MOSCOW (Pakistan Point News / Sputnik - 24th November, 2022) After months of deliberations, the EU's executive presented its vision of a cap on runaway natural gas prices that is so ludicrously high it could never cap anything, Damien Ernst, a professor of geopolitics of energy, told Sputnik.
The European Commission's answer to sky-high energy costs revolves around capping future gas prices at 275 Euros ($285) per megawatt-hour. The limit will kick in if the front-month price on the Dutch gas exchange TTF exceeds that price for two weeks and if at the same time TTF prices are 58 euros higher than the liquefied natural gas global reference price for 10 consecutive trading days.
Ernst, from University of Liege and Institut Polytechnique de Paris, estimated that the present market price of about 112 euros per megawatt-hour was already too high, whereas at 275 euros it could potentially shut the European industry and cause the EU economy to collapse. A price cap of 150 euros per megawatt-hour would not have sounded so ridiculous, he suggested. Anything above 250 euros is a non-cap.
"The stratospheric level of this price cap shows that the Eurocrats don't think before deciding 'to prevent sky-high costs for consumers'... So clearly, the European Commission has realized that this price cap idea is totally impossible to apply and they try not to lose face by announcing a totally unrealistic cap," he said.
But even if they were actionable, the EU's gas price rules could be bent easily through supplement payments on different invoices. They could also force gas suppliers to sell elsewhere, the expert warned.
"For Europe, that is shooting once more in its foot; European countries still import Russian gas through the TurkStream pipeline, but the pipelines through Ukraine to Slovakia or Moldova are or could be permanently shut down. The European announcement of such a bloated gas price cap is simply pathetic," Ernst said.
