The energy crisis forces fuel savings

The welcome decision of the Croatian Government to reduce excise duties on fuel and limit traders' margins was inevitable in order to mitigate the rise in energy prices. But whether fuel will really become cheaper is another question. As things stand now, a small drop in gasoline prices is possible in the short term, but it is hard to believe that it will last.

On the contrary, the costs of citizens and companies for energy could rise, because in the next four months, developed countries expect even stronger wildfires in oil prices and even greater shortages - as a result of the introduction of Western sanctions against Russia due to its aggression against Ukraine. The West is preparing for the outbreak of a world energy crisis, similar to the oil shock that happened half a century ago. The energy crisis of 1973 caused high inflation and economic stagnation, forcing Western countries to cut fuel consumption.

That a new crisis is not impossible is evidenced by the unusual appeal of the International Energy Agency (IEA), which on Friday called on developed countries, its members, to introduce extensive measures to save gasoline, which apply primarily to citizens. In order to reduce fuel consumption, the IEA suggests that company employees work from home at least three days a week, wherever possible, while increasing the use of public transport. Driving speed on highways should be limited by 10 kilometers per hour, and private cars should be prohibited from driving in cities on Sundays. The agency also recommends that citizens use more than one car for the trip to work, and business people to reduce air travel.

Older generations in Croatia will be reminded of the "even-odd" regime introduced for gasoline shortages in Yugoslavia, when drivers could only go out on the road every other day. Even the citizens of Western Europe were not exempted from similar restrictions at one time. Now it can happen again because the shortage of oil will intensify in the coming months. The IEA expects the peak of the troubles during the summer, when gasoline consumption is at its highest.

The agency calculated that with the proposed savings, the world could make up for the daily shortfall of at least three million barrels of oil from Russia, which will occur due to the interruption of trade with the country from which 11 percent of the world's production of "black gold" comes. Although a complete ban on the import of energy products from Russia is not expected, a reduction in the flow of its oil by a third - while there is not enough of it on the world market anyway - will be a big shock.

Therefore, Western countries are pressing with all their might the Organization of Petroleum Producers (OPEC), to which Russia is a member, to increase production. However, the leaders of Saudi Arabia and the Emirates have turned a deaf ear to repeated calls by the US president, British and Japanese prime ministers to help the West get rid of its dependence on Russian oil. In the West, the Arab oil producers' reluctance to increase production is interpreted as their solidarity with Moscow, at a time when neither China nor India want to join Russia's isolation.

At first glance, it seems that the fear of a shortage of Russian oil is exaggerated, because the ban on the import of energy products from Russia has not been formally introduced, neither in Europe nor in the USA, despite some announcements from the highest places. However, many Western companies and traders are afraid to import Russian oil because they believe that it will get them into some kind of trouble. Therefore, the deficit is increasing.

The shortage of energy on the world market occurred during the economic recovery from the pandemic, and the aggression against Ukraine and sanctions against Russia are only making it worse, igniting the energy crisis. At this moment, no one in the world knows for sure what the consequences of war and sanctions will be, and when fuel prices will stabilize. They don't know that either in Washington, or in Brussels, or even in Zagreb. Governments, companies and citizens want the war in Ukraine to end through negotiations as soon as possible. This would at least partially alleviate the upcoming energy crisis.

The proposals of the IEA agency for saving fuel are just a hint of the restrictions that may hit us in the coming months. The trouble, however, is that high energy prices - even without the war in Ukraine - will plague us for years to come.

(novilist.hr)