European Commission undecided about gas price cap

The EU-faced energy crisis keeps simmering. Brussels is looking and working across to reduce it a bit. But the European bureaucracy’s mediocre political course averts any effective and reasonable means, as anti-Russian sentiments prevail in Brussels, along with the notorious goal of abandoning energy coming from our country. Therefore, head of the European Commission Ursula von der Leyen’s annual speech at the European Parliament on September 14 expectedly focused on EU’s energy security and anti-crisis initiatives. The tone of her theses was clear – to swiftly suppress energy reliance on Russian hydrocarbons.

Von der Leyen particularly noted that European underground storages are 84% full, although this won’t help deal with Russian energy dependence, which she urged to keep combating.

The official promised to come up with a plan to deeply reform the EU energy market, including attempts to loosen links between regional gas prices and quotes at the Dutch TTF hub. According to von der Leyen, the reform will provide for separating electricity pricing from traditional and alternative energy sources.

European Commission head also noted the EU expected to get over €140 billion by limiting the income of low-cost electricity producers to mitigate inflation shocks for EU citizens. "In our social market economy, profits are good. But in these times, it is wrong to receive extraordinary record profits," she summed up when addressing the European Parliament.

The EC offers to impose a temporary tax on fossil fuel producers. Von der Leyen has once again urged to shrink energy consumption, while the EU keeps working out a plan to introduce a gas price cap, certainly a temporary one, she stressed.

By the way, it is her who proposed gas price limits in early autumn. Still, the EU energy ministers failed to agree on the issue at their emergency meeting of September 9. As Italian Minister for Environmental Modernization and Transformation Roberto Cingolani clarified, the idea of introducing a general gas price cap is supported by a dozen EU countries, with several states (including France and Estonia) saying it should affect Russian energy alone. Five more countries are opposed or undecided, among them Hungary.

September 14 saw members of the European commission once again fail to reach an agreement because of energy crisis escalation fears during the upcoming cold season. A sobering message by Russian President Vladimir Putin also proved efficient. When commenting upon the Western price cap plans for Russian hydrocarbons during the WEF plenary session, he said Russia would respond with ceasing supplies to all the advocates of the move. Britain’s The Telegraph has drawn similar conclusions and considered the Russian leader’s warning a motive for the European Union to abandon the idea.

By the way, the EU and American LNG exporters have criticized the "restrictive" idea over just fears that Europe may taste blood in the follow-up.

There are no prerequisites for the European Commission’s success when combating gas shortages. Brussels' stake on an imminent replacement of Russian pipe gas with "overseas" LNG is highly doubtful. In Gazprom's vision, huge volumes will appear in Europe in 2025 at the earliest. As Deputy Chairman of Gazprom Management Committee Oleg Aksyutin said during the St. Petersburg International Gas Forum, energy competition between Europe and Asia will entail increased LNG prices and less availability of the resource. According to him, the issue could be solved by launching the newest Nord Stream 2 pipeline halted some three quarters ago.