The numbers are stark, and they should make any fiscal conservative wince. Gas prices on the continent have shattered historical records, with the benchmark Dutch TTF contract touching €180 per megawatt-hour earlier this week. For context, that is roughly ten times the level seen two years ago. The market is screaming, but are policymakers listening?

This is not a natural disaster or a black swan event. It is the predictable consequence of years of fiscal profligacy and misguided energy policy. The green transition was always going to be costly, but the speed at which governments have pursued it without a credible plan for baseload power has been reckless. Germany, the engine room of the European economy, has been particularly egregious. Its Energiewende has turned the country into a net importer of electricity, reliant on Russian gas that was never as cheap or secure as Chancellor Merkel believed.

Now the bill has come due. Gas storage levels across Europe are dangerously low. At just 65% full, they are well below the five-year average for this time of year. And winter has not even started. The consequence is inflationary pressures that will squeeze household budgets and corporate margins alike. The Bank of England, already grappling with CPI at 4.2%, will be watching this closely. Any further increase in energy costs will feed directly into headline inflation, forcing the Monetary Policy Committee to tighten policy faster than the market expects. Gilt yields have already risen sharply in response, with the 10-year touching 1.2% earlier this week. That is a sign of the market pricing in higher long-term rates, which will choke off the recovery.

The irony, of course, is that this crisis is entirely avoidable. North Sea gas fields continue to produce, but the fiscal regime in the UK has made investment in new extraction punitive. The windfall tax on oil and gas producers, announced in May, was a classic example of short-term populism. It may have raised a few billion pounds for the Treasury, but it has also signalled to investors that the UK is not open for business in the energy sector. Capital is already flighting to more welcoming jurisdictions, such as Qatar and the United States.

Meanwhile, the European Commission has been dithering. Ursula von der Leyen's proposals for joint gas purchasing and storage obligations are worthy in theory, but they lack teeth. The reality is that member states are hoarding supplies and shutting down interconnectors. The single market for energy, which was supposed to ensure security of supply, is fragmenting along national lines. This is the worst of all worlds: government intervention that crowds out private enterprise, combined with a failure to coordinate at the supranational level.

The solution is not more subsidies or price caps. Those are the tools of a central planner, not a market economy. The answer is to let the price mechanism work. High prices will eventually ration demand and incentivise supply. That is how markets clear. But politicians are panicking. France has already announced price controls, and Spain has imposed a cap on gas used for power generation. These measures will only distort the market and delay the necessary adjustment.

Let us be clear: the energy crisis is a test of political will. If governments succumb to the temptation of intervention, they will repeat the mistakes of the 1970s. The result will be stagnation and higher inflation for years to come. If, on the other hand, they have the courage to stand back and let the market do its job, the crisis will be sharp but short. The choice is theirs. The bottom line is that there is no such thing as a free lunch, least of all in the gas market.