facing its most profound increase in inflation in a generation. It is unlikely to be the last time we see this. The war in Ukraine and the green energy transition are set to trigger unprecedented changes in one of the economy's most important markets. Central Bankers must, therefore, refine how they think about energy prices and how they affect the outlook for inflation. This year's first panel will look at the latest thinking on how officials can better understand the implications of these shifts on their work. It will be chaired by ECB Executive Board Member Isabel Schnabel. Dr Schnabel, over to you. Thank you so much, Claire, for the introduction and good afternoon. I think we can say that now to everybody, especially of course to my four distinguished panelists. It's a very great pleasure to welcome you to our panel on structural change in energy markets and implications for inflation. Energy prices clearly remain a key driver of inflation dynamics in the euro area. The marked decline in headline inflation in the euro area was, to a large extent, driven by falling energy price inflation. We saw that other inflation components like food prices and co-inflation are also heavily impacted by developments in the energy sector, albeit with substantial lags. At last year's central forum, we discussed the impact of rising energy prices on macroeconomic developments in Europe and around the world, and also the implications for monetary policy. This year, as the President asked us to do, we are going to look a bit more into the future, so we are going to focus on the ongoing structural changes in energy markets and the impact on the outlook for energy prices and inflation. What are the future shocks that we may need to expect going forward, and what kind of shocks will that be? A discussion of energy markets is important as the volatility of energy prices is likely to persist for some time, especially given the fundamental changes to be expected in light of geopolitical shifts on the one hand and the green transition on the other hand. This volatility is going to continue to contribute to the uncertainty of the macroeconomic environment, and it will also affect our inflation outlook. For this reason, central banks are monitoring closely what is happening in the energy market, and we need to deepen our understanding of the functioning of energy markets and incorporate relevant structural changes in our projection models. To be able to do that, we rely on the support from experts like our excellent panelists, with whom I have the pleasure to discuss over the coming 90 minutes. Each of the panelists is going to make introductory remarks of no more than 10 minutes each, and then I will give the panelists a chance to react to each other before I will then open the floor for the Q&A. Of course, our online participants are also very much welcome to ask questions, so if you would like to ask a question, please raise your virtual hand. Let me start with the first speaker, who is Xavier Blas. He is a blue work opinion columnist based in London dealing with energy and commodities. He is also the author of a fascinating book on commodity markets, The World for Sale. If you haven't read it, I recommend reading it because it's really fascinating. It's a different world, I would say, from the one we know. This book shows quite plainly that Xavier has an exceptional understanding of what is really going on in global energy and commodity markets. Xavier, we're very much looking forward to learning from you what's really going on in these markets. Thanks for being here. Many thanks, Isabel. Thank you to the ECB for his kind invitation and also thank you to the Banco de Portugal for his hospitality here in Cintra. I'm a Spaniard and I can say that I'm absolutely marvel by this city, so that goes a lot as Portuguese people will know. The views are all my own, including about Portugal. Global commodity markets have experienced extreme price volatility over the last three years due to several large consecutive and at times overlapping supply and demand shocks. In particular, the cost of energy commodities, including crude oil, natural gas, coal and propane, surged to a nominal high in 2022 well above historical norms. If I may have the first slide of the presentation, the price volatility was, there you are. That is the IMF energy index. It measures, as I said, crude oil, natural gas, coal and propane. As you can see, the price spike was very significant and well above what we have seen in previous peaks, including just before the global financial crisis in 2007-2008. That price volatility was amplified at times by disorderly trading and poorly regulated financial and physical commodity markets here in Europe and elsewhere in the world. The lack of circuit breakers meant that market schools suffered significant intraday price rings in some occasions, particularly in electricity and natural gas. Short squeezes triggered by record large margin calls also add significantly to the volatility and in some cases what we saw was artificial pricing used triggered by the need to reduce positions due to margin calls and not for any fundamentals. I will make here an aside that you allow me based on this chart with data from the IMF. The IMF monitors 68 different commodities around the world. Crude oil, natural gas, coal, propane, energy, wheat, soybeans, corn, metals, fertilizers. It does not among those 68 commodities includes the price of electricity. I see the same in some central banks and I think it's a big miss on what we are seeing. In some ways we are looking at the economy as we were still in 1973 and oil was the main energy of the planet when electricity is taking over. Look at this room. The main source of this room is electricity, no crude oil, no natural gas. If you look at particularly the service sector, think about what is the biggest energy cost of the service sector. On most occasions that is electricity. If my hairdresser told me last time I was there that from the first of July the price of my haircut is going to go 10% up in Paris because that hairdresser is still adjusting to higher electricity prices. Contrary to what I have heard in previous panels, I will argue that the energy shock has not ended. I think it is still persistent and consumers and small and medium companies in particular are adapting to a higher structural cost of energy, particularly for electricity. When you look at electricity prices, the analogy that I like to do is oil looks like a wave that hits you. You are on the beach and it's a windy day and the waves are hitting you and they will hit you on the face. They are very fast, they come very fast energy, oil shocks. Electricity is more like the tide. It comes very slowly, it takes time but if you are in low ground you will drown also. That difference is why I think that the electricity price shock is very important to monitor. Also because most consumers enter into relatively long term contracts one year, one and a half years longer. Some consumers, particularly small and medium enterprises, enter into contracts last year at peak levels that they are going to stay with us for 12, 18 months. It is going to take a significant amount of time before we see disinflation coming on electricity. I will focus in the next few minutes in a couple of areas. What happened in physical and financial commodity markets and a brief summary of how those markets work and also the important but I think unappreciated role of the commodity traders. First on the markets. The commodity markets in reality are a complex web of interlink markets. At different of equity and other security markets we start with a physical market where goods are exchanged for immediate delivery. That is the spot physical market. Someone buys or sell a barrel of oil or a cargo of oil, a ton of aluminium, a bushel of wheat and that is done today on the physical market without intervention of the financial market. We have also forward physical markets where physical goods are also interchains for future delivery and above all of those markets that they are physical in their nature. We have financial or derivatives markets where participants can hedge, raise, can speculate on the direction of the market. Those financial or derivative markets can be over the counter, bilateral, private or can be done on exchange and clear. At times both markets are interlink. You can take a position on the physical market, hold the contract to delivery, to a spirey and then take physical delivery of the commodity so the financial market has a link to the physical market and vice versa. You also what happened on electricity and gas markets in Europe over the last 18 months and those receive most of the attention by policymakers alongside with oil but we have seen price volatility in many other markets from Nicoll, a commodity used for stainless steel where we saw in London at