Austrian Chancellor Karl Nehammer called for “stop the madness” and “not be allowed” in the energy markets. [президенту РФ Владимиру] Putin” will set energy prices, writes Reuters.
The politician advocated limiting the rise in electricity prices across the European Union and promised to persuade previously skeptical countries.
“We must finally stop the frenzy in the energy markets. And that can only happen with a European solution,” he said.
The Chancellor said he plans to do everything he can to find a sustainable solution model that can be implemented quickly. He promised to continue negotiations with his colleagues in the Council of Heads of Government at EU level in the near future. At the same time, the chancellor did not specify exactly what he could propose to combat high energy prices.
“Something has to happen eventually. This market will not self-regulate in its current form. I urge all 27 EU countries to come together to stop this price boom as soon as possible,” he said.
According to that, electricity tariff should be separated from gas price and reduced to actual production costs. Nehammer emphasized that “the exchange price of electricity should fall, it is necessary for both the economy and industry.”
“We should not let Putin decide the electricity price in Europe every day,” the Austrian chancellor said.
Austria is heavily dependent on Russian gas, especially for industry and heating. Before the military operation in Ukraine began, Vienna received about 80% of its gas from Russia, Bloomberg reported. At the same time, most of the electricity in the country comes from renewable sources, so there is a growing misconception in Austrian society about a market system in which gas and electricity prices are closely linked, Reuters reports.
European countries, including Austria, faced rising energy prices and rising inflation against the backdrop of reduced gas pumped through Nord Stream and a policy of abandoning energy sources from Russia.
Gas prices hit record
Dmitry Medvedev, Deputy Chairman of the Security Council of the Russian Federation, claims that with the current increase in the cost of gas in the European spot market, it could reach €5,000 by the end of the year.
“In connection with the increase in gas prices to 3.5 thousand euros per thousand cubic meters, I need to increase the estimated cost to 5 thousand euros by the end of 2022,” Medvedev said.
He concluded his article with the phrase “With warm regards” (from English “with warm wishes” – “socialbites.ca”).
No negative consequences for Russia
Citing Liam Peach, an analyst at British Capital Economics, Bloomberg writes that Russia also has the ability to halt gas exports to the European Union for at least a year without negative consequences for its economy.
“As long as oil prices and export levels remain at their current high levels, Russia’s current account surplus will be sufficient to support it, even if it breaks away from the main gas market,” the expert said.
The economist noted that the high level of energy prices allows Moscow to earn up to $20 billion per quarter from gas sales, even if the volume of gas supply is reduced.
Gazprom’s exports to non-CIS countries (especially European countries) have fallen by 36.2% since the beginning of the year. As a result, gas prices skyrocketed. According to the ICE exchange, the settlement price for September futures on August 26 was $3507.3, the highest for the entire asset of European hubs since 1996. At the same time, in just one week, the price increased by almost $1,000, up 40%.
Gazprom believes prices could rise to $4,000 per 1,000 cubic meters this winter, setting a new record. At the same time, analysts expect a record decline in Russia’s gas supplies to Europe in August. This is largely due to Nord Stream’s three-day shutdown.
Electricity prices in Europe reached record levels against rising gas prices. According to the TV channel France 24, the annual purchase contract in Germany exceeded €995 per MWh, and €1.1 thousand in France, in both cases 10 times more than in 2021. British energy regulator Ofgem said electricity prices in the country will rise 80% from 1 October, with the average annual household marginal bill to be £3.5k.