With gas prices surging, Members of the European Parliament have called for an investigation into market manipulation from state and non-state actors, and into the EU carbon market speculation to measure the impact that both factors are having on prices.
During the debate between the European Parliament, Commission and Council in plenary on October 6, many MEPs insisted on the need for immediate measures to protect the most vulnerable from rising bills, the EU Parliament said in a press release.
Gas prices in the EU surged to record highs on October 1 as Russian gas monopoly Gazprom has been fulfilling its sales obligations under long-term contracts but has not increased deliveries, signaling further price pressures on European consumers ahead of the winter.
MEPs have accused Gazprom that it is pushing up gas prices in Europe. Russia is Europe’s biggest gas supplier, contributing 43% of the EU’s gas imports last year.
An unnamed official has warned about Russia’s “weaponization” of energy, telling New Europe all it takes is “a Russian claim of some production problems combined with a few “predictions” of cold winter and Europeans will be scampering around like ‘frightened children’”.
During the plenary debate, Energy Commissioner Kadri Simson said the EU should react in a quick and coordinated manner and highlighted the measures already at the disposal of member states to help vulnerable households and SMEs. The European Commission will also propose, before the end of the year, to reform the gas market to make it more resilient to price hikes.
Several MEPs called for gas storage capacity to be boosted, and for common gas purchase programs to be set up – replicating the model used for vaccines – and for the Green Deal to be used as an opportunity to improve energy security and independence. Other MEPs said that the crisis is the result of a market-based approach to energy and the action of market speculators and called for energy prices to be capped.
MEPs also confirmed their position on draft legislation aiming to update the criteria and methodology for selecting energy projects of common interest (PCIs). These include projects like high-voltage transmission lines, pipelines, energy storage facilities or smart grids, which would benefit from fast-track administrative procedures and be eligible to receive EU funds.
Simpson said the European Commission is looking into complaints by some EU countries that Russia is using its position as a major supplier to propel the soaring price of gas in Europe. “We are looking into this claim, together with Executive Vice President Vestager, who is responsible for competition rules, because it is of course a very serious matter,” Simson told Reuters, referring to EU antitrust chief Margrethe Vestager. “Our initial assessment suggests that Russia is fulfilling its long-term contracts,” she said in written responses to questions.
Meanwhile on October 6, Russian President Vladimir Putin said Russia will exceed the contracted volume it sends via the Ukraine pipeline system to send more gas to Europe ahead of winter. “Moscow also considers it has also made the case for Nord Stream 2 – that point could not be clearer after supply concerns caused this year’s huge gas price rise,” Chris Weafer, co-founder of Macro-Advisory, argued. “Gazprom is confident it will be able to send 5 Bcm through the new pipe before the end of the year.” Putin’s statement is already generating some price reductions.
Moscow is awaiting regulatory approval for the controversial Nord Stream 2 pipeline from Russia to Germany to start pumping gas to Germany. Opponents say Russia has applied pressure to try to speed up the project’s approval, by not supplying extra gas to Europe as prices have surged.
Russian gas supplies via the Yamal-Europe pipeline fell on October 1 by almost 77% from September 30, according to data from grid operator Gascade, as Gazprom booked only a third of its available capacity for October, Reuters reported. “Gazprom’s decision not to book for October the full capacity available at one of the main pipelines that delivers gas to Germany poses an increased tightening risk to north-western European gas balances and, hence, further upside risk to TTF prices this winter,” Goldman Sachs said in a note.
The November gas price at the Dutch TTF hub, a European benchmark , hit an all-time high of 97.73 euros per megawatt hour (MWh) earlier on October 1, up around 400% this year, before easing slightly.
Following a meeting of the Finance Ministers of the euro area on October 4, Eurogroup President and Ireland’s Finance Minister Paschal Donohoe said the issue of rising energy prices is a key concern for the European Union, entailing wide-ranging economic and social consequences.
“The issue of rising energy prices is broad, and it is multifaceted. Our exchange of views today focussed on the consequences for inflation and for budgetary policy within the euro area. There are also many other viewpoints, such as energy security, which belongs to other ministers and to other Council configurations,” Donohoe said.
“This is an issue that is indeed touching all Europeans, citizens and businesses and, small and medium-sized businesses. So that’s why we agreed on the need to monitor the evolution of energy prices and to factor this into our budgetary policy-making to ensure it doesn’t compromise the recovery that is now taking hold,” he said.
“We were in full agreement today that the current situation does not undermine our ambitious climate objectives. The green transition is not the problem, it is part of the solution. We need to maintain and find opportunities to speed up our efforts to improve energy efficiency, develop renewables and low carbon sources of energy so as to reduce our reliance on imported energy,” the Eurogroup president said.
France and Spain on October 4 called for a coordinated European response to the surge in global energy prices. One of the ideas reportedly suggested by Spain was to set up a strategic European gas reserve, which would help the EU negotiate lower prices.