one point the price moved about 250% over the 36 hours period although later some of the trade was cancelled. We saw it in the price of wheat, the price of soybean and unfortunately we are seeing ongoing on the price of olive oil which is a significant cost for my household. Why prices surge as much as they did? Well there is a culprit above everything else and it's the Russian invasion of Ukraine. Without that we will not have suffered the amount of price inflation that we saw in the system but there was significantly more to that. We have in particular in global energy markets first an unprecedented demand contraction during Covid. At some point we lost 20% of global oil demand. No one was taking a plane. We were at home under lockdown. Later the market OPEC and other producers reacted to that imposing production cuts to try to avoid excess surplus accumulating into the market. The production cuts were historically large. It took a long time for us to see the impact of those cuts but OPEC at one point cut more than 10 million barrels a day of production. That's more than 10% of global oil production in one go. That was the largest ever production cut I have seen from a cartel. Then demand reopened, the economy reopened and demand came back perhaps not as fast as it disappeared but certainly surprised many market participants. OPEC also decided to keep the market artificially tight in an effort in part to recover tons of trade. OPEC countries import a lot of their manufacturers and they have suffered also for inflation. The purchasing power of the barrel is not what it used to be. A barrel of oil I did recently an exercise and I looked what is the purchasing power of a barrel measured by furniture for an IKEA. It buys you exactly what it used to buy you in 2005. So you go to the till on an IKEA shop with a barrel of oil impossible as it is. I don't think that they take that mean of transaction perhaps bitcoin but not barrels of oil. You will not be able to get much of it and OPEC is trying to reverse that negative tons of trade that is suffering. Electricity prices reacted for high natural gas, expensive CO2 credit emissions, expensive coal, the price of coal and appreciated went from $100 to $400 in the space of six months and also in certain countries in Europe lower than expected nuclear generation and also hydroelectric generation. The impact of climate change not only at times increased the demand for electricity perhaps for air conditioning but at times also reduced the ability to produce electricity because we don't have as much water in hydroelectric installations. But there is also a bigger trend in energy markets that is very important and at times goes unappreciated. The global fossil fuel industry is investing enough for a world that is moving to meet net zero by 2050 demand and supply targets. And the supply is heading into that direction. Unfortunately the demand is not heading into that direction. While the industry is investing for a world of net zero demand continues to grow and this year most likely will see record oil demand, record gas demand and unfortunately also record coal demand. And that's interesting. The demand for coal in 2023 most likely will hit an all-time high and that's coming many, many years after the first climate change initiative in the first serious one in Kyoto. Let me discuss now the role of the commodity trading industry. As commodity prices increased last year and also in 2021 we witness a massive transfer of wealth from consumers and in many cases also from governments who were buying commodities on behalf of consumers or subsidizing them to producers. What's largely missing this debate is the significant proportion of that rent transfer went from consumers into the pockets of intermediaries and those are the commodity traders. By commodity traders I don't mean big wall street investment banks but I mean a small group of companies, most of them privately owned, most of them also headquartered here in Europe that buy and sell physical commodities and they hedge and speculate also in financial markets. The financing of these industries also largely coming from Europe is done by European commercial banks, not big investment banks but actually the kinds of banks that will have a high street office and will extend a mortgage to consumers like me. How profitable was 2022 for those commodity traders? Well, that's how profitable it was. Those are the four largest commodity traders. I should say that some of those commodity traders don't only trade but also produce some commodities. Perhaps produce some oil or they are in the mid-packing industry but Glencoor is the world's largest commodity trader, largest metal trader, beetle, largest oil trader, largest grain trader, trafficker, a big player in both oil and gas and you could see the net income. That is profit after tax in billions of dollars. We don't have many data on the industry. It's very opaque. Most of them are probably owned so they don't have to report but that is paradigmatic of the rest of the industry. You are a CEO of commodity traders and you will get similar information from other companies. Return on equity that most businesses will be happy to have return on equity of perhaps 10, 15, 20% return on equity. Return on equity for many in the industry was 100% last year. In some cases was 200, 250%. These are highly leveraged businesses. The recipe for obtaining these margins at those profits is very simple. You buy and sell many, many times in different locations in different forms and try to make a buck exploiting and arbitrating the price difference. For that, ones need to take risk and at times significant risk. Last year was very risky. We don't have many data about how much risk value a risk the industry takes because again these are probably owned companies in general. But we have data from Glencourt which listed in 2011 in the London Stock Exchange and its headquarters in Switzerland and as you could see value at risk for Glencourt. This is one day 95% interval average for the year exploded in 2022. At some point Glencourt, very similar to many others in the industry, lifted completely all the value at risk limits and they traded without any limits whatsoever. That is the average value at risk for the year which I think if I remember top of my head is $158 million but the peak, the single day peak was $451 million. Mostly on the back of LNG and gas trading. With this industry that seems quite important to understand energy commodity markets, how much we know about them, how we regulate this industry. Well, let me tell you that the commodity traders have largely escaped regulatory scrutiny in the European Union. And that's not my statement. I have a much better source. That's what the European Central Bank said in a review six years ago. We also know that the sector is opaque, is highly leveraged and suffers from liquidity mismatches that also comes from the ECB. The IMF told us earlier this year that some very large traders at private companies, they are subject to very limited or no public reporting requirements. And what worries me the most is what we don't know that we don't know about the sector. Particularly considering the size of the marketing calls that we saw last year, some market failures and exchange failures like the London Metal Exchange. And those unknowns as our famous Secretary of Defense of the United States used to say is what worries me. And considering the experience of the last three years, I think it will be better that we know more about the sector. Is regulation needed? I will leave that for you policy makers to decide. But I will argue is that we need more oversight and that the commodity trading sector is too large to ignore. Thank you very much. Thank you very much, Javier. So this brings me to our second speaker. I'm delighted to welcome Christiana Baumeister, who is Lembert Family Professor of Economics at the University of Notre Dame. And she's also an empirical macroeconomist and a leading expert on the dynamics of energy markets and the transmission of monetary policy. And in her remarks, she's going to focus on structural changes in global oil markets and what they imply for inflation. So Christiana, thank you so much for joining us today. The flu is yours and I would be very grateful if you could stick to the 10 minutes. So that's the problem. Well, thank you so much for the introduction. It's a great pleasure to be part of this panel. Well, the outbreak of the COVID-19 pandemic in early 2020 set in motion a sequence of structural changes in global energy markets, which were reinforced by the Russian invasion of Ukraine only two years later. Now these dramatic events triggered unprecedented policy interventions and played an important role in the recent surge of inflation. And that's in a nutshell what I'm going to talk about today. So let's start by looking at some of