Who pushes and who brakes on the roof at gas prices
According to Alberto Clò, director of the magazine Energia, the proposal for a European gas price ceiling is "inconsistent". Here because
To impose a price on the gas cap? And how? And who pushes? And will the desired objectives be achieved?
Interviewed by the daily Verità & Affari , Alberto Clò – editor in chief of the magazine Energia and former Minister of Industry in the Dini government – said he considered the proposal of the European Union to establish a ceiling on the prices of natural gas. In other words, a maximum limit which – in summary – should serve to protect consumers and businesses in the event that the interruption of supplies from Russia, the main supplier of the continent, would greatly increase the cost of fuel.
THE EUROPEAN (AND DRAGONS) PROPOSAL, IN BRIEF
The proposal was also pushed by Prime Minister Mario Draghi. In essence, the Union should assert its market power vis-à-vis Russia, whose economy depends on exports of hydrocarbons above all to European countries, and cannot immediately replace them with other equally profitable buyers . On the other hand, not even Europe is able to immediately replace the entirety of the volumes of gas it receives from Moscow.
According to Clò, however, it is "a project that I really want to see how they will follow up".
CLÒ'S OPINION ON THE ROOF TO GAS PRICES
The energy economist and former Minister of Industry explained in fact that "most of the gas imports" take place within long-term contracts that were stipulated some time ago, with different prices lower than the current ones. “Then there are the prices expressed by the stock exchanges […] that the financial market makes. So how do you put a roof on? ”.
Moreover, it is not governments that enter into contracts, but companies. “Once the gas price ceiling has been decided”, Clò rhetorically asks, “who goes to re-discuss this multitude of contracts?”: Individual companies, consortia of companies, national governments or even European authorities?
However, Europe is not united in the proposal to impose a gas cap. First of all Germany is against it, which fears – as Finance Minister Christian Lindner declared – that Russia could interrupt supplies. For Berlin, which is extremely dependent on it, it would be a great industrial and economic damage.
LIQUEFIED GAS AND ALGERIA
As for the LNG carriers that transport liquefied gas, then, they go where prices allow greater profits : if Europe imposes a maximum ceiling, therefore, they will head to Asia, where demand is very strong and prices are usually more higher than the European ones. In this regard, the Commission explained that, in the event of a disruption of supplies from Russia, it may be necessary to introduce an "administrative ceiling on the price of gas" at EU level, but only for a short period of time in order to "not compromise the ability of the European Union to attract alternative sources of gas supply via pipelines and LNG ”.
Clò also thinks that Italy and Europe will not be able to return from Algeria, which has undertaken to increase gas exports, and ask for a "discount", because it will be answered with a refusal.
THE EXTRA PROFITS
In the interview with Verità & Affari Clò also expresses reservations about the Draghi government's measure to tax the so-called " extra -profits", that is, the high profits recorded by energy companies in recent months due to the increase in the prices of raw materials.
The economist points out how however “even in this period in the energy sector there are those who accumulate huge profits but also those who face large losses, squeezed between old contracts and rising prices. What do we do with these companies? ”He asks.
“Any intervention at this level of the supply chain”, he adds, “could have problems of constitutionality”. Confindustria also said it considered the tax on extra-profits "at risk of constitutional challenges".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/tetto-prezzi-gas-favorevoli-contrari/ on Tue, 24 May 2022 07:13:49 +0000.