Italy proposes to slash Europe's gas price cap
Photo: Gas prices in Europe may be frozen at 60 euros (Getty Images)
The European Union should extend the emergency gas price cap and set 60 euros per megawatt-hour. This is necessary to prevent a possible energy price shock, according to Italian Energy Minister Gilberto Pichetto Fratin, Reuters reports.
The EU gas price cap expires at the end of this month and will apply only if European gas prices exceed 180 euros per megawatt-hour, a level that has not been reached since the first days of the Russia-Ukraine war.
“I think the EU should at this point renew the price cap but not at 180 euros, now it should be set at 50 or 60 euros,” the Italian minister said.
Italy has enough gas reserves to last for the next two months without interruptions.
“I reassure everyone, we have no problems. The country's gas storage system is filled to at almost 80%," he said.
European gas prices are hovering around a 14-month high of 50 euros per megawatt-hour (about $545 per thousand cubic meters). This year's cold weather has caused storage facilities to be depleted at the fastest rate since the Russian-induced crisis began.
The region's storage facilities are now about 72% full, compared to 86% at the same time last year. Yet, there is no risk of an immediate shortage in Europe.
On January 1, Ukraine refused to renew its gas transit agreement with Russia and turned off the gas tap, marking the end of decades of Moscow's dominance in European energy markets.
According to the European Commission, the termination of Russian natural gas transit through Ukraine on January 1, 2025, will have a “marginal” impact on European prices. The end of the transit agreement has already been factored into winter gas prices.
