Stalemate on gas cap, as inflation soars

EU ministers agree on easy points of Commission’s energy proposal, but not on containing prices

European governments appear unable to come to an agreement on a practical way to control gas prices at a time when energy inflation is running at 41% in the eurozone – and 53% in Greece – reducing the real income of citizens, sharply increasing the cost of money, and pushing economies into a deadly stagflationary trap.

The Council of Energy Ministers reached consensus on the relatively simple issues on Friday, including targets for lowering power usage, recovering overpayments to energy providers, and imposing an extraordinary solidarity levy on other businesses like refineries. However, it remained divided on the proposal by Greece and 14 other member-states to cap gas prices, with other states led by Germany disagreeing.

According to Eurostat data, inflation in September in the eurozone soared to 10% while in Greece it stood at 12.1%.

The crucial issue of the gas cap is being promoted by 15 countries on the initiative of Greece, Italy, Poland and Belgium.

The Commission’s decision not to include their request in its plans for the forthcoming legislative proposal fomented strong resentment among its backers.

However, the Commission stood by its position, reiterating that a gas cap entails a high risk to supply and that it is a radical solution that would lead to a far-reaching intervention in the gas market, which would require lengthy preparations and a reduction in gas demand by member-states of much more than the 15% already agreed.

Instead, it advocated reducing consumption and renegotiating with reliable supply partners, such as Norway and Algeria, to achieve lower import prices.

“We had a frank discussion,” said Kadri Simson, European commissioner for energy. “While views differ across member-states, there’s also common ground. We agreed the market is not working normally and an intervention is necessary.”

She said the cap on wholesale gas prices is a legitimate proposal, but it needs a lot of intervention. Simson added that more information from member-states has been requested and “we have expressed our intention to apply a cap on gas used in electricity generation.”

Meanwhile, in a separate development on Friday, Bulgaria’s President Rumen Radev said in a statement that the Gas Interconnector Greece-Bulgaria will be inaugurated on Saturday.