EU county energy ministers met on Friday in an emergency setting to discuss capping the price of Russian gas but ended the meeting without an agreement, according to a draft meeting summary seen by media.
The issue of capping the price of Russian gas was discussed, and it was agreed that proposals for capping should be delivered by mid-September, stating that “further work is needed” on the possibility of such a gas cap measure.
While EU energy ministers appear divided on the subject of capping Russian gas prices, the group reportedly remains committed to working towards a solution to their citizens’ exorbitant energy bills, adding that there was broad support for saving utility companies from the difficult economic conditions.
Other measures the group discussed include decoupling the price of gas from other less expensive energy sources.
The group will now work on drafting proposals for how a Russian gas price cap would work, although some in the group expressed there was an urgency required for such an agreement and the subsequent required action.
For example, the Czech Industry Minister Jozef Silkela said, “We are in an energy war with Russia. We have to send a clear signal that we would do whatever it takes to support our households, our economies.”
The countries that support a price cap include the Baltic states—which are not as reliant on Russian gas as some of the other states that are more reluctant to employ any measure that could incite the wrath of Russia, which has already promised to cut off the gas flows completely should a price cap be employed.
A draft proposal seen by Reuters indicated that it would cap revenues from non-gas producers (coal, wind, nuclear) at 200 euros per MWh. Power prices are set by natural gas power plants—the excess revenues above the cap from the non-gas power plants would be used to subsidize energy bills for consumers.
By Julianne Geiger for Oilprice.com
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The result will be more rises in oil and gas prices and more pains for European customers whilst Russia will be laughing all the way to the bank.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert