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Could European countries implement oil and gas rationing?


An individual using a London petrol station to fill up.

Lewis Whyld, PA Images | PA Images | Getty Images

European countries face energy shortages as the dispute between Moscow, the West and Russia over Russian export payments continues.

European countries are dependent heavily on Russian oil and natural gas supplies. However, the invasion of Ukraine by Moscow in February resulted in the EU and U.K imposing a barrage sanctions. cutting down on Russian energy imports.

Early March saw the EU promise to reduce Russian gas imports by at least two-thirds in the coming year. Britain, however, has stated it will eliminate Russian oil imports completely by 2022.

However, these moves have risks in a region already experiencing an energy crisis. Weak natural gas supply led to wholesale price increases surge to record highsLast year in Europe, households in Britain saw their energy bills rise. rise by more than 50% from April 1.

Natural gas rationing

Germany warned on WednesdayThe country may face a natural gas crisis that could force the government to restrict gas supplies. Robert Habeck, German Economy Minister, said that the government’s “early warning” measures did not mean the country would have to use rationing gas. However, he called for consumers and businesses to cut their energy consumption.

The government of Austria announced Wednesday that they had initiated the first phase of a three stage emergency plan. It would enable them to closely monitor the country’s gas markets. Officials pointed out that Russia’s demands for payment in rubles was the trigger for the contingency planning. However, if the plan reaches the third stage, then emergency measures like rationing could be in force.

Chi Kong Chyong (director of the Energy Policy Forum at Cambridge University) says Germany and Austria could not be the only countries that will have to use extreme emergency measures, if Russia is still in conflict with Western countries.

Putin said last week that the Kremlin will seek payment in rubles for gas sales from “unfriendly” countries — a demand that has been rejected by the G-7 nations. Thursday the Russian leader said he had signed a decreeRussian gas prices will increase to rubles from April 1st, according to foreign buyers.

CNBC spokeswoman Chyong saying that “if they cannot agree on payment terms, and gas flow to Russia is blocked, then other European nations will have to take urgent measures.” We are entering a warm period, when we use less gas. However we still require gas to flow to our storage units to be used in the winter when temperatures will drop.

“If Russian gas flow stops, all European governments — including the U.K.’s — need to start activating emergency plans including ‘front loading’ public campaigns to ready our citizens to save energy in the winter months,” he added.

Diesel rationing

Reductions in demand

The ‘true, effective weapon against Putin’

The International Energy Agency released its first report earlier in the month. published a reportThe organization outlined 10 policy recommendations that it claimed could quickly reduce the global oil demand to 2.7 millions barrels per hour. These policies were intended to be implemented in advanced economies and other countries. They included speeding down highway speeds by 10 km (6.2 miles per hour), making public transport more affordable, creating car-free Sundays, and alternately using private cars in big cities.

Rory Stewart was a British former International Development Minister. He is now a Senior Fellow at Yale’s Jackson Institute. said in a tweetThis month, Russia’s oil exports were reduced by focusing more on decreasing demand.

His words were: “It would need a civil and government effort equal to the Covid response.”

The U.K. speed limits should be reduced to 50 MPH, all public transport must be free, and Uber is urged to make technology available that allows civilian riders to rideshare.

This would decrease the demand for and increase the price of Russian oil. [and]Stewart stated that Putin’s actions could have a devastating impact.”

CNBC’s Chyong from Cambridge University said that Russia can be hurt by energy sanctions if it implements policies that reduce demand.

“This point is about trying to bring down demand for fossil fuels — this is our true and effective weapon against Vladimir Putin,” he said.

A negative exponential relationship between prices and demand [exists]Because right now, we face a global tightening of the energy system. Every extra unit will result in prices rising disproportionately. The flip side of this effect is that reducing our demand will have disproportionately high marginal benefit – drastically reducing prices.”