All news

Italian expert predicts energy problems in Europe including Italy

Rolling portion supply is a real risk, economist Demostenes Floros noted

ROME, June 24. /TASS/. Senior energy economist at the European research center CER-Centro Europa Ricerche Demostenes Floros does not share the Italian authorities’ optimism regarding energy security in the coming months. "The situation is quite complicated and far from being under control, both in Italy and in Europe, starting with Germany," Floros told TASS on Friday.

He believes that the authorities will have to introduce what he described as portioned consumption.

"It is difficult to say if this measure will have to be resorted to as early as this summer or with the start of the cold season. It depends on climatic conditions. A hotter summer, and this summer is likely to be hot, will push up consumption, and this can only bring problems closer. Rolling portion supply is a real risk. It will cause production activities to shrink, and this will affect jobs and the social situation," the expert warned.

"I would not be optimistic. In Europe last week there were already cases of gas withdrawal from storage facilities to meet the current demand. Normally these reserves remain intact during this time of year, because they are being filled for the winter, " he continued.

Floros recalled that the current drought, which is already observed in many regions of the country, also leads to a worsening of the situation. "In Italy, gas is used to produce electricity. Nuclear power is absent and we have to use other sources, including hydroelectric power plants. But the drought halts them," he explained.

Floros questions the feasibility of capping gas prices.

"First of all, it is not very clear whether this proposal will be accepted by everyone in Europe, because countries adhere to different viewpoints. It is not very clear to which contracts and how exactly this ceiling will be applied, because we have both long-term and spot contracts. Who will set these ceilings: individual countries, the EU or energy companies? All these issues constitute a problem that is not easy to solve," the expert said.

"Suppose that gas prices have been capped. Then liquefied gas can go to Asia at higher prices," he argues. "Suppose that the price ceiling will apply only to Russian gas, while other providers will remain unaffected. But this will be a violation of any contract with Gazprom. How will the company react?"

Floros is certain that the problems in the European energy market date back to the moment when the European Commission, "succumbed to US pressure" to abandon long-term supply contracts, which caused price hikes and imbalances.