EU gas price cap comes into force: What does this mean for gas prices?

The EU gas price cap will come into force on Wednesday.

But what does the gas price cap mean for consumers?

Are gas prices falling now?

An overview.

Brussels – The EU gas price cap will come into force on February 15, 2023.

This is to prevent the prices for natural gas in the EU from deviating too much from prices on the world market.

This is exactly the situation that occurred with the Ukraine war: According to the European Commission, European gas prices were suddenly up to 1000 percent above average - with devastating consequences for consumers and the economy.

EU gas price cap: What does the EU cap mean for consumers?

The EU will in future ban certain gas trades when their price reaches a predetermined level and the price increase does not correspond to a similar price increase at regional or global level.

The correction mechanism is triggered if the price of the products exceeds 180 euros per megawatt hour for three working days and at the same time is 35 euros above an international average price for liquid natural gas (LNG).

The European gas price is currently between 50 and 60 euros per megawatt hour and is therefore far from the EU limit.

When the discussion about the EU price cap began in August, the price was 300 euros - a record high.

According to the

gas prices in Europe otherwise ranged between 5 and 35 euros per megawatt hour.

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 On February 15, 2023, the EU gas price cap will come into force. 

© Marijan Murat/dpa

The gas price cap in February will have no effect on end consumers.

On the one hand, because the gas price cap does not have to take effect at the moment, since wholesale prices are below the limit.

As the

reported at the end of January, prices on the short-term consumer markets play a rather disorderly role anyway.

Local utilities and public utilities usually buy their gas well in advance - which protects them from large price fluctuations.

"Last year, customers benefited from this long-term procurement," says Kerstin Andreae, Chair of the Executive Board of the Federal Association of Energy and Water Industries (BDEW).

However, this strategy also means that the developments on the gas market only have an impact on end customers over time, and in both directions: if prices rise, end users will not be affected until later.

However, when they decline, it also takes longer for them to benefit.

Gas price cap and gas price brake: What is the difference?

The German gas price brake starting in March directly affects end consumers and is intended to cushion the consequences of the rapidly rising energy prices.

Households and small and medium-sized companies are guaranteed a gross gas price of 12 cents per kilowatt hour for 80 percent of their previous consumption.

For the remaining 20 percent, the normal contract price should apply – so an incentive to save should be retained.

In comparison to the EU gas price cap, end consumers will feel much more of the price brake.

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Gas prices 2023: What is the forecast for this year?

According to

, gas market experts estimate that the price development will primarily depend on the weather during the rest of the heating season.

If temperatures allow larger gas reserves to remain in storage, there could be a summer slump in prices.

According to an analysis by the EU Commission, prices rose in the summer of 2022 mainly because Russia used its gas supplies as a weapon and manipulated the market through deliberate interruptions.

In August, the relationship between supply and demand was particularly tense because, in addition to a reduction in pipeline flows, EU countries were trying to fill up storage facilities before winter.

According to the analysis, the fear of further supply disruptions and market manipulations by Russia also played a role - and also the pricing mechanism, which was not geared to such extreme changes in demand and supply.

List of rubrics: © Marijan Murat/dpa