MEPs suspect Gazprom manipulating gas price

The commission said that a global increase in gas demand had caused prices to spike.

But 42 MEPs, ranging from the Greens, through the EPP, S&D and Renew Europe, to ID on the right, suspect that the Russian gas giant Gazprom is manipulating market prices and sent a letter on Thursday asking the commission to open an investigation.

According to the letter - seen by this website - Gazprom has refused to guarantee additional volumes of supply "despite available information that Gazprom has sufficient production capacity."

The signatories also raised suspicion that Gazprom is pressuring Europe to agree to an immediate launch of the Nord Stream 2 pipeline, despite its non-compliance with EU energy market regulations.

While speaking at an online conference, Alexei Miller, the head of Gazprom, warned that natural gas prices in Europe will in fact rise even further - but said that was due to low storage levels.

When quizzed on Friday, the commission said it had received the letter and would look into the matter. However, when pressured further, the representative did not want to go into detail.

The EU has, however, accused Gazprom of market manipulation in the past.

Lower renewable prices?

Meanwhile, higher prices are reverberating through other parts of the economy.

On Friday, Yara, the second-biggest producer of fertiliser globally, and with large production bases in the EU, announced it would reduce its ammonia production by 40 percent due to the current high gas prices. Ammonia is used to produce ammonium nitrate, which is a widely-used fertiliser.

Of 4.9m tonnes of ammonia produced in Europe, the company said it planned to reduce production by approximately 2m tonnes in the Netherlands, Italy, the United Kingdom and France - which in turn might affect food prices.

Household energy prices have also begun to rise.

In Spain, a megawatt-hour of electricity has increased from €46 to €154 in a year, prompting the Spanish government to intervene in the energy market and lower taxes on gas and electricity.

Commission vice president Frans Timmermans was critical of this plan: "You can't just do that," he said on Wednesday. "The free energy market is the basis on which we base our energy prices."

But according to the think tank Bruegel, major gas-price increases do pose a problem for European countries. Higher prices affect low-income households and member states disproportionately.

According to Eurostat, 30 percent of people in Bulgaria cannot afford to keep their house warm. In total, 34m people suffer from what is called 'energy poverty.'

Rising gas prices will exacerbate this.

While temporary measures like direct payments to citizens can help cushion the effects of the current high prices, Bruegel says that European leaders can avoid future prices hikes structurally - by committing to renewable energy.

EU energy commissioner Kadri Simson also mentioned renewable energy as a way to stabilise prices.

But Bruegel writes that governments have not yet committed enough to green energy: "Clearer commitments from governments will imply growing electricity demand. As a result, investors will not have to worry about over-investing in low-carbon power systems."