Germany considering direct intervention in energy market

Germany is considering direct intervention in the energy market to avoid a wave of insolvencies amid soaring gas prices, said a key lawmaker from the ruling Social Democratic Party.

“We have to pay the bill anyway. The question is whether we do this now at the beginning, by intervening in the markets and by cushioning -- or whether in the end, it is insolvencies, it is unemployment,” said Lars Klingbeil, co-head of Chancellor Olaf Scholz’s SPD, told the broadcaster ARD on September 11, according to Bloomberg.

“I want us to take the first step, to intervene now.”

The German government allows gas companies to pass on a share of higher costs to customers, but has so far avoided direct intervention, such as price caps.

European Union energy ministers last week urged the bloc’s executive body to come up with urgent measures to rein in the price of gas and provide liquidity to traders hit by massive margin calls.

The ministers stopped short of calling for a mandatory reduction in energy consumption. Instead, countries are taking a variety of measures to reduce demand, from lowering the temperature of public swimming pools to providing financial incentives for households to turn off the lights.

The German government is urging consumers and businesses to save energy in the months leading up to winter, which has led to streets and office buildings in Berlin going dark.

Russia has said it will not supply gas to countries that sign up for gas caps, and some worry that would jeopardize the limited flows that still go to Europe.