the changes on the supply side of the global oil market, where I will focus on the world's three largest oil producers, the U.S., Saudi Arabia and Russia. The U.S. shale oil sector has been hit very hard by the pandemic and production growth since then has been very slow to pick up again because of the existence of a number of physical constraints and demands from the corporate side in terms of imposing capital discipline and generating returns for shareholders. In fact, the U.S. shale oil sector has shifted to a new business model that prioritizes generating returns for investors over expanding production in response to higher oil prices, which used to be the status quo before the pandemic. And this is also reflected in indicators of drilling activity, which while recovering from the pandemic recently show a reversal and a marked slowdown. So the key takeaway here is that the U.S. is likely no longer, is likely not going back to its earlier role as the new swing producer. And in fact, the pendulum has swung back to some extent to OPEC under the leadership of Saudi Arabia. Now, one issue that has become evident during the recovery from the pandemic is that some OPEC members really struggle to fulfill their quota. So there is consistent under production from a number of member countries, which together with the low levels of spare capacity limits OPEC's flexibility to stabilize the market. And while you can see from the graph that spare capacity has been low before the pandemic, what is new and what needs to be taken into account is that in this new setting where other major oil producers face enduring constraints, and here I'm thinking in particular of the U.S. and potentially Russia as I will detail in a moment, that kind of the severity of this lack of spare capacity has increased. The Russian crude oil market is undergoing also a major transformation since the invasion of Ukraine. Now, as Russia lost its traditional customer base in particular Europe, the composition of its buyers has changed quite dramatically as you can see in the graph below here where China and India are now the top importers. The first line indicates the start of the war in Ukraine and the blue part, which stands for the EU, has decreased dramatically. Now, this change in the composition of importing countries has led to a redirection of global oil flows and also a fragmentation of Russia's export market into two different geographic segments, which feature very different price and demand dynamics. Now, the demand side obviously has also responded to the developments over the past couple of years with several policy interventions in order to promote the stability of the global oil market and to counter global inflationary pressures. And I will limit myself to discussing just two here. The first one is the EU embargo and the G7 oil price cap that was introduced in December of last year. Now, the underlying idea of the price cap is that Russia still has access to Western shipping services, but only if the cargos that carry Russian oil are sold at or below the price cap, which is currently at $60 a barrel. Now, the objective here is a dual one. On the one hand, we want to make sure that the market remains well supplied and avoid a price spike while at the same time curtailing the fiscal revenues for Russia that it uses to finance the war in Ukraine. Now, after six months, six months after its implementation, it's maybe time to take stock of the effectiveness of this price cap mechanism. And so far it turns out that seaborn export volumes remained relatively stable. And if anything have increased, as you could see on the chart that I showed you before, and there was also no material impact on the global price of crude oil. But there have been important impacts on the prices for Russian crude, which differ greatly across locations. In fact, as a result of the market fragmentation that I mentioned previously. So shipments from the Baltic Sea and the Black Sea now sell at a discount because of the change in customer base, so you need to entice India to take over the shipments that were lost from the EU. While transactions that happen in the Pacific Ocean, they tend to exceed the price cap. Now, what did that imply for Russia's revenues? Well, at first, in the first quarter of 2023, we actually saw a marked decline. But recently revenues have been on the rise again, and that's mainly due to the narrowing of the price spread between Brent and the Western benchmark at which Russian oil sells and also export volumes shipped by sea have increased. Now, the second intervention that I want to talk about are the unprecedented releases of oil from government controlled emergency stockpiles. So what clearly stands out here is the large scale and duration of these drawdowns. So, for example, the US Strategic Petroleum Reserve started from 600 million barrels in the aftermath or during the, as you observe, after the recovery from the pandemic, and it has decreased to a historic low of 350 million barrels right now. But recently the US has started the process to refill the Strategic Petroleum Reserve, which down the road will create additional demand for crude oil. Now, I will now kind of like leave the more physical side of things and turn to prices where we'll decompose the oil price fluctuations associated with the events that I mentioned. Into supply side and demand side factors and quantify their contribution to price movement. So here you see the Brent price which reached a trough of $18 a barrel in April and peaked at $122 in June of 2022. Over this period from April 2020 to December 2022, where the sample for my econometric model ends, we saw two episodes where supply played a major role. And here I'm filling in the quantitative evidence of the narrative that Javier mentioned before. So when OPEC Plus cut production by 10 million barrels per day in the early stages of the pandemic to lift prices off the floor, so we see that more than half of that price increase can be attributed to supply. And the second episode is related to the outbreak of the war, where also supply factors are the main driver. Now we also have one event where supply side forces prevented prices from falling further, which is between October and December. Now over this period there were three time periods where demand was the dominant factor accounting for over 80% of price movements of crude oil. Now what I want to do next is to, and they line up again with the narrative of the pent up demand and then we even see that demand is still the major factor in the run up to the war. So when tensions in December became first apparent until the outbreak of the war and then also when oil prices came down so it was mainly due to a reduction in demand. Now what I want to do next is to look at the same periods that I examined here for the price movements and to look at the contribution of oil supply and demand shocks to inflation in the US and the Euro area. So I chose a different starting point for the US and the Euro area for that first episode that aligns with the time when inflation started to overshoot the target because we're interested in seeing how much oil shocks mattered for basically excessive inflation. So I just highlighted in the interest of time a few periods here so what you see or the key takeaway from this decomposition is that in the initial period both in the US and the Euro area so when we were recovering from the pandemic oil demand shocks contributed substantially to inflation so in the Euro area it was about 50%. While most of the time oil supply shocks did not matter that much except for the early stages of the war in Ukraine where they actually made a quite substantial contribution to the additional increases in inflation. Now they are also relevant for inflation coming down so inflation came down in the US by 1.3 percentage points in the last quarter of last year and about half of that can be attributed to demand shocks. The contribution in the Euro area for that first reversal of headline inflation is a bit smaller. Now however oil supply shocks is what keeps policy makers I guess awake at night because as we heard already this morning they generate a trade off between inflation and output stabilization so I want to also look at the dynamic effects of a 10% increase in oil prices due to a supply shock on headline inflation. So what you see is that both in the US and the Euro area inflation jumps up on impact by relatively similar amounts reflecting the energy share of headline inflation. But then the pass through is much faster in the US while in the Euro area inflation takes a while to increase and then is more persistent which points to important second round effects. Now an important transmission channel are inflation expectations so I also want to see how they are affected in both areas and here I take one year ahead household inflation expectations which as you