June 15, 2024 RomaniaEnglishRussia

Gas price cap, a populist decision that favors gas importers and suppliers and not consumers

The capping of the price of natural gas (together with the prices of other utilities), recently taken by the Government, favors gas importers and suppliers and affects consumers. Thousands of consumers are at risk of this state intervention to pay higher prices for natural gas than if prices were allowed to continue their downward trend stated the Intelligent Energy Association in a press release.

“In the gas market, we have an oversupply even before the appearance of the COVID-19 pandemic, which has determined that from January 2020 the prices will fall and even decrease sharply. The large quantity of gas left in the deposits at the end of the 2020 extraction cycle, the oversupply of imports, the measures to “expensive” the gas storage for the 2020/2021 cycle, all of which led to the further decrease of the price of natural gas in the next 5-6 months “, said Dumitru Chisăliță, president of the Intelligent Energy Association.

“The decision of the cap authorities is a populist one, which does not take into account these realities. This measure could change the current trend of sharply lowering the price on the natural gas market in Romania ”, added the president of the Intelligent Energy Association.

According to the data of the Intelligent Energy Association, gas suppliers are experiencing a visible decrease in gas demand since the declaration of state of emergency (consumption decreased in March 2020 by 15-20% compared to consumption in March 2019) or even with the closure of some consumers. . Therefore, lately it is renegotiating the contracts with the extension of the payment terms and the decrease of prices.

According to the association, the authorities should amend the following article of the recent ordinance: “During the state of emergency, the price of natural gas cannot be raised above the level practiced at the date of issuing this military ordinance, it can only be reduced according to demand and supply”, it is deficient and does not protect final consumers, as stated intention. This article should be amended in the following sense: “the price of natural gas at the final consumer cannot be increased above the level practiced in the contracts existing at the date …”.

In this situation, the respective article would have a utility to prevent a very possible situation of increasing the price of natural gas in the next period, at the level of the final consumer.