Gas, rising prices are emergency: this is how the EU tries to lower prices and what will happen from August


Gas, rising prices are emergency: this is how the EU tries to lower prices and what will happen from August
Written by aquitodovale

THE gas prices continue to rise. L’EU try to run for cover, especially in consideration of a possible further reduction of Russian supplies: the Commission is thinking about the steps to be taken to stem the rise in prices and among the hypotheses the price capthe ceiling on the cost of gas that the Prime Minister, Mario Draghi, would like to introduce immediately.

The times will certainly be longer, but in the meantime also the European Commissioner for Competition, Margrethe Vestagerconfirms that the EU is working to find a solution that avoid the extreme rise in gas pricesbut also to avoid the risk of hydraulic, solar or wind energy becoming as expensive as gas.

Concrete steps forward could come in the second half of Julywith a plan that the Commission is preparing in these days and will probably discuss before the summer break. On the other hand, the situation is becoming increasingly critical, with the increase in prices recorded in the last few hours and with the risk of heavy consequences also in the next few days. Let’s see what the EU is thinking about and what will happen in the coming weeks on the gas.

What the EU will do on the price of gas

The EU is evaluating the energy package to introduce to try keep prices down. The measures will certainly concern gas, but also fuel and electricity. The hypothesis is to start from the model of Iberian price capalready in force in Spain and Portugal, but going to review the most critical points.

Roof on the price of gas, when it could arrive

The decision of the community executive should not come before second half of July. According to the Republic, the date to be marked is that of 20 July, when there will be the last call of the Commission before the holidays. The EU wants to be prepared for August, because at that time there are fears that Russia could increase the pressure, perhaps by shutting down other supplies. Furthermore, the date of the embargo on coal would be approaching more and more, as well as the arrival of winter and the period in which we will see what the EU has managed to do for the gas stocks.

The ceiling on the price of gas

Draghi continues to push for the ceiling on the price of gas. The discussion is open on the possibility of supporting suppliers through a public contribution, which would however be very expensive for countries like Italy and Germany, which are more dependent on foreign gas.

We must then avoid another backlash already seen in Spain and Portugal, where gas consumption exploded. Furthermore, the mechanism could cover all energy sources, giving priority to renewable. The final goal – but it must be understood how to achieve it – is to keep the costs of raw materials and electricity lower.

How gas prices will change

The concern of all European countries is that the gas price may continue to rise. The risk is that other cuts will come from Russia that could drive prices up further. This increase would also affect exports from AlgeriaCongo and all the other countries on which Italy is now focusing with the new agreements.

Another problem could come from the closure – for scheduled maintenance, according to the official version – of the pipeline Nord Stream from 11 to 21 July. Even this closure could lead to a further price increaseas also underlined by the Minister for Ecological Transition Roberto Cingolani.

Prices are already rising: only yesterday by more than 10%. The strike that started in Norway with the risk of a 13% reduction in exports does not help. Plus it also dropped the arrival of LNG from the United States. Added to this are the fears related to the situation in North Africa, starting with the Libyan one where chaos has returned to reign. A series of factors that could lead to a new increase in gas prices.

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