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Amid protests, Europe limited in curbing high energy prices

Across Europe, governments are slashing fuel taxes and doling out tens of billions in aid to help consumers, truckers, farmers and others cope with spiking energy prices made worse by Russia’s invasion of Ukraine.

But it is not enough for some whose livelihoods hinge on fuel.

Miguel Angel Rodriguez was one of 200 concrete truck drivers who held a slow-driving protest around Madrid this week. He said filling up used to cost EUR1,600 (US$1,760) a month, but he’s been forking out an extra EUR500 euros since the start of the year because of the rising price of diesel.

“We will continue striking because, at the end of the day, it’s pretty much the same for us to go out to work or to stay at home,” Rodriguez said. He warned that his rising costs were part of “a domino effect that is only going to drive us all to our ruin, unless the government takes some definitive action”.

He is among those in industries like trucking or fishing who are staging protests to push politicians to ease their financial pain. The war has exacerbated a months-long energy crunch in Europe, which is dependent on Russian oil and natural gas. Governments have limited options to provide lasting relief as households and businesses face crippling energy bills, high prices at the pump and other effects. Volatile energy markets control natural gas and oil prices that have soared and fuelled record inflation.

Countries like Italy, the Netherlands, Belgium, Greece, Sweden and Cyprus are doing what they can, passing temporary efforts to provide immediate help: slashing fuel taxes, rolling out heating and power subsidies or rebates, and capping energy bills for households and small businesses.

Such measures “are sensible, and some of them, such as energy tax cuts, could be sustained indefinitely — even if prices continue to increase,” said Elisabetta Cornago, a senior research fellow at the Centre for European Reform think tank who specialises in EU energy policy.

But she called them partial solutions that “only make a small difference”.

“The main problem is that these measures to keep energy prices low will also suppress incentives for energy efficiency, for investment in green energy generation, and for electrifying sectors that currently rely on fossil fuels; so they could make the long-term pain of adjustment harder,” Cornago said.

Raising interest rates, the tool wielded by central banks to tame inflation, would also do little to rein in energy prices, which European Central Bank President Christine Lagarde noted last month. That’s because “rising energy prices are due to fundamental shifts in energy markets,” Cornago said.

The energy crisis will be a hot topic at a European Council summit which started on Thursday in Brussels, where leaders from Spain, Portugal, Italy and Greece will call for an urgent, coordinated bloc-wide response. EU officials on Wednesday said they would seek US help on a plan to top up natural gas storage facilities for next winter, and also want the bloc to jointly purchase gas.

In the meantime, workers are taking to the streets as the price of gasolene across the EU’s 27 countries has risen 40 per cent from a year ago, to an average of EUR2.02 per litre, the equivalent of US$8.40 a gallon.

Truckers around France, dissatisfied with aid they consider “insufficient,” held a day of action on Monday, with a group of independent drivers in Normandy and the English Channel region staging a blockade that prevented hundreds of trucks from moving.

Collateral damage included a Paris gig by British hard rock group Royal Blood. The band tweeted the cancellation of its show on Monday night because its gear was stuck at a service station near Paris and “the protesters will not allow the (equipment) trucks to leave”.

In Cyprus, hundreds of livestock breeders protested on Monday outside the country’s Presidential Palace and demanded compensation to offset the sharp increase in animal feed prices because of higher transport costs tied to fuel price hikes.

Spanish truck drivers have been disrupting delivery of fresh produce and other goods for supermarkets for more than a week, while farmers paraded their tractors through Madrid on Sunday. Outside government offices, cattle breeders poured out milk that they said costs them more to produce than they earn selling it.

With the country’s logistics in disarray from the trucker protests, Spain’s national fishing federation, FNCP, said members can’t even move their catch from the ports to the markets further inland.

“Right now, it makes no sense to set out to sea to lose money,” said Basilio Otero, head of the FNCP guild.

Italian truck drivers and fishing boat owners and crews also have held one-day protests over high fuel costs.

Their actions come even as governments have spent billions to help businesses and households. France last week unveiled a multibillion-euro economic assistance package, including partial subsidies of fuel for fishing boats and trucks over the next four months, and EUR3 billion to help some companies pay soaring gas and electric bills.

Greece is giving a one-off subsidy to taxi drivers, and Britain announced a package of tax cuts and support payments that fell far short of what consumer advocates demanded, as utility bills are set to rise 54 per cent in April because of soaring natural gas costs.

Officials in Cyprus say they have lowered fuel taxes to the “absolute minimum permissible” under EU regulations for the next six months, which will cost the government EUR30 million euros in lost revenue.

Albania, which normally relies on hydroelectric dams for energy, has ran up against a dry winter, forcing it to turn to fossil fuel imports. To save energy, the government has cut power to street lights on some main roads and intersections and has public employees working from home for two to three days. It’s paying up to 80 per cent of electricity bills for households and small businesses.

To bring down prices long term, there are two options, Cornago said: investment in renewables and measures like better insulation for homes or electrifying industries that rely on natural gas.

In the nearer future, an EU proposal for a common strategic gas reserve could work to improve security of supply by next winter.

“But realistically, refilling reserves at a time of tight gas markets is also going to result in higher prices for consumers generally,” Cornago said.



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