The European gas price cap is risky and harmful

2023. 01. 27.

The European gas price cap has a negative effect on the operation of gas markets, as it might broaden the scope for speculation and can possibly undermine the financial stability of the European markets. This is the conclusion reached by the Paris-based European Securities and Markets Authority (ESMA) in its recently published preliminary impact assessment. These conclusions reaffirm the position taken by the Hungarian government and Fidesz from the beginning of the debate: the gas price cap is a harmful and dangerous measure that should not be introduced.

In its most recent impact assessment, the European Securities and Markets Authority (ESMA) said that traders may leave the European markets en masse if the gas price cap is triggered. Furthermore, the number of transactions conducted outside the gas market could also increase. This may further reduce the transparency and liquidity of natural gas markets and provide further room for speculation.

The impact assessment also demonstrated that the gas price cap has no effect on the formation of natural gas prices. It also highlighted that the recent drop in prices is mainly due to favorable weather, high storage filling levels, and the savings made by citizens and businesses. It became clear that the various ideas from Brussels proved to be ineffective in reducing energy prices.

The Authority’s findings reaffirm the position of the Hungarian government and Fidesz on the gas price cap: it is a dangerous, harmful, and unnecessary measure that does not reduce the skyrocketing energy prices. It is time for Brussels to draw the right conclusions and not introduce the gas cap.