Belgian Prime Minister: Either we do something about energy prices or we deindustrialize Europe
The European Union must act quickly in the gas and energy markets, including by imposing a cap on wholesale gas prices, to avoid a spiral of deindustrialization and social unrest amidst skyrocketing energy prices, he said. Belgian Prime Minister Alexander De Croo to the Financial Times in a comment posted Thursday.
The EU will seek to reform the electricity market to decouple the dominant influence of gas on the price of electricity, European Commission President Ursula Von der Leyen said in mid-September.
"These are all emergency and temporary measures that we are working on, including discussions on price caps," said the Commission President, without referring to specific price caps for gas or just for Russian gas.
Commenting on the need to take measures as soon as possible, the Belgian De Croo told the FT that if the EU does not intervene in the gas market, "we risk a massive deindustrialization of the European continent, the long-term consequences of which could be very profound" .
The energy crisis is already pushing Germany – Europe's largest economy – into a recession that will worsen with the arrival of the winter months, amid the energy and natural gas crisis. Across Europe, industries are forced to reduce or shut down production due to soaring energy prices.
The prime minister of Belgium, who has been one of the EU member states calling for a gas price cap for months, said the EU could impose a hard cap on Russian gas and a flexible cap on LNG imports, which it would still be high enough to incentivize LNG exporters to bring it to Europe.
So far the European Commission has been reluctant to propose a gas price cap precisely because of the fear that, by limiting the price, LNG exporters will avoid Europe and sell their cargoes to Asian customers.
Ben van Beurden, chief executive of Shell, the world's largest LNG trader, admitted this earlier this week. A cap on gas prices would make Shell and other traders' efforts to bring more LNG to Europe much more difficult, he told the Energy Intelligence Forum in London on Tuesday. “We will do our best to get gas to Europe where it is needed, but if there is no market signal it will be really difficult,” said van Beurden.
The problem is precisely this: the prices are high above all because the material to be supplied is scarce. Speculation has a role, but a limited one, gas is a scarce product, and energy in general is likewise. An answer to the problem cannot come only from pricing policies, but from a forced increase in supply. It is a pity that European leaders, now stunned by finance and forgetting the real economy, do not realize it.
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The article Belgian Prime Minister: either we do something for energy prices or we deindustrialize Europe comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/primo-ministro-belga-o-facciamo-qualcosa-per-i-prezzi-energetici-o-deindustrializziamo-leuropa/ on Thu, 06 Oct 2022 14:00:53 +0000.