can see react much more strongly on impact in the US but then the effect dies out relatively quickly. Whereas once again in the Euro area the build up is much more gradual and long lasting which seems to suggest that higher oil prices get much more ingrained in expectations in the Euro area compared to the US. And I also have evidence for the long run market based expectations but the effect is much smaller all by it very persistent. But so the last thing that I want to point out and I'm going to wrap up with that is that something that matters a lot for the Euro areas of course that we're looking here at the area wide response of inflation expectations but underlying this response is a lot of cross country heterogeneity and here I show you evidence for the 19 member countries so I apologize to Croatia. I excluded it because it only joined or adopted the Euro at the beginning of this year so but what you see here is that the sensitivity of inflation expectations varies quite a bit across member countries both in terms of the magnitude which you see on the left panel which is a snapshot at a year after the shock for all the countries but also in terms of dynamics which is on the right hand side so there you see the month of the maximum response which tells you something about the speed of pass through. So I just guess I'm going to leave you with with that impression of the of the heterogeneity and thank you very much. Thank you very much Christiane. So our third panelist is Miguel Geltertre who is Chief Economist in the Directorate General for Energy at the European Commission. So he is the person responsible for modeling the impact of energy related policy proposals and for ensuring that they are economically coherent so he's a very important person at the commission. And Miguel will briefly review the Russian gas crisis and the EU's policy response but then he will also analyze implications of the change in the energy mix offering a longer term perspective of the green transition. So it's great to have you here Miguel. Thank you very much Isabel. Indeed I mean my first message today is that last year energy crisis was not related to the green transition. It was not a clean energy or a clean technologies crisis that clearly a Russian natural gas crisis. There are three reasons why prices increase very significantly during 2021 and 2022. The first one the very significant reduction in supply from Russia. We went from importing 45 around 45 40 percent of natural gas supplies from Russia to around less than 10 percent today so from 155 billion cubic meters to less than 40 today. The second reason was the uncertainty and the fear of shortages that ensued and in particularly this you can see in the slide in the period between July and September 2022. And the third reason is the lower than usual hydro and nuclear output for electricity in the summer as well that push natural gas consumption for electricity generation. So this increase in the prices of natural gas drove the increase in electricity prices and that had effects on the overall economy. Had we had more renewable energy sources we would have been able to displace gas a longer number of hours from our electricity generation mix. If we would have had more solutions like heat pumps for heating our homes we would have had lower demand for gas and therefore prices would have been lower. So on the contrary clean technologies would have shielded us better. Now if we look at this period in summer 2022 I think it's important also to mention that prices above global levels were instrumental in attracting liquefied natural gas. But the extremely high prices that we paid between July and September 2022 were not strictly necessary from the point of view of security of supply. The high spike that we saw in the summer of 2022 was due to intra EU competition in this context of fears of shortages that met with infrastructure bottlenecks in the northwestern region in Europe. And since then a lot of new LNG terminals have been built. The capacity to bring flows in the northwestern Europe region has eased and is better. But other parts of the world were not paying these very high prices that we paid in the summer of 2022. And this as Javier was mentioning before benefited mainly those trading the assets. Now what about next winter. So here we come with the with the positive news similar spikes as those that we experienced in 2022 are less probable this year. All things being equal for five reasons. The first one is the high storage levels. If we continue with the refilling of the storages as we are doing today and we have a framework the EU adopted a framework about minimum storage levels. By mid August and of August our storages are going to be full. Therefore we will need less gas during the winter 23 24. The second reason relates to natural gas demand reduction. We have a framework in place. We have consistently reduced by 18 19 percent our consumption of natural gas. And part of it is a structure. I mean prices have gone down. We're still with high prices. So we are not seeing demand coming coming back. And certainly something very important. It was not the weather. This we need to be very clear because there are a lot of narratives out there saying that Europe got lucky. I mean the five years previous to the to 2022 2023 to this winter were not that you know that let's say for a third element. More infrastructure has been added to remove bottlenecks. We have 30 BCM billion cubic meters additional regressification capacity in the EU. This has been delivered in a record time by 24 25. We will have 45 BCM. So we will be able to accommodate more liquefied natural gas. And there has also been an acceleration in the deployment of renewables with 56 gigawatt of additional capacity. The fourth reason is that there is a lower possibility from Russia to weaponize energy markets. As I said I mean they have moved from 45 percent of our supply of natural gas to less than 10 percent today. And finally a very important point again less uncertainty. There is no fear of shortages. I mean these reports about European homes not being able to hit or blackouts in the electricity system have been avoided. Now if we look at three lessons that we learned from the crisis the first one I alluded already to which is the fact that more renewable energy sources can help limiting price spikes due to fossil fuels. If they are able to displace the gas from the electricity from the electricity generation but it will take time. And I think it's important to understand that by 2030 and this is the modeling we have done with my team while renewables are expected to provide more than two thirds of the electricity fossil fuels would still set electricity prices during half of the hours and even increasing in some member states. So we need to accelerate very much this deployment of renewable energy sources to be able to grasp the benefits of their lower generation generation cost. Now the second element is that the pass through from wholesale to retail energy prices differs very significantly across member states. Why because actually it's just a fraction of the retail price the wholesale price. I mean one third are taxes. So this is something that helped member states in addressing the crisis but the way this taxation happens is very different across member states and therefore led to a significant heterogeneity in the way prices for energy responded. And the third element is that futures while you know an important indicator on market expectations and reflecting market sentiment in a context of a turbulent market they need to be complemented with an analysis looking at supply for instance in the additional capacity coming from LNG terminals and demand condition lower demand due to the installation of heat pumps. Now if we look at the future the energy sector is undergoing a massive structural change. Had it alluded to it at some point I mean oil is going to lose its importance. We need to look increasingly at renewable energy sources and electrification. So three elements or three very important factors is that we will have less energy consumption in the future. The total energy consumption will decrease by one third in the EU by 20 by 2030. Second element electrification the share of electricity in the final energy consumption would increase from 23 to 33 percent in 2030. 