Under pressure from many EU countries, the European Commission has made new proposals for a possible European gas price ceiling. According to a discussion paper available to the dpa, the EU should be ready to introduce measures to limit prices. “The EU’s main objective is to ensure lower prices for consumers this winter.” However, the Brussels authorities only partially respond to the wishes of EU states.
Specifically, the EU Commission is proposing, among other things, to set a maximum price for Russian gas. Another option is to limit the price of gas in the production of electricity to also lower the price of electricity – Spain and Portugal have already introduced something similar. The document does not detail exactly what this would look like across Europe. The price difference between the ceiling and the market price would be borne by the electrical system, he says.
Greece, Italy, Belgium, France and eleven other countries had already asked the European Commission in a letter to present a maximum price proposal for gas. This is likely to be related to gas deliveries from abroad – such as imports from Russia and other countries – but also transactions at wholesale centers within the EU, the letter said.
In its document, however, the EU Commission warned of the possible negative effects of a price cap. “If price action is taken in isolation, there is a risk of increasing demand rather than solving the underlying shortage.” The commission also wrote that for a European wholesale price cap – rather than just imports – a centralized system would need to be put in place to replace the market and ration and allocate gas. That would be “unprecedented”. There is no organization at European level that can technically regulate this at this time.
Even before that, the EU Commission relied on proposals that essentially leave the price mechanism in place. So she suggested first taking the excess profits out of oil and gas companies and many electricity producers and using the money to relieve consumers instead of setting a price cap.
On Friday, EU energy ministers will hold a special meeting in Brussels to discuss the measures. They are expected to agree to confiscation of surplus profits. The gas price ceiling should also be discussed. Germany and other countries spoke out against it.