BERLIN — German Chancellor Olaf Scholz on Wednesday called for a European intervention to curb gas prices, with German officials suggesting Brussels could look into joint purchasing.
EU countries are currently struggling to find ways to rein in soaring gas prices, which are wreaking political and economic havoc across the Continent. Energy ministers will meet Friday in Brussels to discuss a raft of European Commission proposals for taming prices.
Although the German government has said it is skeptical about a proposal to introduce a price cap on imports of Russian gas, Scholz said Wednesday he believes it is crucial that the EU intervenes to tackle the energy cost crisis.
“We are now making sure that we discuss together with Europe how we can get a grip on the issue,” the chancellor told lawmakers in the Bundestag.
Germany and other EU countries are currently paying natural gas prices that lie way above the true cost of importing global liquefied natural gas (LNG) by ship, Scholz stressed in his speech.
He attributed the problem to the fact that many European countries — having been cut off from Russian gas on cheaper long-term contracts — have had to plug the gap by making last-minute short-term purchases from the world market. The prices for those purchases are much higher than usual on local EU trading hubs, partly due to the shock of losing so much piped gas from Russia.
“The first thing we have to achieve is …. that we only have to pay the world market price and that we don’t have to pay the higher prices that are currently called for,” the chancellor said, without going into further detail on how this could be achieved.
An official at the German economy ministry said the EU could seek to bring down prices by pooling its market power via joint gas purchases, instead of each EU country and their energy suppliers bidding individually for contracts and entering into competition with one another.
“There is an opportunity to influence gas prices through good, structured purchasing behavior,” the official said, adding that German Economy Minister Robert Habeck was looking into enabling “joint purchases” of gas at European level.
The Commission already set up a voluntary platform for joint gas purchases in April, but as of early August no purchases had been concluded. Germany was skeptical about the idea when it was first discussed earlier this year.
As part of a raft of proposals to be discussed at Friday’s Energy Council, the Commission has also floated setting a new reference gas price that reflects the cost of LNG on the global market. That would help avoid price spikes caused by interruptions in supply from Russia.
EU ambassadors will hold a first discussion on the Commission proposals Wednesday afternoon. Experts from national energy ministries were briefed on the technical details at a separate meeting earlier in the day.
A senior Commission official suggested a formal EU proposal would only come after Commission President Ursula von der Leyen’s State of the European Union speech on September 14.
“We will discuss [the problem of high gas prices] with our friends in Europe and with everyone here in Germany, because this is something we are not going to let rest — the prices for energy supplies must come down, and the citizens must be able to pay the prices,” Scholz said. “And we will get it done.”
America Hernandez contributed reporting.
