The big question is how third countries such as India and China will act in relation to the ceiling. The ideal condition would be for them to participate by shaping the final price together.
By Antonis Anzoletou
The energy war with Russia has begun. The Brussels and the Moscow they are preparing their weapons in view of a very difficult winter and the match will be tough. The E.U. belatedly – ​​and after seven sanctions packages – he is putting on the table the ceiling on the price of Russian gas that passes to the old continent through pipelines in order to pressure Vladimir Putin. The first response from Russia was as expected: “There will simply be no Russian gas in Europe”, showing that the “bra de fer” will be tough. The bells, after all, have already started as the Russians warn of a complete interruption of energy flows by opening and closing the taps on the natural gas pipeline Nord Stream 1.
At the same time the decision to proceed to eceiling fan on the price of Russian crude oil and petroleum products, the finance ministers of the G7 also ratified yesterday. The counterattack across the one-way seems to be coordinated. What was happening until now? Russia was getting rich from the price rally and the states were trying to find resources from their budgets in order to cope with this difficult condition. Economic analysts argue that the imposition of the ceiling will also contribute to the reduction of inflation, which is currently a major problem for the West. During the week the European leaders, among them the Kyriakos Mitsotakiscalled for a common front against Russia.
The big question is how third countries such as India and China will act in relation to the ceiling. The ideal condition would be for them to participate by shaping the final price together. It looks extremely dubious. The reshaping of the energy map is a fact and the geopolitical developments are expected to be huge in the coming period, as many countries will be asked to choose a side. Among them is Turkey, which continues its deals with Russia. Putin is already looking to other markets to secure buyers.
European gas prices have retreated from record levels in recent days, but are still more than four times higher than a year ago. In this environment, the debate about reducing the demand for natural gas has already flared up. It is a parallel action that the member states are asked to adopt in view of the winter. Intervention measures could be proposed by the EU. in the form of recommendations or otherwise by legislation that would encourage governments to intervene in the market. The other option would be to mandate all member states to intervene.
In France the government announced a subsidy of 30 cents a liter at the fuel pump while the Italian government – in the midst of an election season – is preparing to ask consumers to lower their thermostats by one unit and turn off radiators an hour earlier. Also on the table is the Iberian model, which foresees imposing a ceiling on the price of natural gas used for electricity generation. Also under consideration is the Greek proposal for the creation of two separate electricity markets, one for energy produced from fossil fuels and one from Renewable Energy Sources, with pricing based on the weighted average price that will result and not the most expensive one that applies today. The integrated European plan is expected to be developed at the Energy Ministers’ Summit that will take place next Friday.
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