EU Summit: No Agreement on Gas Price Cap

Photo: Reuters [via Al Jazeera]

The Facts

  • After a two-day summit in Brussels, EU leaders announced on Friday that they had put together a "roadmap" to lowering energy bills but have yet to reach an agreement on a gas price cap. The meeting comes amid soaring energy costs from the war in Ukraine.

  • Before the conflict, the EU reportedly received 40% of its gas from Russia, but in July, it cut this down to 15%. This saw Moscow slash supplies, exacerbating the increase in prices. At the end of August, EU gas prices hit more than $335 per megawatt-hour — a record high.

The Spin

Narrative A

Though experts are still struggling to analyze the impacts of a price cap given the varying schemes and provisions that have yet to be decided, the EU must agree on a cap. The critical problem, however, is that there is a shortage of energy, and time is running out before cold weather sets in. Something needs to be done.

Narrative B

A price cap on gas is expensive, and subsidizing even a slice of Europe's current gas consumption would cost hundreds of billions of euros, which could leave the EU drowning in debt. Another problem is if the EU sets the price cap too low, global suppliers who can afford to sell elsewhere will do so, likely resulting in a bloc-wide shortage.

Nerd narrative

There's a 17% chance of a large-scale power outage in the continental Europe synchronous grid before 2023, according to the Metaculus prediction community.

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