60 percent as I said before in 2050 more renewables and less gas to the mix. And obviously when we analyze prices for energy we need to look at these important changes. An important slide from my side is that there is clearly a need to differentiate the short term contribution of energy to inflation from the long term structural changes from the green transition in relative prices. As a previous speaker has mentioned there is going to be more regular price spikes in the future if there are mismatches of supply and demand of fossil fuels and this can happen irrespective of the green transition. So it's important when we analyze the prices of energy to differentiate these two aspects and also important to differentiate the impacts during the transition from the structural effects once the transition has been achieved. And given the large number of different effects when looking at these price impacts it's important to look at different dimensions. First of all commodities in the future the central assumption is that prices paid by the EU on both fossil fuels and critical and raw materials necessary for the green transition will be set in international markets. The green transition requires technologies that are very mineral intensive and the EU depends very heavily on a few countries for these critical raw materials. For instance the EU gets 98% of its rare earth supply and 93% of its magnesium from China alone. At the same time we will still need diminishing volumes of fossil fuels during the whole transition and as shown by the recent crisis that we had this can have a very significant impact on electricity prices even if they are diminishing. The second point is that in order to reduce vulnerabilities since we need to work on diversification we need to work as much as we can with supply but we have limited possibility to impact supply we need to work on lowering demand and electrification. There as I mentioned before there's going to be a lower demand for energy in the future and there is also the development of energy efficiency solutions demand response and self consumption are going to be extremely important. The lower cost on electricity driven by renewables I already alluded to replacement of capital stock and infrastructure according to our modelling in the energy sector alone we will need 487 billion euros of investments per year. This can push prices up of green goods and moving before other regions in the world can moderate these price tensions. Shortages on the skilled labour force might create also upward pressure on prices but there will be ultimately a readjustment on relative prices. Carbon pricing and taxation increasing the cost of carbon can have an important impact on prices using the revenues for public investment in clean technologies could lead to a positive supply shock and the current taxation systems in member states they need to be adapted. Because currently fossil fuels are heavily subsidized while at the same time electricity is heavily taxed and therefore should taxation of electricity decrease in the future this can have a downward impact on prices. And finally uncertainty and higher risk premiums changes in the cost of capital can impact the future energy system certainly is crucial. So my conclusion is that poorly sequenced or erratic changes during the transition will be accompanied by episodes of very volatile prices. Policy choices matter. We need to avoid uncertainty as much as possible, cheap and stable access to commodities, manage the demand and install renewable energy sources as soon as possible. Thank you. Thank you very much Miguel for a very interesting presentation and my final speaker is Ida Woldenbacke, who is governor of the central bank of Norway, which is a country that was very differently affected by the energy price shock. Ida will bring the perspective from a major energy exporting economy and as a central banker I assume you will also talk about implication for monetary policy. So Ida, the floor is yours. We are very much looking forward to hearing your insights. Good afternoon and thank you so much for inviting me to participate in this distinguished panel. So in my remarks I will offer some thoughts on how the structural changes in energy markets will affect energy prices and inflation more generally before turning to some implications for monetary policy. But let me start by sharing some observations on my home country. Now Norway is an energy nation and a large exporter of oil. Of the past decade natural gas exports have increased in importance. Also Norway is highly integrated in the European energy market, primarily as an exporter of oil and gas, but increasingly also as an important supplier of flexible hydroelectric power. Now since Russia's invasion of Ukraine Norway has become Europe's largest single gas supplier. A close cooperation with Europe reflects our common interest in well functioning energy markets during the transition to zero emissions. Now in the years to come Norway's petroleum sector significance to the Norwegian economy will likely decline as resources on the Norwegian continental shelf are depleted. And lower activity in the petroleum sector will have implications for the Norwegian business structure. Substantial investments and reallocation of labour and other resources across sectors and firms may be required. But along this path the green energy transition can be a catalyst and we're already seeing that technology developed in the petroleum sector serves as a springboard for new jobs in the green sector. So turning to the next topic. How are structural changes in energy markets shaping the outlook for energy prices and inflation more general? And on this is my time to be humble and say that predicting the energy prices in the years to come is extremely hard. As we've already heard different aspects of the transition are likely to affect different prices differently and possibly with opposite science. And outcomes will depend on developments of technology, the supply of raw materials and minerals and on political decisions not only related to the climate but also related to energy security. While recognising that uncertainty I think in the short to medium term it would be prudent to be prepared for at least a potentially higher frequency of negative and possibly more persistent supply side shocks originating in the energy market. Now with an increasing share of intermittent renewables in the energy mix and insufficient energy storage system to act as balancing mechanisms supply could become more unpredictable. And coupled with low demand elasticity short run fluctuations in supply could potentially trigger large price movements reinforcing a well documented characteristic of energy markets. Now turning to how this might impact inflation. Although household energy costs constitute a fairly modest share of the CPI basket as we all experienced last year large movement in energy prices can have a material impact on headline inflation. And energy prices as we've also heard earlier today can also have an indirect effect through firms input costs. And large and potentially more persistent changes in energy prices may limit firms ability to absorb such large costs via lower profit margins. And the pass through from firms input costs and ultimately to consumer price inflation may then be amplified. Large and more persistent energy price changes could also amplify second round effects for instance by affecting inflation expectations. Recent research that we've already heard and but also at Nurgis Bunk have found that household expectations play a key role in amplifying the pass through of oil price shocks to inflation. And this is particularly the case when oil price changes are large and persistent. On the other hand and contrary wise at least some of the pass through to core inflation will be counteracted by the disinflationary effect of lower income and a fall in demand. As many households are credit constrained and consume mainly out of current income larger and more persistent energy price movements could therefore potentially amplify the contractionary effect on consumption. So how will this affect monetary policy going forward? Now first central banks need to deepen their understanding of the functioning of energy markets and we need to integrate that knowledge into our analytical framework. The effects of and the efforts to combat climate change might change the structure of our economies in ways that reduce the relevance of existing models based on historical data. And furthermore going forward it will be crucial to identify the source and the nature of the shocks behind the energy price movements in real time. And this may become more challenging as the green transition involves a wide range of sectors and products. So to help us navigate we need more research possibly new analytical tools and new models. Now central banks are not unfamiliar with fluctuations in energy prices. But should the frequency and persistence of supply shocks in the energy market increase ahead we may be faced more often with a challenging short term trade off between stabilizing output and stabilizing inflation. And deciding on the right timing and dosage of monetary policy will be crucial. As we've heard earlier today the appropriate response of monetary policy to energy prices will depend on the source and the nature and the duration of the shock. It will also depend on whether energy