Europe finds way to mitigate energy crisis
The energy crunch in Europe is not ebbing away. For this reason, EU states are looking into the benefits of joint gas purchases.
The European Commission is desperately trying to find a way out on how to lower soaring gas prices. Currently, it is considering the possible benefits of member states jointly buying strategic reserves of gas and its further storage. This measure is supposed to help governments stabilize energy prices, prevent price spikes, and also survive the upcoming winter.
The new EU project is aimed at tackling several problems at once, e.g. tax cuts, financial aid for poorer households, and a number of companies in various sectors. The European Commission hopes that by adopting the new initiative, it will be able to lower energy prices by April 2022. However, they will significantly exceed the average price of previous years.
Apart from that, the European Commission encourages EU member states to actively switch to renewable energy sources. The gradual shift to greener energy will ensure that the bloc will not face the same energy price shocks in the future. Energy ministers from EU countries will hold an urgent meeting in Brussels to discuss the price spike on October 21 and 22. "The only way to fully decouple gas from electricity is no longer to use it to generate power. This is the EU's long-term goal, to replace fossil fuels with renewables," EU energy policy chief Kadri Simson pointed out.
Notably, the idea of creating a single platform for the purchase of natural gas for all EU countries has been brought up more than once. Before that, a similar proposal was made by Eastern European countries, e.g. the Polish government. However, this proposal did not meet cordial support in many European countries. Simson said that it was extremely difficult to implement this idea because the obvious advantages were ignored until recently.
The cost of gas and electricity before the heating season rose to the highest levels ever. On October 6, gas was estimated at $1,924 per thousand cubic meters. Industrial companies were forced to reduce production volumes. The sky-high electric bills of citizens also raised alarm bells.
Despite the fact that Russia sticks to its long-term contract obligations, the European Union calls for more gas supplies. On October 7, President Vladimir Putin suggested his country could sell more gas to the EU through Ukraine. Following this statement, gas futures collapsed to $1,000 per thousand cubic meters. In the period from 11-17 October, gas futures were evaluated at $1,028 per thousand cubic meters.
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