Greek Premier Kyriakos Mitsotakis called for a six-point proposal to counter a jump in energy prices in the European Union as the war in Ukraine continues, in a letter sent to European Commission President, Ursula von der Leyen and an opinion piece published in news website Politico on Wednesday.
“Extreme circumstances call for out-of-the-box thinking, and the time has come to address this threat head on. We are seeking to intervene only as a last resort and with a temporary set of measures,” he said in the opinion piece, in which he elaborates on the points mentioned in the letter.
The six proposals are a price cap on what are known as title transfer facility (TTF) prices, or the highest historic gas prices before the crisis; daily price guardrails, to limit volatility on the fluctuation band on TTF, within, for example, plus or minus 10 percent; emergency price setting in other words, fixed-price setting — but only as an emergency reaction to declarations regarding pipeline gas flows from Russia; a profit cap on gross profit margins, which could be a 5 percent cap based on market regulators monitoring production costs and production assets; the physical-delivery trading, or the consideration of a time-limited option in which to only allow trading with physical delivery and avoid market manipulation; liquidity enhancement, which would include increasing liquidity in the natural gas market by market-coupling between the United States, the EU and Asia.
The sixth point could be done by enhancing cooperation with China on LNG cargoes, and potentially introducing caps on transportation costs to disincentivize speculation, Mitsotakis said.
“I understand that these points represent considerable market interventions. That is why they must be time-limited and accompanied by clearly defined triggers and exit options,” he adds.