price shocks fuel inflation via second order effects including through inflation expectations. And failing to respond to such second order effects we may risk persistent overshoots of our inflation targets and ultimately at the anchoring of inflation expectations. On the other hand wrongly interpreting temporary movements in energy prices as having persistent effects we could incur larger output losses in the short term and may even increase inflation volatility. Moreover changes in relative prices for instance due to higher carbon prices are effective signals that drive the transition in the right direction. And appropriately flexible and forward looking monetary policy would help those necessary changes in relative prices to feed through. But flexibility must not come at the expense of credibility. In presence of structural changes and large uncertainties such as those created by climate change well anchored inflation expectations remain as important as ever. I'll stop there. Thank you. So thank you very much to the to the full panellists for excellent presentations. Actually I if I may I would like to start from a comment made by Eda. So you basically said that you would expect there to be more frequent and more persistent energy price shocks. I mean during the transition period and I would like to hear whether the others agree to that or how you would see that how the structure of the markets affects that. And then maybe also to Miguel because you took a bit the longer term perspective what is going to happen after that and how long is. Do you think this transition period is going to be so whoever wants to wants to come in. Yes I guess the question. No it's actually more to now more to the others because you made this. Let me just emphasize that at least I think I mean there's great uncertainty about the about the outlook for energy prices. But I think it would be prudent to at least prepare for the possibility that we might see more persistent and more frequent negative supply shocks in energy markets. But that's not a given that that will actually happen. In terms of my more current analysis of how the major oil producers are shifting in terms of the market structure and the way. So they kind of like becoming in a way more prone to supply disruptions. And so yeah I would kind of like share the view that mentioned that supply shocks are going to be more frequent and it is indeed prudent to prepare for that possibility. Yes but I think it's a broader phenomenon. Fully agree with the comment that it made and one of the difficulties in particular in the electricity market to predict where the price and the supply and demand is going to be is that you need to take a view on the weather. You need to forecast what the weather is going to look like two weeks from now and that is very very difficult beyond most of the tools that we have. It was the case that we have only to model the weather because of the demand. Is it going to be hot? We are going to need more demand for air conditioning. Is it going to be cold? We are going to need a lot more demand for heating. But today increasingly we need to model also for supply. Is it going to be windy? Is it going to be sunshine? Is it going to be cloudy? We are going to have a reduction in solar production is becoming more and more important in many European countries particularly in the south. And that is having an impact and the impact of weather both on the supply and on the demand and the difficulty to predict whether more than ten days ahead makes that more difficult. The solution will be a storage but we are not there yet. Very much. Maybe you can also comment a bit on this, you know, the longer term perspective that maybe is a more benign one. I think there are two sources of volatility that we might see in the years to come. One which was alluded is the mismatch between supply and demand related to fossil fuels. And also the fact that concentration of these diminishing volumes of fossil fuels might be in two or three countries in the world mainly. And then there is the volatility that is inherent to the clean technologies that Javier was alluding to. The fact that if there is no wind, if there is no sun, we might need other things there. Innovation, demand response, flexibility, batteries are extremely important. And also, as I mentioned in my presentation, to secure this base load that you need for electricity, gas, nuclear that would still be needed. Now on the benign side, because you were asking about that, we are seeing an acceleration of the deployment of clean technologies after this crisis. I mentioned before, we are in a record level of the deployment of renewables. We are also in a record level in several member states on the deployment of heat pumps and other solutions. So this part on the electricity will require also a very significant investment on grids that we are not seeing. But I think in several member states might come earlier than expected. So by 2030, 2031, 2032 we will start seeing dramatic changes. OK, so you mentioned the investment that is needed. There is, of course, one debate ongoing whether central banks by raising interest rates forcefully, whether we may actually make this transition harder. Maybe, I don't know, Ida, do you have a view on this? Well, I guess higher real rates would make all investments more expensive. So it's not obvious to me, although the horizons might differ, of course, how this will play out. But I nevertheless think that the most important contribution we can make is to make sure that inflation is low and stable, as that would also benefit those investments. And then providing for a stable economy and low inflation is perhaps more important in the long term. Very good point. Any other comments you would like to make to each other after your presentation? I would like to follow up on one point that Miguel made, which is about the pass through from wholesale to retail prices and the difference across member states, which is the case in different energy markets. So that was my last point also about the heterogeneity in the pass through. And it's important to be mindful of the fact that this depends very much on the economic structure. So we have been talking about structural changes in the energy market, so we also need to take structural changes in economies with regard to the energy mix into account, which is, for example, one factor that determines heterogeneity in pass through. Others are kind of like changes in the industry composition, the competitiveness of the environment, kind of like how competitive the environment is in which firms are operating, and also national government policies like energy subsidies, taxes, and things like that. So there is scope also for, I guess, some policy interventions that could kind of make countries more converged on that front, which then should also make the job for the ECB easier, kind of like to intervene in the case of the more frequent energy supply shocks that might happen on the road. So I just wanted to reinforce that point because I think it's important. I think that's an excellent comment because indeed, of course, we have been struggling quite a bit with all these heterogeneities across different countries with the very different speed of the path that was also shown in the slides, and I think that's an extremely important point. I will perhaps make a quick point following on Miguel's comments about the lack of forecast power of the forward curve in commodity markets, and I think that a lot of the errors on inflation forecasting across the industry, not just in central banking, my own included over the last few months have been for relying too much on forward curves as an input for our inflation forecast. I know that if we take away the curve and what we replace that with, and I don't have a very good answer on that, but I know that perhaps relying too much on forward curves is making us predicting inflation wrongly. I mean, we've had that discussion also internally, if I may say, but actually you mentioned that you are doing analysis that goes beyond the forward curve, that you are looking at what are the expectations about how demand and supply is going to develop. So do you have anything to offer to us, what we can use instead of future curves? Well, I mean, we are working with my team very much, and we are in touch with the teams in the ECB on this, but it's basically to have a qualitative assessment on the supply and demand conditions. I mean, if we know that the storages are going to be full by the end of August and that we might not need that much gas, we can have an assumption that prices might decrease for natural gas. I mean, this is one of the scenarios that we are developing ourselves for the end of August and the beginning of September, all things being equal, considering, as I mentioned, demand conditions that we don't need that much gas anymore, the