Michalis Mathioulakis
Michalis Mathioulakis
• 2nd
Academic Director at Greek Energy Forum, and Research Associate at the Hellenic Foundation for European and Foreign Policy (ELIAMEP)
48m • 48 minutes ago
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TTF IS STILL FALLING…
Despite the European Commission’s fears about speculated shortages in supply, natural gas TTF prices continue to fall steadily, trading today at 133 euro/MWh.
Let’s keep in mind that after the multiple explosions in the Nord Stream pipelines in September, prices traded above 200 euro/MWh.
Since then, and despite the pipelines being irrevocably out of service, we are still 35% lower than these levels, while at 133 euro/MWh, we are now 60% lower than the 340 euro/MWh all-time-high that TTF was trading at the end of August.
We have now fallen almost to the price levels that TTF had on the day after the start of the Russian invasion of Ukraine at the end of February.
Given the above, I can’t help but repeat the opinion I have been expressing for the past year, that the rise in prices was NOT a matter of speculation or a "dysfunction" of the markets, nor a matter of an objective problem of fuel supply, but was, and remains, a matter of market psychology.
The market now, as the prospect of an absolute cap on gas prices fades, (and a more technical “price corridor” system of controlling short-term price spikes is not considered a threat to the function of the market), improves its psychology and thus prices fall.
On the other hand, if, when TTF was at 200 euros or higher, a price cap was imposed by the Commission at e.g. 150 euros, this would be considered by European politicians as an essential political move and a success even if it would mean that prices would have been stuck at 150 euros.
In addition, it is almost certain that the attempt to keep prices artificially within the ceiling of 150 euro/MWh would have created a huge series of extra administrative measures, problems, and side effects.
Instead of all this, prices are now much lower, and the relief for households, businesses, and state budgets is much more significant.
In the chart I prepared, one can see the TTF price movement in relation to the most important events of the last year.
Everyone can draw their own conclusions about what the Commission and European politicians should do in the future...
#energy_strategy #TTF #natural_gas
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