Price caps all around

Autumn has begun, and with it a flood of news as is only right and proper after the slow summer months. In actual fact, this summer has not been its normal boring thanks to all the energy woes of Europe, which have been simmering over the gas burner so long they’ve achieved a nice thick consistency. The name of the sauce? Price caps.

You’d think once the G7 agrees on their oil price caps for Russia everyone would settle but no, it seems those price caps were only the beginning and no amount of warnings that price caps will not work because they cannot work because there is a logic in physical markets and it is against price caps could stop their outpour.

Remember when Italy’s now former PM Mario Draghi suggested a price cap on all OPEC+ oil because benchmark prices were so high they were unacceptable in the eyes of Draghi and co? Well, now its EU energy ministers who are considering gas price caps. On all imports, not just Russian gas (which might drop to zero by the end of the year anyway).

By the way, I see Draghi has been at it again, suggesting a price cap on Russian gas only, echoing the words of EC’s von der Leyen, who suggested the very same thing last Friday, hours before Gazprom found an oil leak in a Nord Stream 1 compressor station and shut the pipeline down indefinitely. Far be it for me to suggest a causal link but it was an interesting coincidence.

The persistence with which European decision-makers keep doing things that have proved to be unproductive/harmful/outright disastrous has been quite impressive. And it is becoming more impressive by the hour.