Europe plans to cap gas prices

The European Commission is making progress on the subject of gas price controls. Thus, the European body has proposed a mechanism to cap the price of the gas market, as reported The echoes. This announcement was eagerly awaited by the Member States of the European Union faced with the energy crisis. The stated objective is clear: to avoid price peaks, favored by speculation. Currently, the megawatt hour is around 110 euros.

In reality, it is not a mechanism for regulating the gas market, but rather a way of imposing a dissuasive cap. An expert, quoted by Les Échos, details the idea put forward by the European Commission: “Ideally, it would never be activated, because the market would have understood that Europe is not ready to pay any price at all. any time.”


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A fixed ceiling

Concretely, how does the device imagined by the European body manifest itself? He is interested in one indicator in particular, reveals Les Échos: the one-month contracts of the TTF hub of rotterdam. Indeed, it is generally used as a reference indicator. When it exceeds the ceiling, which has yet to be set by the European Commission, the European Union will then set a limit. However, the price of gas must imperatively be higher than that of liquefied natural gas (LNG). This is the essential condition so that the cargo ships of LNG are not abandoning European ports.


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In order to trigger this device, there is no need for a political decision. It will fall to Kadri Simson, the Energy Commissioner. According to the Commission, this will make it possible to move more quickly, always with a view to ensuring visibility for players in the gas market. However, the Commission reserves the right to suspend the system, in the event that the continent’s security of supply is threatened.

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