forecasts that we had also on the weather. So all of these elements, they allow to, a little bit, in a sense, qualify what the forward curves are telling us. I find quite fascinating to see that now we are becoming so dependent on weather. I mean, weather affects energy prices more and more, but of course it also affects food prices. At the same time, we are seeing all these things happening with El Nino, with climate change and all these things. I mean, that is interesting that the weather is going to be one of the major uncertainties going forward and I think probably we are not going to be better in forecasting the weather than we are at forecasting other things. So it's a bit concerning, but any other comments or shall we open the floor? Just one brief remark and what my fellow panellists reminded us, it's obvious of course, but there's not just one energy price or one energy market. I think panellists did a good job of explaining that and why we also need to expand our analysis at central banks and recognising that different markets affect different firms and different sectors of the economy differently, which also makes this quite a challenge. All right, so let's go to the floor for question. So I don't see any question on Zoom, so please, yes. We need a mic actually, we have three questions right here, we collect the three. Yes, Richard, you too. I don't know who wants to start. Thank you, Fernanda Guardado from the Central Bank of Brazil. We can definitely see how we are depending on the weather. We have a lot of hydrological power and when there is a drought we get very strong increases, but I wanted to dial back to Edith's comment on the shocks becoming more frequent. So making a link with that with the first panel and trying to identify whether shocks are temporary or kind of frequent enough to be considered permanent, would you say that maybe this is one area where we should consider a higher frequency of shocks in prices of energy and oil to be more permanent and include that in our framework in such a way that this is maybe requiring higher neutral interest rates so that we don't pass through the volatility from oil prices and energy prices into monetary policy. So maybe this is a more permanent development and maybe this should be included as such in our evaluation. So maybe if you want to comment on that. Yes, very interesting question. Javier Vives from ESF Business School. I'd like to go back to the relationship between the green transition and the pricing dynamics, which I mean most of you touch upon, because this is going to definitely be tricky and one issue which I am not clear and I would like to see your opinion, is that we all agree that we have to decrease the use of fossil fuels, but how to manage the transition and the needed investment still in those fossil fuels so that the light is still gone always basically. And in this respect, I think Miguel, so you have pointed out that the role of the Russian aggression on natural gas prices and so on, but if we look at 2021, the year before, prices of energy were going up. This was not Russia. And it was because of weather obviously, the weather, the increase in the money in Asia, but also because of the increase in the prices of CO2, which that's what we have to do. The prices of CO2 have to go up. So here we have some dynamics, how to ensure that this goes as smoothly as possible. Very good question again, Richard, please. Thank you. Richard Portins, London Business School. Quick remark on the weather, Ken Arrow did weather forecasting during the war. Forty years later, he said that it hadn't improved. Beyond 48 hours, weather forecasting hadn't improved at all. Two questions for Javier. I was struck, really struck by the information you gave us about the commodity trading houses and now I understand why Glencore is so often in the financial pages of the newspapers. But first of all, do you think that these activities, that the trading house activities actually contribute to arbitrage to some positive consequences in the markets? And second, there's a huge increase in their revenues. Can you tell us anything about who's actually paying that? What's the distributional effect of this immense rise in the revenues of the trading houses? All right, so who would like to take any of the questions? Yes, please. I can start with the point that Javier was mentioning. I think we need to provide as much certainty as possible and clarity on what is the demand we are going to have for fossil fuels and enter, as we are doing it already, with our joint purchasing mechanism from the commission entering into partnerships with countries in the world that will have to supply us so that they know until when we will meet these amounts of fossil fuels so that investment can follow. Investment, not necessarily in new drilling and new, but keeping simply the facilities. Now, an important point from my side is that prices already in the summer of 2021 were increasing due to Russia. Prices increased at the moment of the aggression of Ukraine. In August 2021, we started noticing that the storages in several member states that should have been filled by gas coming from Russia were not being filled. That's what puts us in a difficult situation because we ended up in the winter 2021-22 with storages only filled at 30%. That puts us in a lot of difficulties. Related to the ETS price, I would say the same. We need to provide certainty. We believe in this tool. It's a market tool. I think it's delivering. We need to be as certain as possible about what is the path on the allowances. Thank you. Thank you. Do you want to take the monetary policy question? It was a very interesting question, but one that is difficult to give a definite answer to. I think in real time it will be very challenging to identify whether a shock is temporary or permanent as we've already discussed this morning. I think there's in general a very interesting question related to the transformation of energy markets, the green transition and how if that would impact a neutral rate of interest. I think it's an ongoing discussion where there are effects that could go in potentially different directions. So that's for next year's panel. Javier. Thank you for the questions, very pertinent questions. If you want to ask thinking about is a positive arbitrage for society and the economy, you ask that question inside the industry. They will tell you that they are the visible manifestation of the invisible hand, that they are doing the job of the market and they are redistributing commodities. Certainly the industry is as old as mankind, commerce and trading commodities. We started with the stones and copper and iron and we have continued now with everything else. There is a degree of need of the industry and certainly at times last year in particular there was a need to reshuffle global trade of commodities. Oil from Russia was not coming to Europe anymore. It was sent to India where it is refined, transformed into diesel and then re-esported to Europe. Whether that's a good policy, I will leave it to the room. But there was a need for the traders. The question is, are they profiting in excess in the commodity trading regulation in the United States? There is a terminology that is excessive speculation. Was excessive arbitrage on the industry looking at the profitability, one will think that the profits at least were quite good. In terms of who is paying for this, it's coming from consumers, it's coming from producers. If I look at last year, my initial reaction was that most of the profit was coming from consumers, were the consumers paying for those extra profits. I will make an additional point here. I'm going to get a lot of emails from the CEOs and some of the commodity trading houses for this. In Europe, we discussed and implemented some windfall taxes on the profits of big oil companies, big gas companies, and included we kept the profitability of some green energy generators, particularly in the wind industry. There was no windfall tax on the commodity trading industry, mostly because it's located in Switzerland and also headquartered in Switzerland, but very important, most of the times the final incorporation of those companies is often on low tax jurisdictions, Singapore, British, Belgian islands, Cyprus, and so that was one point, and because they operate from those locations, the tax that they pay to society is relatively low. The average tax marketing for these companies is about 10%, Wall Street pays about 25%, Wall Street banks, they compare very well with Goldman Sachs in terms of taxation. I will leave it there before I get more emails. I have three for the speakers. I know everybody is hungry. Okay, four. I close the list here. I have Anil first, then Daniel, then Lucrez, then Joao. Anil Kashyp University of Chicago. This is for Miguel and anybody else who wants to answer. The one thing