Do price caps assist monetary authorities to control inflation? Examining the impact of the natural gas price cap on TTF spikes

Given the ongoing Russian-Ukraine conflict and sanctions against the Russian Federation, as well as Moscow’s responses to these, European policy interventions in natural gas markets are of considerable interest to scholars and policymakers. We explore if the EU natural gas price cap announcement of December 2022 has affected Title Transfer Facility (TTF) prices. After controlling for market and demand factors typically affecting TTF prices, we identify no significant impact of the price cap regulation on natural gas prices and their volatility. We conclude that the introduction of this price cap has provided little utility, and that there is a need for alternative actions to prevent potential future spikes in European natural gas prices. We contribute to the literature on energy prices, price controls as well as offer important guidance for policy makers.