The European Union is fighting to make natural gas more accessible to citizens and businesses. Having paid a heavy price for the opportunity to rebuild their energy reserves, European leaders will consider on Thursday and Friday whether they can impose flexible caps on commodity prices, engage in collective buying and even establish a new model – a benchmark for deals – with the goal of de-escalating spending. . However, such measures hardly mean anything. The key factor is the reduction in demand.

For a year now, Europe has been trying to cope with unusually high prices. In the previous decade, in the futures market, monthly contracts in the main trading center of the Old Continent, TTF, rarely exceeded 30 EUR/MWh. That began to change last fall, when natural gas production failed to keep up with the booming post-pandemic economic recovery. E.E.’s decision To cut fuel supplies from its main source, Russia instigated a frenzied campaign to buy fuel from other exporters after invading Ukraine, causing prices to soar to 300 euros per MWh in August.

The price of fuel will be much higher than the average for the decade 2010-2020, despite the measures announced by the Commission.

Gas prices also increase electricity bills, making them unsustainable. However, finding a solution is not easy. It has been proposed to slow down the chain during natural gas price fluctuations to prevent daily fluctuations of more than 5%, but this measure will not change the overall direction of the market. A temporary cap or “dynamic price band” for trading in the TTF hub could stop excesses like those in August, but the price of fuel will still be much higher than the 2010-2020 average. And given the fact that many long-term futures contracts are linked to the trading center, the above measures may cause legal controversy.

And collective markets, as the EU did. during coronavirus vaccination season, they may not be able to convince exporters to offer drastic discounts as long as demand remains strong. Regarding the creation of a separate reference value in the EU. on LNG at a discount to TTF will have some effect if market participants decide to use it.