Chancellor Scholz threw in the towel too early in the negotiations on the European gas price cap. For a long time, the federal government in Brussels had resisted a politically set maximum price for natural gas, and with good reason.
The danger is too great that urgently needed liquid gas tankers will no longer head for Europe because there is not enough money to be made here. But then, at the meeting of the EU heads of state and government, Scholz suddenly gave up. The lid is coming.
The energy ministers will set the exact maximum price at which natural gas can still be traded on Monday. Scholz only has the pious wish that the price cap will be set so high “that it will never be relevant”. Wishful thinking replaces well-founded realpolitik. Consumers suffer.
After all, wholesale prices for natural gas can fluctuate by more than 50 euros per megawatt hour within a day. This means that dealers will no longer offer anything even 50 euros below the price cap set by the EU in order to limit their own risk of loss.
The price cap will therefore slow down trading and reduce the gas supply more often and earlier than expected. In addition, the usual collateral for stock exchange transactions, known as margins, which have to be deposited, also become more expensive. This increases the lack of liquidity for wholesalers like Uniper. They can no longer participate in trading, and the supply is becoming increasingly scarce.
The consequences are absurd: the price cap could make energy in Europe more expensive instead of cheaper. Many of the tankers anchored off the coast with the liquid gas known as LNG will soon turn off towards Asia. Because there, China’s economy is awakening from the corona lockdown and is rapidly developing its old, enormous hunger for energy.
Ironically, the communists pay market prices, while the supposedly capitalist West seeks salvation in a planned economy and price manipulation. Unfortunately, it is therefore foreseeable how the bidding competition for the globally scarce natural gas will turn out. In order to make energy cheaper for Europe’s consumers, the formation of purchasing groups, but above all increasing one’s own gas production through fracking, would be more expedient than political price bungling.
