Ursula von der Leyen, the President of the European Commission, proposes to cap the price of Russian gas. What does it mean ? The eco decryption of Fanny Guinochet.
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“From now on, we will buy your gas for so much, and not a penny more.” The idea is that the 27 countries of the European community agree on a common price, which they will not exceed. Unity being strength, this should normally pull prices down and stop soaring gas prices. As with the group purchases that the European Union had made at the time of Covid for vaccines, this mechanism had enabled it to pay less for doses from manufacturers. But capping prices is also putting pressure on Vladimir Putin to reduce the income that Russia earns by selling its gas and thus financing its war in Ukraine.
It’s an arm wrestle. Vladimir Putin did not like it and he warned: in the event of a price cap, he will cut off deliveries of gas but also of oil. The threat is not new, since the Russian supplier Gazprom has already stopped deliveries. Europe ensures that it is not serious, Russia only counting for 9% of the gas it imports – against 40% at the start of the war.
The European Union is also considering capping the price of electricity, probably at 200 euros per megawatt hour. Brussels talks about electricity produced via wind power, nuclear power plants or coal. For the moment, there are few details on this proposal but it would be a question of setting up, on a European scale, a tariff shield on electricity.
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If the price of electricity exceeds 200 euros per megawatt hour, the European Union could support the difference to protect the consumer. All these suggestions will be discussed on Friday, September 9, during an extraordinary council which will bring together European energy ministers. The risk is that the countries of the Union will not be able to reach an agreement.