The presidency does not want to discuss the issue of Russian gas price ceilings on Friday. Excluding this point is reasonable, its implementation would make gas in the EU more expensive

The presidency does not want to discuss the issue of Russian gas price ceilings on Friday. Excluding this point is reasonable, its implementation would make gas in the EU more expensive
The presidency does not want to discuss the issue of Russian gas price ceilings on Friday. Excluding this point is reasonable, its implementation would make gas in the EU more expensive

The Czech Presidency of the EU will try to ask the single minister of the EU countries responsible for energy to remove the ceiling on the price of gas imported into the EU through gas pipelines from Russia. It is a reasonable death. Capping the price of imported Russian gas would very likely lead to the fact that Russia will stop supplying it to the EU entirely. Russia now delivers gas to the EU through the transit pipeline through Ukraine and the TurkStream gas pipeline from Armenia.

If the EU were to try to cap the price of Russian gas, Moscow would therefore completely deprive its main recipients, i.e. Slovakia, Austria, Italy and Hungary, of gas supplies. Budapest only supported the ceiling on the price of Russian gas, or on the contrary, in August, it negotiated an additional supply of Russian gas beyond the term of its long-term contract with Russia’s Gazprom.

If the Czech Presidency succeeds in removing the price ceiling for Russian gas from one point, it will be quite the same darkness how to relieve households and companies in the EU from expensive energy. It must be noted that a ceiling on the price of imported Russian gas would, at least temporarily, lead to a dramatic increase in the price of gas in the EU, which would kill the effort to relieve people and companies from expensive energy.

In the evening, two possible ways to relieve people and companies in the EU from expensive energy will be discussed. In the end, it should be decided here whether the EU will cap the price of gas for electricity production, and vice versa, cap the profit of other sources of electricity, not gas.

The first route, the Iberian exception (which has been applied by Spain and Portugal since the spring, based on an exception from the European Commission), does not lead to dreams of gas consumption. The type, Brussels, proposed by the European Commission and supported by Germany and France, does not reduce the price of electricity, gas consumption does.

The Iberian way means that the taxpayers themselves will pay for help with expensive energy, through external public debt. The Brussels way means that help with expensive energy will be paid for by the profits of domestic, solar, but also hydroelectric and nuclear power plants, without incurring public debt. The Brussels route is not compatible with the applicable tax on foreign profits, the Iberian route is compatible with it.

In Friday, the Czech presidency will also propose the release of EU emission allowances from the reserve into circulation, which helped to lower their price. Poland wants to cap the price of allowances at 30 euros per piece. The manor demands the roof.

Luk Kovanda, Ph.D.

Chief Economist, Trinity Bank

TRINITY BANK

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More information at: www.trinitybank.cz

The article is in Czech

Tags: presidency discuss issue Russian gas price ceilings Friday Excluding point reasonable implementation gas expensive

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