EU Tells Countries Gas Price Cap Would Come with Risks

The European Commission has warned EU countries that a broad cap on gas prices could be complex to launch and pose risks to energy security, amid calls from countries for Brussels to step in to tame high fuel prices, Reuters reported. The Commission shared a document with countries on Wednesday, analysing various options the EU could consider to curb high gas prices, after 15 of the bloc's 27 member states this week urged the EU to propose a cap on gas prices. The document, seen by Reuters, said a wholesale price cap for exchange transactions - covering both liquefied natural gas and pipeline supplies - could disrupt flows of fuel between EU countries. That's because price signals would no longer help drive flows to regions where demand is high or supply scarce, the Commission said. It suggested such a price cap could only work if a new entity was launched to allocate and ship scarce fuel supplies between states. The EU would also need "significant financial resources" to ensure countries could keep attracting gas supplies from competitive global markets where other buyers may be willing to pay prices above the EU cap, the Commission said. It did not specify where such resources could come from. Read more.