Natural gas prices fell to their lowest level in nearly two months on Monday as the European Union began putting together a plan to deal with the ongoing energy crisis. EU members are also reportedly considering proposals to curb electricity demand.
On Monday, the EU presented a draft law that would cap the price of natural gas. The proposal also called on energy companies to make a “solidarity contribution” to relieve citizens.
Benchmark gas futures are down 9.3%, their lowest in a month, and prices are still nearly eight times higher than usual for this time of year. Goldman Sachs expects prices to halve by the first quarter of 2023.
Europe seems trapped in a natural gas quagmire following sanctions against Russia over its invasion of Ukraine. Since then, Europe has been looking for alternatives to Russian gas.
According to a recent report by the International Monetary Fund, natural gas prices quintupled between early 2021 and mid-2022. According to the report, the cost of living for European households has increased by almost 7% on average.
To alleviate the crisis, EU members are trying to limit electricity consumption while creating liquidity for the energy market.
Ahead of winter, with reduced supplies from Russia, the union is stockpiling gas and looking at ways to diversify its fuel sources.
Germany recently announced that two of its three power plants will remain available until around April 2023.
Finland’s state-owned natural gas transmission system operator said it aims to start importing liquefied natural gas via a planned floating terminal next January.
Meanwhile, Norway remains skeptical about price caps given the lack of supply.
“A maximum price would not solve the fundamental problem, which is that there is not enough gas in Europe,” said Norwegian Prime Minister Jonas Gahr Stoere.
In addition, EU officials remain opposed to a price cap for Russian gas only. Before the invasion, Russian gas made up 40% of the region’s supply. This proportion has now shrunk to 9%.
https://www.ibtimes.com.au/eu-powers-through-gas-energy-crisis-due-sanctions-russia-1838255?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution EU powers by gas, energy crisis due to sanctions against Russia