May 28, 2023

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EU leaders, crucial new meeting to draw up plan on energy crisis. EC chief: “It will be a difficult summit”

The heads of state and government from the European Union met on Thursday in Brussels, for the second time in the last two weeks, in a summit that seeks answers to the energy crisis.

“A two-day summit, very difficult”, as described by the host, i.e. the President of the European Council. It is therefore expected that the measures to reduce the price of gas will be intensively discussed. Given that the European Commission only proposed, and did not detail, how the gas price ceiling could work.

Charles Michel, President of the European Council: “It will be a difficult summit. It will be complex, because there are different sensibilities, different opinions. We don’t all have the same starting point, but I think there are two important elements. First question: are we ready to work together to implement measures to lower gas prices? I expect a ‘yes’ to this decision. And, the second point, there is a certain question related to the single market and solidarity, financial solidarity”.

Emmanuel Macron, President of France: “A set of measures that must aim at regulating the price of gas, discouraging speculators who would try to take advantage of the situation, and lowering the price of electricity. We also need greater financial solidarity. Thus, we are advocating for unity regarding price guarantee mechanisms”.

The 27 would express their support for an alternative reference price for liquefied natural gas. An agreement on common gas purchases at the level of the European Union seems to be in sight, so that member countries do not compete with each other in this regard.

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This is after, previously, the leaders of the Union agreed on the reduction of consumption and the introduction of a tax on the exceptional profits of companies in the energy industry.

Still, however, the leaders of the community block have different opinions, as they did a few months ago, whether and how to cap the gas price. This as a measure to counter high inflation and avoid recession, after Russia massively reduced gas supplies to Europe, following the invasion of Ukraine.

Ursula von der Leyen, President of the European Commission: “We must not forget what is the root cause of all this. The cause is the atrocious war that Russia started and the fact that Russia systematically tried to blackmail us using energy.”

Most of the member countries, including countries like France and Poland, insist on some form of gas price ceiling. But they are facing fierce opposition from Germany – Europe’s biggest economy and biggest gas buyer, as well as from the Netherlands – Europe’s most important gas trading hub.

Olaf Scholz, Chancellor of Germany: “A politically set price cap always carries the risk that producers would then sell their gas elsewhere, and we Europeans would end up not getting more gas, but less.”

On the other hand, across the ocean, President Joe Biden called on US companies to increase their oil production and confirmed that the United States will continue to use its strategic oil reserves, an additional 15 million barrels, in December in an attempt to stabilize prices at the pump.

This is after the OPEC countries, as well as Russia, decided to reduce oil production, which leads to higher fuel prices all over the world.

President Biden’s decision also comes from an electoral perspective, for fear that fuel prices could increase even before the elections on November 8, from the middle of the presidential term. These elections are vital for determining which political party will control Congress.

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