that hasn't come up as far as it makes no sense is the fossil fuel countries to leave it in the ground. At some point, their incentives to try to harvest some of that revenue before things become completely and viable kicks in. I'm just wondering how you're thinking about modeling that, and I must be thinking about this for Norway. You guys are trying to go green, but at some point there is going to be a tipping point. I just wonder where that comes into your calculations. Thank you. My question is, in a certain sense, a direct follow-up, and comes back to this key question for monetary policy, whether the shocks are temporary or permanent. My question would be to Jill to ask, is there any indication that the oil price, maybe the gas price is a random walk? Most shocks are permanent? Or do you see evidence of some equilibrium price to watch which the daily price tends to return after a shock? Maybe an equilibrium price which varies over time, but nevertheless something which would imply that most shocks are transitory. Yes, thank you. I have one question for the central bankers in one observation. The question is that there is work on optimal inflation targeting that relates the trend in relative prices to the optimal inflation target, so that you want to minimize distortion, and then when there are trends in relative prices, you want to have a higher average inflation level for that reason. So it seems to me that that work would be relevant to think about the future level of inflation target if you think of it in the long term. I'm not saying that you have to change it now, but thinking of the type of shocks that you are discussing. So the question is, are you thinking about that? Is there any analysis in-house? And the observation is that actually the weather forecast has become much, much better, so that's unlike economic forecast. So that's good news. Joachim, please. Joachim Nageldoece Bundesbank. Regarding the perception of the energy market, that central banks are definitely not in the driver's seat when it comes to energy market. I think we are used to the volatility of the energy market since 50 years, more or less, so we have to deal with the fallout. We are pretty good in this. This is my understanding here. But what is obvious is that the energy market is very opaque, it's not transparent, and it's asked for much more regulation. And as I said, we are not in the driver's seat, so we have to ask who is in the driver's seat. And I believe that politics is here in the driver's seat. It is a little bit the same compared to the fragmentation when we are talking about the capital market union. At least I can say that for the European Union. I think the energy market is even worse. So we have to discuss this fragmentation and we have really to get better here. And this is one of the major challenges I see here. But as I said, central banks, we can ask for that. Let me say homogeneity and reduce the heterogeneous situation. But I think the task is in the political arena. Thank you. Thank you. So we have a final round of responses. Whoever you would like to respond to. On the final comment on regulation, as I said, I think that the first step to me is oversight and increased transparency. We cannot regulate what we don't know how it works. We need to get better data. And I think that what it was concerning to me looking at the reaction of policymakers in 2022 in particular was that at some point they were blind. They didn't know what was happening and they didn't know what they were missing. And I think that improving that transparency and getting more information of the sector, it will be a very good first step. And then we can decide that we're actually, when we have that information, whether we need to regulate it or not. But I think that the first step is increased transparency. Sure. I guess I'm going to speak a little bit with just actually outside my usual field, but I have some views on the energy transition and kind of like speaking to Anil's question to some extent, but also following up on what Miguel said. So I'm less optimistic relative to Miguel on how fast we're going to accomplish that. And I think one important thing that has not been mentioned yet is that we need to take into account the purpose for which we use fossil fuels, right? So you mentioned heat pumps, for example, but I'm thinking yet coming from the oil angle more of transportation where there start to be kind of like substitutes with electric vehicles and stuff, but to scale that up basically is going to be, in my view, a much longer-term process. And so the tipping point that you mentioned, Anil, I think is still, in my view, far off. So kind of like a... And that's why in a way the oil producing nation is still going to try and take advantage of it, but they are facing their own structural issues, as I mentioned, right? This years of underinvestment, and they have to make the difficult decision in the end, is it worth it and kind of like, what is the planning horizon, right? So I guess they have to find a balance there and make their cost-benefit analysis and decide based on that. Miguel. Yes, thank you. So first on the point that Javier was mentioning, I think definitely it's super important to have standardised monitoring and supervision of trading houses. I think at some point, as Javier was mentioning, it was a certain blindness in the policymaking because it was not clear who was trading what, under which conditions, what price, which volumes. I mean, getting this information up to date was not possible and it's not possible because we have different regulatory regimes, nationally but also at the European level. And the question on the tipping point, I think there, as I said before, we might not be able ourselves to influence a lot supply of fossil fuels. What we can is influence demand because in Europe we are importers of commodities. So I think providing this certainty to those producers that sell their fossil fuels to us is extremely important. Well, thank you for the question. The literature on optimal inflation targets is indeed an interesting one. I think now, for the time being, for most central banks, and there is no exception, our sole focus is on getting inflation back to target. But it adds to the trade-offs that we might be facing going forward in the face of cost bus shocks and in the face of supply shocks in energy markets that we do need to be sufficiently forward-looking so as to allow those relative price changes, including those from carbon pricing to feed through. So I think it's an interesting debate. But for now, I think we are focused on our main objective of getting inflation back to target. So thank you very much. I think we have to come to a close. Everybody is hungry now. Let me just say a few words what I am taking away from this session. So I think it was also shown by Christiana that it seems that the supply of fossil fuels is becoming less elastic, which also leads to this higher volatility in fossil fuel prices. The panel is of the view that we are going to face more frequent and more persistent energy price shocks. Due to the mismatch between supply and demand, due to what's happening at OPEC, due to the weather. So this is, of course, creating challenges for us. I think I agree with Joachim that we have to deal with it, but we cannot solve the problems. So this is clearly up to governments. I think you convinced us that the commodity traders need more oversight. After we've learned what they're actually doing, and you've already told us a bit of that, we certainly need infrastructure massively. I mean, we need grids. We need the expansion of renewable energy. I mean, on the analysis side, we need to integrate the energy sector into our models, and of course we are already doing some of that. So there's a lot to do, a lot to learn. Many challenges. Thank you very much for sharing your insights. It was a very interesting discussion. I enjoyed it enormously. I hope the rest of you too. I wish you all a very nice rest of the day, also with some social activities, which is new, et cetera. But I'm going to hand over to Claire now. Thank you very much, Isabelle. So that brings to a close the formal proceedings for today's events. I'd like to thank President Lagarde, all of our panellists and our chairs for a great start to the event, and with plenty of compelling insights into the not-so-steady state we're in, there's some mixed feelings, I think, about whether or not Goddow will show up. But if he does any time soon, I think it's going to be in pay packets or shopping baskets rather than riding in on an oil tanker. So please join us again here in the room tomorrow, or online at 9am. We'll also be finding out the winner of this year's Young Economist Prize, and if you haven't already, please do vote for your favourite by 9am local time tomorrow morning. Thanks a lot, and enjoy the rest of your day.