Germany’s Scholz Warns EU Gas-Price Cap Could Crimp Supplies

(Bloomberg)

German Chancellor Olaf Scholz warned that a proposal to introduce a European Union-wide cap on gas prices could backfire as the region seeks to offset a drastic supply cut from Russia.“A politically set price cap always harbors the risk that the producers will then sell their gas elsewhere — and we Europeans will end up getting less gas instead of more,” Scholz said on Thursday in a speech to parliament in Berlin.

The German chancellor was speaking ahead of a two-day summit of EU leaders in Brussels. The bloc’s member states will discuss ways of keeping energy prices in check and ensuring supply security as well as the latest situation in Russia’s war in Ukraine.

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Instead of a price cap, Scholz backed the idea of closely cooperating with buyers like Japan and South Korea to avoid competition for tight supplies, while also appealing to like-minded producers.

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“I am convinced that countries like US, Canada or Norway, which stand with us in solidarity on the side of Ukraine, have an interest that energy in Europe doesn’t become unaffordable,” he said.