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The EU is assessing “all possibilities” including fuel rationing and releasing more oil from emergency reserves as it braces for a “long-lasting” energy shock from the Middle East war, the bloc’s energy commissioner has said.
“This will be a long crisis . . . energy prices will be higher for a very long time,” Dan Jørgensen told the FT, warning that for some more “critical” products “we expect it to be even worse in the weeks to come”.
The near closure of the crucial Strait of Hormuz waterway and strikes on infrastructure in the Gulf have created chaos in energy markets, sending prices soaring and prompting long-term supply fears.
“The rhetoric that we’re using and the words we’re using are more serious now than they were earlier in the crisis,” Jørgensen said. “It certainly is our analysis that this will be a prolonged situation and countries need to be sure that they . . . have what they need.”
He said that while the EU was “not in a security of supply crisis, yet”, Brussels was drawing up plans to tackle “structural, long-lasting effects” of the conflict.
The warning from the EU comes as the energy shock reverberates across the world, raising the spectre of higher inflation and slower economic growth, forcing governments to draw up plans to support consumers and prompting some countries to fire up coal plants.
Jørgensen said the EU was “preparing for the worst scenarios” even if the bloc was “not there yet” on needing to ration critical products such as jet fuel or diesel. “I mean, better to be prepared than to be sorry,” Jørgensen said.
Airlines have raised particular concerns about jet fuel supplies.
Asked about the possibility of weakening jet fuel regulations to permit more US imports, or allowing more ethanol blending for automotive fuel, Jørgensen said “we’re not there yet where we have remedied or changed any of our current rules”.
But he added: “We are looking at all possibilities and it’s clear the more serious the situation gets, the more of course we will also have to look into legislative tools.”
The EU and US have differing standards for jet fuel, which in the EU has a freezing point of -47C while in the US it is -40C.
Jørgensen also said he “will not exclude” another release of strategic energy reserves “if the situation becomes more dire.” EU countries took part in the largest release of strategic oil reserves in history last month, in an attempt to tame soaring prices.
Jørgensen would not share the EU’s “exact analysis” on when a new release might be required but said “we are taking it very seriously and we are ready to do it when and if it becomes necessary”.
“We need to keep our possibilities open, and if this is indeed, as I project, a long-lasting crisis, then we need those tools also at a later stage,” he added. “It needs to be done at the exact right time, and it needs to be proportionate.”
Jørgensen also reiterated his position that there would be no change to EU legislation to end Russian liquefied natural gas imports this year. He said that relying instead on the US and other partners to provide additional supplies was acceptable as they operate in “the free market”.
