The European Union has set a ceiling on the price of gas, a “price cap”, at 180 euros. This gas market correction mechanism is a temporary measure, designed for prevent extreme price swingsand will apply for one year, starting on 15 February.
The new limit will take effect if the wholesale price of gas exceeds €180 per MWh for three days working hours and only if the difference in price with the global prices of liquefied natural gas exceeds 35 euros per megawatt hour (this second condition serves to prevent energy suppliers from sending their gas supplies to China or elsewhere in front of a maximum price European). The cap refers to the TTF, or the Amsterdam Stock Exchange.
It’s about a much lower than a previous proposal from the European Commission (275 euros per MWh), which would not have served to prevent the peaks recorded this year, since Russia has reduced gas supplies in the wake of the war in Ukraine and since Putin has decided to punish Europe for the sanctions .
In the event of an emergency in the security of supply, of dangers for financial stability or “risk of an increase in gas demand”, however, the cap can be deactivated immediately.
What changes for the consumer
As far as the consumer is concerned, there will be no real effect on price (except in perspective). Indeed, one is expected increase in the bill already in January. According to experts, only a cut in consumption will help to control prices.
The price cap on gas also represents a defeat for the energy policies of the European Union, because it does not encourage the search for alternative sources and the energy transitionbut move the supply elsewhere: instead of Russia, Qatar, Algeria, the United States and Norway. This continues to fuel the demand for gas and also the price. The vice-president of the European Commission, Frans Timmermans, had also underlined this: “The cost of transitioning to renewables is lower than moving forward with fossil fuels and cheaper than the status quo”.
The reactions
Belgium, Spain and Poland were the first to ask for a maximum price of less than 200 euros. But there was no unanimity in the decision: the Netherlands and Austria abstained, while Hungary voted against. After the deal, Polish Prime Minister Mateusz Morawiecki tweeted: “This means the end of market manipulation by Russia and his company Gazprom». Also via Twitter, the European Commissioner for Energy, Kadri Simson, said: “We now have an effective mechanism to prevent the #EU from paying excessive prices for gas that do not reflect world prices”.
The Kremlin spokesman, Dmitri Peskov, on the other hand, defined the agreement as “unacceptable”, a “distortion of the market”, and has already promised a reaction.
– War in Ukraine
Source: Vanity Fair
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