The European Commission proposes a cap on gas that is almost impossible to apply

The

does not want to put a

when it reaches prohibitive levels.

The Heads of State and Government mandated Ursula von der Leyen's team in the conclusions of the last European Council with clear instructions to intervene in a market that has proven to be full of failures in the face of a situation like the current one and a disruptive war.

The instructions were clear:

because the current one, the one used on the Netherlands Stock Exchange for a large part of the transactions, is not responding, as the EU believes, to the reality of the market, and is subject to manipulation by operators such as Russia.

And while this new index is underway, something that could take until March,

a mechanism that would jump automatically at levels considered excessive.

Today, the Commission has made its proposal, it has explained its mechanism, and the general reading, for some even the only possible one, is that

The proposed instrument consists of a

one month in advance.

The Title Transfer Facility (TTF), which is the most widely used gas reference price in the EU, that of the Netherlands, plays a key role in the European wholesale gas market.

The Commission mechanism

: that the settlement price of the TTF derivative of the previous month exceeds 275 euros for two consecutive weeks and that the price of the pure TTF is up to 58 euros higher than the LNG reference price for 10 consecutive business days within the two weeks .

The LNG reference price would be calculated on the basis of the daily average of a basket of references, made up of the Daily Spot Mediterranean Market, the Daily Spot Northwest Europe Market and the daily price assessment to be prepared by the Agency for the Cooperation of Energy Regulators (ACER).

A scenario that

since with these rules,

even in the worst moments,

, at most.

There is something on the table, but it clearly does not respect the spirit in which it was conceived.

La Unión, which has been reacting badly for a year or so and later, trusts everything again in the hope that the winter will not be too harsh and that the worst is behind us for everyone.

The Commission's scenario is that if such a market situation were to occur, with those prices above those thresholds for half a month,

in the Official Journal of the European Union and inform the Commission, at the European Securities and Markets Authority (ESMA) and the European Central Bank.

(ECB).

The following day the

would take effect and orders for first-month TTF derivatives that exceed the maximum security price could not be accepted.

The mechanism, if this idea goes ahead, may be activated as

which would actually give little margin for its practical application.

Its expiration date would be at the end of the course.

The

, those 275 and 58 euros, has been chosen "carefully to reflect the potential impacts of its application and is an essential element of the Commission's proposal to avoid the detrimental effects of sudden price increases for citizens, businesses and the European economy as a whole

to the financial stability of the EU and avoid a disruption of deliveries that would jeopardize the Union's security of supply The level has also been chosen to ensure that the cap does not jeopardize our ability to attract LNG from the global market to Europe," the Commission says.

What the Commission does, in any case, is a

.

This

, the

will meet again in Brussels for a

in which they will pronounce, debate and if there is consensus they will ratify the structure of the instrument, but being able to modify it at will.

The Commission proposes but ultimately the Council decides.

Parliament has no voice this time, as all these measures are being processed through the emergency clauses enshrined in the Treaties, and which leave MEPs almost completely on the sidelines.

Gas caps are being a toothache for everyone.

There are countries that have put up all possible obstacles because they continue to think that this is a temporary anomaly, that the markets are correcting themselves and that intervening is more damaging than doing nothing.

The energy market is extremely complicated and delicate, and

Thus, the Regulation establishes all kinds of safeguards to "avoid disturbances" in the energy and financial markets and avoid problems of security of supply.

That is why the maximum price is limited in its original formulation to a single derivative so that operators can still satisfy demand requests and acquire gas in the spot market and in the over-the-counter market.

To ensure that gas demand does not increase, the proposal requires Member States to notify within two weeks of the activation of the Market Correction Mechanism what measures they have taken to reduce gas and electricity consumption.

As if that were not enough, in addition to being difficult to activate, except with extreme flare-ups,

"Automatically, with a deactivation, when its operation is no longer justified by the natural gas market situation, that is, when the difference between the TTF price and the LNG price is no longer met for 10 consecutive business days," it says. the document, or "through a suspension decision by the Commission when risks are identified for the Union's security of supply, for demand reduction efforts, for intra-EU gas flows or for financial stability" .

The deactivation is

since in the design it is contemplated that even if market conditions justify the intervention, the Commission could prevent it if relevant institutions, including the ECB, argue convincingly of the risks for the supply of touching prices and suppliers selling to other countries.

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