Could a cartel of large energy consumers cut oil and gas prices?
Energy prices are skyrocketing as the world confronts the economic ramifications of Russia’s invasion of Ukraine, supply chain bottlenecks and the lingering effects of Covid-19 lockdowns. But Italy’s prime minister, Mario Draghi, has a plan.
The celebrated former European Central Bank president recently broached the idea of creating a “cartel” of oil consumers at a meeting with Joe Biden. Just as the biggest oil-producing nations club together through Opec to agree annual oil production quotas, Draghi has suggested big energy consumers join forces to increase their bargaining power.
He suggests two options: either “a cartel of buyers” working together to negotiate prices, or a “preferred path” of persuading Opec and other big producers to increase output.
Draghi and the US president also discussed implementing a cap on wholesale gas prices, an idea pushed by Italy within the EU for the past three months – although with little detail on how it would operate in practice – but opposed by Germany, the region’s biggest importer of Russian gas. In what the Italian press called “a small victory”, Draghi has managed to raise the topic for discussion at the European Council meeting taking place in Brussels on Monday and Tuesday.
“It will be discussed, and there is the possibility that the commission will then have the job of verifying the conditions of [such a scenario],” Paolo Gentiloni, European commissioner for the economy, told journalists in Rome on Monday. “But I don’t think a decision [on a gas price cap] will be made in these two days.”
Before the war 40% of EU gas and 25% of its oil came from Russia. Italy has made the cap a priority as it seeks alternative sources for its energy. The price of gas imported from Russia has
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