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Tuesday, November 29, 2022

Imposing a Petrol Price Cap Would Be Dangerous: EU

15 of the EU's 27 member states this week requested the EU to impose a cap on gas prices

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BELGIUM. Brussels: In response to appeals from nations for Brussels to intervene to control excessive fuel costs, the European Commission has warned EU nations that a wide ceiling on gas prices could be difficult to implement and present dangers to energy security.

After 15 of the EU’s 27 member states this week requested the international organization to impose a cap on gas prices, the Commission this week shared a document with countries that examined potential possibilities the EU may take into consideration to lower high gas prices.

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Price signals would no longer contribute to directing flows to areas with high demand or limited supply, the Commission claimed, explaining why.

It stated that implementing such a price ceiling would require the creation of a new organisation to distribute and transport limited petroleum supplies across states.

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According to the Commission, the international organization would also require “substantial financial resources” to guarantee that countries could continue to draw gas supplies from globally competitive markets where other purchasers could be willing to pay prices beyond the EU ceiling.

The “risk of triggering supply disruptions” from overseas providers would be greater with a broad wholesale gas price cap than with a cap on pipeline deliveries, it was claimed.

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The Commission suggested that the the international organization’s bargain with “trusted” suppliers to lower prices and claimed that cooperative gas purchasing may support equitable supply sharing across nations.

On whether a comprehensive gas price cap will reduce the supply shortage and energy price spike brought on by Russia cutting off supplies to Europe, EU member states differ.

In an effort to slow the rate of inflation, France, Italy, Poland, and 12 other nations pushed Brussels to propose a restriction on the price of wholesale gasoline on Tuesday. Those who disagree include Denmark, the Netherlands, and Germany.

Also Read: EU-rightist Tension Increases as Italy’s Election Campaign Ends

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