The EU Commission: the “ceiling on the price” of gas requested by Draghi is “Impossible”
The European Commission told countries during a seminar held on Monday that it is not possible to create a ceiling for gas prices, as previously requested by EU leaders. On the contrary, the EC has proposed a "market correction mechanism", that is, as desired by Germany, a system that simply "flattens" the maximum price peaks.
Earlier on Tuesday it was revealed that discussions on the gas price cap have dragged on for weeks, with no decision being reached – and that any deal that has been finalized will likely not include a cap on the price of imports, in particular. based on the options that the EC is currently considering. But if Tuesday morning was unlikely, it is now much less likely, indeed impossible, according to new Reuters sources described as diplomatic.
According to the European Commission, there is no way to cap the price of gas that does not affect existing long-term contracts.
The initial idea of a ceiling on the price of gas imports into the European Union was suggested by several EU members, including Belgium, Greece, Italy and Poland. The European Commission, the executive arm of the European Union, has never been in favor of the idea of a gas price cap.
However, it agreed to discuss it with the leaders of the member states and did so for weeks. Since those talks, however, the EC concluded that there was no way to implement a gas price cap in order to preserve existing long-term contracts.
In its place, a market correction mechanism is being evaluated, which would be nothing more than a substitute for interventions on the stock exchanges of various authorities, such as Consob, which intervene when prices appear excessively unbalanced on a security, blocking its exchanges.
More than half of the EU Member States supported the idea of a gas price cap, but in the EU it goes by weight, and Germany is worth more than everyone else. The other options to mitigate Russia's revenues from natural gas sales without freezing Europe that were already on the table were a joint gas purchase agreement and a reduction in gas demand.
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The article The EU Commission: the “Price ceiling” of Gas requested by Draghi is “Impossible” comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-commissione-ue-il-tetto-al-prezzo-del-gas-chiesto-da-draghi-e-impossibile/ on Wed, 09 Nov 2022 09:00:57 +0000.