“A German Economist and an Italian Political Scientist Debate Europe’s Energy Crisis”, Daniel Gros and Nathalie Tocci (IAI, Italy) 

Italy, alongside other fourteen member states, strongly supports a European cap on gas prices. Today, such prices are often set with reference to the Title Transfer Facility (TTF), the virtual hub based in The Netherlands where gas is bought and sold, which has become the benchmark underpinning European gas contracts. The peaks we have seen in European gas, and therefore electricity prices, have far outflanked those in other international gas markets, including the traditionally more expensive Asian one. Some believe this to mean that the TTF market has lost its bearings. The European Commission is now thinking of establishing a different benchmark which, it believes, could better represent market conditions. A generically referred to “cap” on gas prices, Rome believes, provided it is set at the appropriate level and in the appropriate way, rather than distorting market mechanisms, would put a brake on speculation, restore order, without diverting supplies elsewhere. Moreover, it would shorten and mitigate the effects of a recession. Berlin and others remain sceptical, if not out outright opposed. Why?

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