Struggle in Europe over the frantic rally in energy prices – The cap on natural gas is on the table

August 30, 2022

Robert

The scenarios for the measures ahead of the extraordinary meeting of the energy ministers – The Greek proposal for a ceiling on the wholesale price of natural gas and for the decoupling of the price of natural gas from the price of electricity is back.

Looking ahead to September 9, when the emergency meeting of energy ministers will take place, Europe is watching with bated breath the frantic rally in energy prices.

The rally appeared to be stalling today after the yesterday’s announcements by Ursula von der Leyen on pan-European intervention in electricity prices: “We at the Commission are working on an emergency intervention and a structural reform of the electricity market. We need a new market model for electricity that really works and restores the balance,” she said.

The Czech presidency of the European Council convened yesterday an extraordinary meeting of energy ministers for September 9, in order to discuss the issue of rising energy prices, announced Energy Minister Jozef Sikelá.

Sikela emphasized that he must disconnect the price of natural gas from the price of electricity and pointed out that a proposal includes enforcement ceiling on the price of gas which is used to generate electricity. This is a proposal submitted seven months ago by the Prime Minister, Kyriakos Mitsotakis, at the Summit.

However, after a lot of water has flowed down the drain, those who disagreed with the proposal of Greece and other countries of the European South seem to be changing their stance.

Berlin

Berlin in particular, heavily dependent on Russian natural gas, intends to consider imposing a cap on the price of natural gas, reports said today citing a text message German Finance Minister Hambeck sent to European energy ministers.

According to reports, Robert Habeck sent a text message to European energy ministers indicating that Berlin may consider imposing a cap on the price of natural gas on September 9 when the emergency meeting of energy ministers to deal with the dramatic increase of natural gas prices due to limited supplies from Russia.

Germany faces the “harsh reality” of Russia not restoring natural gas supplies to the country, Hambeck said yesterday, ahead of Russian state energy giant Gazprom’s planned suspension of gas exports to Europe via the pipeline Nord Stream 1.

For the Belgian Prime Minister Alexander de Crewe also spoke today, who reiterated his demand for a maximum price in Europe for natural gas and electricity. At the same time, as reported by the Belgian newspaper “Le Soir”, the Belgian Prime Minister also addressed the issue of taxation of the industry’s surplus profits.

Alexandre De Croix reiterated his call for a cap on energy prices. Comparing the current crisis with the financial crisis of 2008, he said: “What did we do then? We intervened directly in the markets.”

And today, he stressed, we should act now. “To intervene in the market. Like 2008. By taking back control of the market and setting a maximum price that we, as Europe, want to pay on the wholesale market. For natural gas and electricity”.

The faucet is turning off in France

Besides, Russia is closing the “faucet” to France from today, as Gazprom announced that it is reducing natural gas deliveries, due to a disagreement between the two parties on the implementation of certain agreements.

“As previously announced, Engie had already secured the necessary volumes to meet its commitments to its customers and its own requirements and had put in place several measures to significantly reduce any immediate financial and physical impacts that could arise from the interruption of natural gas supply by Gazprom”, says a related statement.

Russian gas deliveries to Engie had already been significantly reduced following Russia’s invasion of Ukraine, the French company said in a statement.

However, the company emphasized that it has already implemented measures in order to be able to serve its customers even in the event of a complete interruption of gas supply from Gazprom.

Nord Stream 1 is closing

European anxiety is exacerbated by the fact that tomorrow the operation of the Nord Stream 1 pipeline will be interrupted for three days until September 2. The shutdown is expected to further disrupt Europe’s natural gas supply, as the pipeline is already operating at only 20% of its capacity.

The measures on the table of the extraordinary summit according to a Bloomberg report are the following: