By capping the price of Russian gas, Europe will violate the terms of existing contracts, which, in turn, will cause a disruption of supplies, Gazprom CEO Alexei Miller said on the Moscow. Kremlin. Putin program on the Rossiya 1 television channel.
It is extremely difficult to even imagine the mechanics for regulating the natural gas prices, whether applied to the Russian fuel only or to that imported from other countries as well, including from the United States, Fyodor Sidorov, private investor and founder of the School of Practical Investment, says.
First, there is no way to enforce this decision. Gas is an exchange-traded commodity; its price is regulated by the market supply and demand. Secondly, this will directly harm European gas exporters such as Norway, which is the world’s 9th largest fuels producer. The world’s largest companies will suffer losses, including those in the United States, Saudi Arabia, Australia, Qatar and Canada. Such an initiative, announced during an energy crisis, raises more questions than it provides answers, the expert stressed.
Russia has repeatedly warned that it will discontinue fuel exports to Europe if Europe caps natural gas prices. This will lead to a severe energy crunch in the EU, Fyodor Sidorov argues. At this stage, the International Energy Agency says the 10% cut in consumption announced by a number of EU countries is not enough to secure enough fuel for the winter. European countries will have to reduce consumption by another 13% – overall, by almost a quarter. European businesses are curtailing production even now, amid shortages of commodities and spiraling prices. Tens of thousands of companies have gone out of business in the UK, France, and Germany; acts of civil disobedience have been reported.
“The natural gas price cap policy will lead to a new surge of raw materials prices, on a global scale, and this will affect everyone. It will send inflation spiraling further, and it is already at record levels over the past 40–50 years, and trigger a severe financial and economic crisis in the world,” the investor warns.
The new decisions made by European officials are, if anything, exacerbating the negative trends plaguing developed economies: the embargo on Russian coal has spurred the commodity’s prices; the restrictions imposed on Russian oil also keep its prices high. Capping the Russian gas prices means inflicting another crushing blow on the European economy, Fyodor Sidorov sums up.