EU Warns Oil, Gas Prices Won’t Ease Quickly After Iran War

Commissioner Dan Jørgensen said that although there was no immediate oil and gas supply shortage in the 27-member bloc, there were “increasing constraints” on global gas markets that were causing electricity prices to rise, as well as pressure on diesel and jet fuel supplies.

“What I find extremely important is to state as clearly as I can that even if there is peace tomorrow, we will not return to normal in the foreseeable future,” Jørgensen said at a press conference following a meeting of EU energy ministers. he said.

He said the EU’s executive arm was preparing a series of measures designed to help families and businesses weather the massive surge in oil prices that has seen gas prices rise by nearly 70% and oil prices by 60% in Europe. According to Jørgensen, since the beginning of the war the EU bill for imported fossil fuels has increased by 14 billion euros.

He said close coordinated action among all EU members was needed “to avoid fragmented national responses and disruptive signals to markets”.

The commissioner said the “toolbox” of measures currently being worked on will be unveiled “very soon” and will include ways to make it easier for states to separate gas prices from electricity prices. He added that a tax reduction on electricity is also being considered, as suggested by Commission President Ursula von der Leyen.

While Jørgensen did not foresee a repeat of the 2022 gas crisis, in which companies made huge profits from a huge increase in gas prices, he said a one-time “windfall tax” on such companies was “a possibility.”

Jørgensen said there were “good opportunities” for member states to financially support vulnerable groups or industries currently under “extraordinary stress” and that the Commission would “make these possibilities even simpler and broader”.

Jørgensen also encouraged EU members to consider the International Energy Agency’s 10-point plan, which includes working from home, reducing highway speeds, encouraging public transport and increasing car sharing.

He said the EU stood behind a ban on Russian gas purchases meant to reduce dependence on Russian gas and cut funding for Russia’s war in Ukraine. Dependence on Russian gas has fallen from a pre-war level of 45% to 10% now and will be reduced to zero when imports from other suppliers, especially the United States, increase. The EU is looking at new energy sources from Azerbaijan, Algeria and Canada, as well as from small producers around the world.

The commissioner warned that the EU should not “repeat past mistakes by allowing Putin to use energy as a weapon against us and blackmail member states.” He added that it would be “completely unacceptable” for the EU to continue buying energy that would “indirectly help finance Putin’s terrible war in Ukraine”.