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Updated October 6th, 2021 at 15:31 IST

Five European Union countries want gas market to be investigated as prices spike

Investigations into alleged price gouging of natural gas in the European market in recent months are needed, according to a joint statement by 5 EU countries.

Reported by: Rohit Ranjan
European Union
Image: Unsplash | Image:self
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Investigations into alleged price gouging of natural gas in the European market in recent months are needed, according to a joint statement made by the economy and finance ministers of Spain, France, the Czech Republic, Greece and Romania on Wednesday. The joint statement was posted on the website of France's Ministry of Economy. The statement said that in the case of gas, it is necessary to analyse the operation of the European gas market to determine why current gas contracts are insufficient. It further stated that to limit and moderate price increases, they need to develop universal guidelines on gas storage. Furthermore, to improve their bargaining power, they should better coordinate their gas purchases.

The countries also emphasise the importance of focusing on energy independence

According to Sputnik, they also made a number of recommendations to help reduce the substantial rise in energy prices. The ministers feel that a coordinated approach at the European level is required to respond quickly to pricing spikes. Furthermore, it is advocated that the EU power market be reformed in order to improve the ratio between the price consumers pay and the average cost of electricity production. The countries also emphasised the importance of focusing on energy independence by investing in diversifying energy supplies and rapidly reducing Europe's reliance on gas exporting countries.

The five countries also stated that more predictable coal pricing is required in order to minimise excessive volatility. Natural gas prices have risen sharply in the European Union in recent months, owing to rising energy consumption and restricted supply amid an economic rebound following months of lockdowns, according to Sputnik. The price of European gas futures surpassed $1,600 per 1,000 cubic metres on Tuesday, setting a new high.

The gas situation in the UK

Energy suppliers in the United Kingdom are limited in how much they can charge consumers, with price ceilings reviewed by the government every six months. When the present quota is reviewed by politicians in April, some expect it to be lifted, implying that British households will shoulder some of the increased wholesale costs. Gas price increases, according to analysts, are expected to lead to significant levels of inflation, as per the reports of CNBC. The Bank of England predicted that inflation will rise to slightly above 4% this year, double its target level.

Image: Unsplash

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Published October 6th, 2021 at 15:31 IST

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