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Rising costs: EU wants to cap gas prices if necessary

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Status: 05/14/2022 4:20 PM

It is clear that the EU Commission is considering capping gas prices. This emerges from the paper that is now known. However, the attitude towards price caps has so far been divided among EU members.

In the fight against rising energy prices and fearing that Russia will further restrict its gas supplies to the EU, the EU Commission is now apparently considering a cap on gas prices. This emerges from a working paper prepared by the commission, which was first reported by “Welt am Sonntag”.

“One possibility is to restrict prices during this turbulence scenario with a cap on the price of European gas exchanges,” the German news agency quoted the message to be published next week. Such a price cap should be a temporary measure that, according to the EU Commission, may require “significant” sums.

Pressure rises with suspended charges

European Union countries have been discussing possible steps against higher energy prices for weeks. The pressure has increased due to the interruption of gas supplies from Russia To Poland and Bulgaria. Finland has now also announced that Russia has halted electricity exports last night. Previously, the Kremlin warned of possible consequences in relation to Finland Possible NATO membership warned of the country.

However, EU countries have not yet been able to agree on a common position on setting a price ceiling. While Spain, Greece, Italy and Portugal clearly supported such a measure at the EU summit at the end of March, Germany and the Netherlands rejected such free market interference. One reason: the fear that suppliers might look for other customers if the price of gas set by the EU turns out to be too low.

Germany has so far refused to set a price cap

At that time, Chancellor Olaf Schultz called Instead to join forces in Europe and cooperate more closely in buying gas – albeit on a voluntary basis. After the summit, European Commission President Ursula von der Leyen also noted that the EU has “enormous purchasing power”, accounting for about 75 percent of the pipeline gas market.

The direct statement on the EU working paper that is now known did not come from the Federal Ministry of Economics. One does not comment on unpublished papers of the European Commission, it has only been said. However, “the question of how energy prices will evolve, both for the economy and for end consumers” should “be analyzed and monitored carefully at the European level as well”. With regard to Germany, the ministry referred to the relief already initiated by the federal government.

The European Union grants exceptions

There are actually two exceptions to the EU’s gas price caps: Spain and Portugal. At the end of March, the European Union agreed that both countries could limit the price of gas – initially for twelve months.

Spain, for example, wants to set the price of gas for power generation to 40 euros per megawatt-hour and compensate suppliers for the difference between the market price and the price ceiling.

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