Kadri Simson, EU Commissioner for Energy (LaPresse)
The solution for expensive gas could be a ‘scissors’ on the price ceiling
“Europe is close to breaking the energy crisis”, writes Repubblica. The European Commission and the states, or at least fifteen of them, continue the tug-of-war on the roof over the price of gas to reduce energy costs and alleviate the increasingly unsustainable burden on families. The Extraordinary Council of Energy Ministers closed with the commitment, on both sides, to continue to work and polish their proposals. A meeting point could be a price cap a range (or scissor or fork) which provides for a minimum and maximum price in order to reduce costs without putting the supply at risk.
Roberto Cingolani says in an interview with Corriere della Sera that the European meeting would have gone “much better than I myself could have thought twenty-four hours earlier. There could have been a clash in the extraordinary Energy Council of Ministers, also because the Commission European Union had ignored the letter from Italy and 14 other countries – including France, Spain, Poland and Belgium – which asked for a specific proposal to reach a ceiling on the price of gas from any country “. According to Cingolani, we are closer to an agreement on the roof and Corriere speaks of the German Haebeck as a person of “great loyalty. And I think we understand each other. Robert is a person open to discussing and collaborating. it closes only because Germany is economically and financially stronger. I told him that it made no sense not to do anything about the problem that exists, that of the excessive price, just because we are worried about a problem of scarcity that could exist tomorrow “.
The Commission – now obtorto collo – undertakes to take into consideration the latest filings submitted by the States. “The generalized price cap is a legitimate option but it requires radical intervention in the market that requires several non-negotiable conditions that must be implemented before it goes into operation”, explained Energy Commissioner Kadri Simson.
A mini opening by the Commission concerns the setting of a gas price ceiling for the formation of the price of electricity. But the difference – between the administered ceiling and the market price – would be borne by the states. As already happens in the Iberian Peninsula and as it will happen in Germany, which yesterday announced the maxi aid plan worth 200 billion euros, attracting criticism from other states. Everyone (or almost certainly the Netherlands opposes) agrees on the need to intervene on the Ttf, the Amsterdam gas exchange. One hypothesis – explained Cingolani – is to “index the cost of gas to something other than Ttf, making an average on large indicators such as Henry Hub, Brent and other global indicators”.
Record injection since 1983, Visco: “Error following the Fed”
In the meantime, however, as Corriere della Sera explains, “we are moving towards a 75-80% increase for gas bills in October. The estimate, calculated by Staffetta Quotidiana, was confirmed yesterday to the Corriere by the president of the Arera Authority Stefano Besseghini. “With the average price of gas on the PSV (the Italian wholesale market, ed) at around 190 euros per megawatt hour for the month of September – said Besseghini – the increase in tariffs will be of that order”. The official will take place on Tuesday, when the Regulatory Authority for Energy, Networks and Environment will announce the tariff update of the users for those under the higher protection regime “.
Inflation, according to Corriere della Sera, has been at record levels since 1983. Ignazio Visco intervened on this point. “Eurozone interest rates must continue to rise, but with caution: the ECB must not follow the Fed and must not tie its hands with the hypothesis of “extraordinarily high” cost of money adjustments. The governor of the Bank of Italy preaches caution on the path of monetary tightening even if, he warns, anchoring inflationary expectations remains a priority: a chase between wages and prices, dice speaking at a conference in Florence, it would be “vain and painful”.
The burden of the energy shock, he notes, is “unavoidable”, as was the “Sheikh’s tax” in the 1970s. The government has the task of redistributing the weight between citizens and businesses, but with the warning not to derail the path of repayment of public debt. Otherwise, he observes, the consequences would be the young people. Visco says to the ‘hawks’ of the Eurotower that the differences between the US economy and that of the Eurozone “suggest that assuming that the ECB will blindly follow the Federal Reserve in the coming months could be a serious mistake”.
The high uncertainty of the economic outlook, he adds, calls for “prudence in setting the ‘pace’ of rate hikes and strongly advises against aiming to reach a predetermined terminal value for official rates”. Also for this it would be “wrong to bind our hands with hypotheses of extraordinarily high increases such as those that are read in some partsRunning too much would end up “to increase the risks of a recession.”
However, anchoring inflationary expectations remains crucial. The sharp rise in inflation following the end of the pandemic and the energy shock caused by the invasion of Russia in Ukraine, explains Visco, “cannot be ignored by the central bank: it is necessary to firmly counter the risk that it could cause an increase in expectations. inflation and in turn lead to a vain and harmful spiral between wages and prices “.
However, monetary policy alone may not be enough to cope with the deterioration of the economic environment. “It is necessary to understand”, argues the governor, “that, as with the ‘sheikh tax’ of the 1970s, the” energy “shock is an unavoidable burden for the entire euro area, and especially for the countries most affected. as Italy is undoubtedly “. And “ensuring the containment of the effects of this shock will require not only an incisive and adequate response from monetary policy, but also the responsibility of the social partners and the contribution of fiscal policy”.
The attempt to completely cancel the impact of the energy shock “on labor and capital income”, warns the governor, “would be in vain and would inevitably end up having repercussions on inflation”. Of course, he continues, budget policy “can redistribute the effects of the shock among consumers, production factors, present and future generations, with targeted and temporary interventions to support the families and businesses most affected”.
But “if it were decided to make redistribution weigh above all on future generations essentially with the issuance of public debt, there would be a risk of loading the latter with unfair burdens and further fueling current and expected inflation“.
For Italy, in particular, concludes Visco, “this would also entail the risk of derailing the public debt from the return path, in relation to the product, which began last year – a necessary path to preserve the possibility of a return to a strong and lasting economic growth “.
#Gas #Cingolani #believes #roof #split #Boom #bills #inflation