EU won’t introduce gas price cap for now amid disagreements between countries

The European Union is unveiling a new emergency package to tackle the energy crunch, betting on steps to bolster solidarity among member states. But the bloc will refrain from immediate gas-price caps amid political divisions and concerns over security of supply, Report informs referring to Bloomberg.

The European Commission plans to propose measures to avoid extreme price spikes in energy derivatives and to use the EU’s joint purchasing power as a leverage in negotiations with global gas suppliers, according to a draft document seen by Bloomberg News.

The bloc’s executive arm, also wants to launch a new liquefied natural gas index to better reflect the region’s energy reality after a cut in supplies of pipeline gas from Russia.

At stake is the future of the bloc’s $17 trillion (17.3 trillion-euro) economy, which the energy crisis threatens to push into recession as companies and consumers reel from high power and gas bills. The EU is trying to balance demands by more than a half of the EU’s 27 member states to limit gas prices with the need to avoid undermining its single market or deepening economic splits among member states.

“This is the moment to act, for this winter and beyond,” according to the draft document. “The current situation causes economic and social hardship, placing a heavy burden on citizens and on the economy. Rising energy costs are leading to reduced purchasing power for citizens and loss of competitiveness for companies.”

The EU’s executive arm is also seeking authority from national governments to propose - only as a last resort - price limits on transactions on the Dutch Title Transfer Facility, whose main index is the benchmark for all gas traded on the continent.

Such a measure could be used while the bloc is developing its new LNG index to avoid price hikes and limit speculation. It would need approval from EU nations in a separate process and would be valid for no more than three months.