Key German Lawmaker Raises Prospect of Gas Price Curbs
(Bloomberg) — Germany is considering direct intervention in the energy market to avoid a wave of insolvencies amid soaring gas prices, said a key lawmaker from the ruling Social Democratic Party.
“We have to pay the bill anyway. The question is whether we do this now at the beginning, by intervening in the markets and by cushioning — or whether in the end it is insolvencies, it is unemployment,” said Lars Klingbeil, co-head of Chancellor Olaf Scholz’s SPD, told the broadcaster ARD on Sunday. “I want us to take the first step, to intervene now.”
Germany’s government is allowing gas companies to pass on a fraction of higher costs to customers, but has so far avoided direct intervention, such as capping prices.
European Union energy ministers last week called on the bloc’s executive arm to devise urgent measures to tame the price of gas and provide liquidity to traders hit by massive margin calls.
The ministers stopped short of calling for a mandatory reduction in energy consumption. Instead, countries are taking various steps to reduce demand, from turning down the temperature of public swimming pools to providing financial incentives to households to turn off the lights.
Russia has said it won’t supply gas to countries that sign up to gas caps, and some are worried about jeopardizing the limited flows still coming to Europe.
German Chancellor Olaf Scholz Saturday said the country is well prepared if Russia cut off gas supplies entirely, but many economists and municipalities doubt that’s the case.
The crisis has been steadily worsening as Russia throttles supplies. Gas prices in Europe are about four times higher than a year ago, and the looming insolvency of key firms may grind the economy in Germany, Europe’s largest, to a halt.