The wholesale price of fossil gas remains stubbornly around EUR 300 per MWh and its rise looks set to continue.

According to Trading Economics‘ global macro models and analysts’ expectations, natural gas is expected to increase further to around EUR 377 per MWh by the end of this quarter, and then to jump to around EUR 517 in 12 months’ time.

The combination of a sharp reduction in supply and a sharp increase in demand, as well as speculative actions, have caused energy prices (gas and electricity) to rise more than tenfold since 2020.

How to deal with this price emergency, which is already weighing heavily and threatens to hit the economy even harder?

What is clear is that there are no painless ways out of this crisis in the short term.

In the medium to long term: more energy efficiency and savings, more renewables, the electrification of end uses, strengthening and greater interconnection of networks are the first things that come to mind. In the next few years, we will have to speed up everything we have not done in the last decade at least.

In the very short term: this winter we will have to turn down the thermostats and next summer we will have to turn up the air conditioning, in addition to many other small but important saving actions. The biggest problems, however, will be for businesses, which risk mass closures.

At system level, a reform of the electricity market seems no longer procrastinable, finding an alternative to the system of the marginal price of the last MWh fed into the pyramid of offers from the various sources, which is now almost always generated with gas and which distorts the entire underlying price structure upwards.

As is already in place for the electricity market, demand response programmes could also be initiated in the gas market, so that demand can be made more flexible if supply decreases or becomes much less flexible, as at present.

To intervene in the short term, instead of the price cap, which is difficult to implement effectively and which in any case distorts the functioning of the market, perhaps a simpler regulatory appeasement would be better, establishing more stringent daily upward and downward limits to gas and electricity prices in markets such as the FTT, so as to contain any price variations of a more speculative nature.