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Germany Considers Extending Energy Price Caps Through March 2024

Germany is considering extending the price caps on gas and electricity prices until the end of the coming winter in March 2024, Reuters reported on Friday, quoting an unnamed source. 

Last year, Germany introduced a package of 200 billion euros for a so-called “defensive shield” to protect companies and consumers against the impact of soaring energy prices. At the end of September 2022, the German government said that it would ditch earlier plans for a gas levy on consumers and instead would introduce a gas price cap to curb soaring energy bills.   

The package has helped with the soaring energy costs at the start of last winter, when Germany lost all Russian gas pipeline supply via Nord Stream and energy commodity markets were highly volatile after the Russian invasion of Ukraine.  

Now the government plans to extend the price caps on gas and power and the European Commission is reviewing the measure, according to Reuters’ source. But Germany wants to end the sales tax cut for district heating and gas, due to more stable energy prices and a more austere budget, the source noted. 

Earlier this week, the chief executive of the country’s biggest utility, RWE, told German publication WirtschaftsWoche that gas supply disruptions continue to be a risk for Germany.

“We don't have any buffer in the gas system,” RWE’s chief executive officer Markus Krebber told WirtschaftsWoche, adding that Europe’s biggest economy must accelerate the construction of gas import infrastructure to avoid future shortages.

“If there is very cold winter or supply disruptions it can lead to very critical situations - and as a result to shortages and significantly higher prices,” according to RWE’s top executive. 

Krebber’s warning that Germany and Europe are not out of the woods yet echoes similar views from the German industry.

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The country continues to call on consumers to save gas and expects natural gas prices to remain high until at least 2027.  

By Michael Kern for Oilprice.com

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