Oil market analysts continue to…
A research team from City…
Australia has joined the club of countries imposing price caps on energy commodities with a ceiling on gas and coal prices, announced today by Prime Minister Anthony Albanese.
The price of natural gas will be capped at $8.15 (A$12) per gigajoule and at $85 (A$125) per ton of coal and the cap will be in effect for a year. The government will provide additional support for coal miners who have higher costs than the cap, the Prime Minister also said.
"Extraordinary times call for extraordinary measures, and we know, with the Russian invasion of Ukraine, what we've seen is a massive increase in global energy prices," Albanese told media, as quoted by Reuters.
The price cap comes in spite of warnings from the gas industry that this would discourage investments in future supply. In addition to the cap, the government will provide financial aid to households and businesses to the tune of $810 million (A$1.2 billion).
Meanwhile, the European Union appears to be moving further from instead of closer to a deal on its own gas price cap. While 15 members have insisted on a price cap in order to relieve the financial burden on their populations, another six member states including Germany, the Netherlands, and Estonia, have put their foot down with regard to the level of the price cap.
For the 15, the current level proposed by the European Commission is too high and as such likely to make the cap pointless. For the six opponents, however, any lowering of the cap level is concerning.
"We are concerned by the lowering of the figures. The figures of the [gas price cap] ceiling and the triggers cannot be lowered any further or replaced," the ambassadors of the six wrote in a letter to the Czech Republic, which currently holds the EU presidency, Reuters reported.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.