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The European Commission, the EU’s executive branch, is considering joint purchases of gas supplies in order to avert another natural gas crisis, Bloomberg reported on Friday, citing a source with knowledge of the draft proposals in the bloc’s ‘toolbox’ to alleviate the impact of record-high gas and power prices.
The benchmark European gas prices continued their rally last week, surging to new record highs on Tuesday to an equivalent of $205 a barrel oil, amid a wider energy commodity rally driven by supply concerns ahead of the winter. The gas price at the Dutch TTF hub, the benchmark gas price for Europe, even topped 160 euro per MWh on Wednesday, before falling back toward 100 euro per MWh.
Early on Friday, the benchmark European price was the equivalent of $200 oil, as per Reuters calculations based on the relative value of the same quantity of energy from each source.
As Europe’s benchmark gas prices hit record highs amid tight supply, the European Union is looking at a single-market response to the surging energy prices, European Energy Commissioner, Kadri Simson, said on Wednesday.
“The Commission will present next week a toolbox of measures Members States can take in line with EU law, both short and medium term,” Simson told the European Parliament on Wednesday.
“More ideas have been put forward by the Member States and members of the Parliament, such as forms of joint purchase of emergency gas reserves. We are analysing all of them,” the energy commissioner added.
According to Bloomberg’s source, joint purchase of gas is just one of the measures that the European Commission will review and put to discussion at an EU leaders summit on October 21 and 22. The other proposals to cushion the impact of the soaring prices and low gas stockpiles include tax exemptions, energy price caps, tax breaks for companies and households, encouraging long-term power purchases of renewable energy, and emergency income support to the most vulnerable households.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com