The European Commission has proposed to EU Member States to introduce a gas price correction mechanism. This would allow the Commission to temporarily apply a price ceiling in periods of exceptionally high prices on the European gas market. The European wholesale price ceiling must be defined in advance, the benchmark should be the price of LNG on the world market. The ceiling should be adjusted on a monthly basis.
In its plan, the Commission writes that the correction mechanism should enter into force as soon as the gas price on the main gas market in Amsterdam exceeds the maximum. It would also be automatically deactivated again. With the introduction of the mechanism, the Commission wants to prevent suppliers from selling their gas elsewhere, which would jeopardize supplies to the EU.
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Market intervention
EU leaders have called on the European Union’s executive board to present legislative proposals to bring down high energy prices. The 27 member states agree on a number of measures, such as joint buying. But a number of member states are calling for a price cap, while a number of other countries – including the Netherlands – are reluctant to intervene in the market.
Under the new plan, the committee is trying to get everyone on the same page before making legally binding proposals. According to insiders, there is still a lot of data missing and there is no impact analysis, as requested for example by the Netherlands. Next week EU energy ministers will meet to discuss the issue.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
