Plans to introduce cap prices for natural gas come to a standstill after EU energy ministers failed to reach an agreement on Thursday amid deep divisions.
However, Czech Industry Minister Josef Sikela said the ministers had managed to agree on other “important measures”, including joint gas purchases, solidarity of supplies if necessary, and speeding up the permitting process for renewable energy. Sikela also said the ministers would meet again in December to try to resolve their differences.
Earlier this week, the European Commission published statement in doing so, it announced a so-called “safety price ceiling” for gas prices, set at 275 euros, or $283, per megawatt-hour.
The EC also planned to link European base gas futures prices to the price of liquefied natural gas on the spot market. The Safe Price Ceiling will be activated automatically when “the settlement price of the TTF derivative for the next month exceeds 275 euros for two weeks.” and second, whenTTF prices are 58 euros higher than the LNG reference price for 10 consecutive trading days for two weeks.”
Both moves have caused alarm among gas traders.”Even a short-term intervention would have serious, unintended and irreversible consequences, undermining the market’s confidence that gas prices are known and transparent.the European Federation of Energy Traders said this week.
Earlier this year, Italian Prime Minister Mario Draghi hatched a radical plan to curb rising oil prices. The former president of the European Central Bank put forward the idea creation of a “cartel” of oil consumers in a meeting with Joe Biden to increase their bargaining power, similar to how the major oil-producing countries teamed up through OPEC to agree on annual oil production quotas. They met at the White House to agree on their positions on Russia’s invasion of Ukraine and the economic consequences of the conflict.
“We are both unhappy with the way things are, in terms of oil for the US and in terms of gas for Europe. Prices have nothing to do with supply and demandDraghi said.
According to Brussels-based think tank BruegelSince September 2021, Germany, France, Italy and Spain – the EU’s four largest economies – have each spent 20-30 billion euros to artificially lower energy prices. However, these subsidies are considered less than ideal, as they help fund Moscow, drain public finances, and damage the environment.
Alex Kimani for Oilprice.com
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