EU Eyes November Deal To Tackle Runaway Gas Prices

The European Union (EU) will push for a November deal on more emergency measures to tackle ultra-high gas prices, officials confirmed, even though countries still disagree on whether to cap gas prices.

The bloc is bracing for a winter of scarce Russian gas supplies and ultra-high energy costs, and is considering gas price caps to both tame spiralling costs and slash Kremlin war revenues.

Energy ministers from across the continent will meet in Prague tomorrow to discuss their next move.

Czech Republic, which currently chairs meetings of EU ministers, will then call an emergency energy ministers’ meeting in November to approve the proposals, according to news agency Reuters.

This follows the EU signing off on emergency energy windfall profit levies, gas storage filling obligations, and electricity demand curbs in recent months.

Gas prices have risen in in 2022 to all-time highs and remain historically elevated

(Source: Dutch TTF Futures/ICE)

Gas prices have spiked this year to all-time highs, putting immense pressure on the EU amid rebounding post-pandemic demand.

The bloc has topped up storage to over 90 per cent of capacity, with Russia squeezing supplies into the continent by turning off the taps into the now-damaged Nord Stream pipelines and halting flows via Ukraine in a dispute with state supplier Naftogaz.

Russia’s actions are widely considered to be retaliation to Western sanctions targeting financial institutions, energy supplies and oligarchs since the country invaded Ukraine in February.

This has raised concerns of supply shortages and blackouts, with high energy prices exacerbating other challenging factors such as nuclear outages in France and droughts at hydroelectric dams in Norway.

While a majority of EU states say a gas price cap should come next, countries disagree on whether it should apply to all trades, long-term contracts, or simply gas used to produce electricity.

Others countries including Germany and the Netherlands, remain opposed.

Compromise measures could ease gas crisis

Ministers will also discuss joint gas buying among countries, and the potential to lower prices with non-Russian suppliers, as ways for the EU to tame spiralling energy costs.

A senior EU official told Reuters they believed countries were leaning towards the “Iberian model” of capping the price of gas used for power generation.

Spain and Portugal have limited the price of gas used in power generation in June, which has helped curb local power prices.

The idea has gained support among other countries, although EU energy comissioner Kadri Simson is concerned it could raise the bloc’s energy demands and put pressure on tight supplies.

Spain’s gas use increased under the measure, with the region home to numerous liquefied natural gas terminals, which many EU countries lack.

Related: Russia’s Soaring Defense Spending Is Unsustainable

Countries would also need to determine how to compensate gas plants for the gap between the capped price and the higher market price at which they buy fuel.

It could be funded through public support, borrowing or a levy on other energy generators.

Meanwhile the UK is pushing to secure a massive, 20-year gas deal with Norway to meet its energy demand.

By CityAM

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