The European Commission has urged Member States to reduce energy demand, particularly for petroleum products, and warned that the impact of the conflict in the Middle East on energy markets will be prolonged, with no return to normality expected in the short term, despite the fact that there are currently no immediate supply issues in the EU.
“Even if peace were to come tomorrow, we would not return to normality in the foreseeable future,” warned Energy Commissioner Dan Jorgensen at a press conference following the informal meeting of energy ministers, stressing that, even in such a scenario, “there would still be consequences”, as the region’s energy infrastructure “has been damaged by the war and continues to deteriorate”.
He warned that “we must not delude ourselves into thinking that the consequences of this crisis will be short-lived”, whilst insisting on the need to act “with unity” and “in close coordination” to avoid “fragmented national responses” that could further distort the market. The Commissioner indicated that Brussels would present a package of initiatives “fairly soon” to protect households and businesses, although he avoided specifying an exact timetable. “We are monitoring the situation very closely; it will remain highly dynamic and, therefore, we will be flexible and ready to propose measures when necessary,” he added.
As he explained, since the start of the conflict, gas prices have risen by around 70% and oil prices by 60%, increasing the EU’s energy bill by some €14 billion in just one month. Although ministers agree that security of supply remains “relatively secure”, thanks to the diversification of suppliers and reduced dependence on the Gulf, the Commissioner warned that ‘tensions in certain product markets’ persist, particularly in diesel and aviation fuel, as well as ‘growing constraints in global gas markets’ which are affecting electricity prices.
Jorgensen has insisted that it is “extremely important” to act in unity and avoid uncoordinated responses, whilst arguing that the measures adopted by Member States must be “targeted” and “temporary” and must not exacerbate supply and demand conditions. He also encouraged governments to “do everything they can” to reduce energy demand, particularly for petroleum products, and noted that they could draw inspiration from the International Energy Agency’s ten-point plan, which includes measures such as promoting teleworking, reducing speed limits on roads, and boosting public transport.
Among other options, it also envisages alternate restrictions on private car use in major cities, car-sharing and the adoption of efficient driving practices, for both commercial vehicles and freight transport. “It is clear that this is not a one-size-fits-all package, in which all Member States are expected to implement all these demand-reduction tools, but it does constitute a very useful instrument, and we strongly recommend that each country assesses which options are available to it,” he added.
Furthermore, he pointed out that there are already measures European countries can implement, such as the recent energy package for citizens, which includes actions to reduce prices for households, as well as tax-related recommendations, including tax cuts, particularly on electricity – something which, according to the Commissioner, would be “highly appropriate at this time”.
At the same time, he emphasised that the Commission is already working on coordinating the filling of gas storage facilities and strengthening the security of oil supplies, in an attempt to anticipate potential further market tensions and ensure the EU is prepared for the coming months. ‘Better to be prepared than to regret it later,’ warned the Danish politician, who also indicated that Brussels is preparing a broader set of tools that will include, amongst other elements, measures to facilitate the use of instruments such as contracts for difference or power purchase agreements, with the aim of decoupling gas prices from electricity prices and reducing the impact on consumers.
The Commissioner also noted that this package will include the simplification and expansion of state aid options to enable Member States to support both the most vulnerable households and industries facing extraordinary pressure from rising energy costs.
Nevertheless, Jorgensen emphasised that, although the EU is in a better position than it was during the 2022 energy crisis, the current situation may be more complex as it affects a wider range of energy products, which, in his view, once again highlights the Union’s “structural vulnerability” to external shocks due to its dependence on imported fossil fuels.