EU states approve gas price cap
After months of wrangling, the EU member states have agreed on a gas price cap of 180 euros per megawatt that would apply under certain conditions. The price limit is intended to protect customers from soaring energy costs as of mid-February 2023, but can be suspended in the event of shortages.
Prague's clever strategy
Commenting on Germany's position, Deník says:
“The magic of majority decision-making, which Chancellor Scholz praised so much in his great speech on Europe in Prague, has turned against Germany. Because not even the Federal Republic, as big as it is, has a 'blocking minority' per se. And in the gas deal, Berlin's last allies disappeared like steam from a pot. Moreover, the Czech Republic's tactic of putting together a package that sweetens inconveniences on one issue while offering advantages on another has paid off. ... It is the best ending we could have wished for after an extremely dramatic year.”
The South got its way this time
El País observes that Southern Europe is gaining more weight in the EU:
“This is an unprecedented measure that was unthinkable just a few months ago, and a new example of the EU's radical change of course, which represents a victory for the South and the periphery. The position of Spain, the most belligerent country and leading voice on the issue, has been particularly reinforced. The times when northern countries systematically won all economic battles within the EU are long gone. From a purely economic perspective the mechanism provides an additional line of defence against speculation and against a possible price increase next summer when the time comes to fill the storage facilities for the winter of 2023.”
Both a victory and a defeat
La Repubblica is of two minds about the deal:
“A victory against Russia, a defeat for European energy policy. A victory because the European Union has once again joined forces to counter Russian expansionism, as it did with the sanctions and the arms deliveries to Ukraine. ... The gas price cap is a defeat for EU energy policy because it doesn't promote the search for alternative sources but merely shifts supply. Russia will be replaced by Algeria, Qatar, the United States and Norway. ... It would have been better to create incentives for the energy turnaround, namely for the use of renewable energies.”
Better not to activate it at all
The gas price cap is nothing but a dangerous pseudo-solution, the Süddeutsche Zeitung argues:
“Artificially low prices could fuel demand even though Europe needs to economise. At the same time, producing countries could divert their tankers of liquefied natural gas to better-paying customers. ... The compromise currently provides for a fairly low limit, but it is linked to tough clauses to protect supplies. If the cap leads to a significant increase i in consumption or restricted supplies, it will immediately be suspended again. However, it would be better if this unfortunate cap wasn’t activated in the first place.”
Speculation likely
The business portal Portfolio does not rule out future price increases:
“A price cap of 180 euros could act as a significant constraint on market transactions, given that the price on the TTF exchange jumped to about that level late last year and rose even further this spring after the war broke out. ... At present, the market price is at a 'comfortable distance' from the new price ceiling; however, such market barriers may at the same time encourage speculators to test the reaction of policymakers.”