By Francesco Canepa

FRANKFURT, Russia (Reuters) – European countries are reviving rationing plans to recall the 1973 energy crises.

Europeans are heading towards car-free Sundays and dimming lights.

It’s unlikely, as that and other recent episodes show that companies adapt quickly, so the impact on the economic output of the euro zone may not be greater than 1% according to some estimates.

Governments have learned from experience that austerity measures such as fuel rationing at pumps won’t work if there isn’t enough support.

Therefore, they will likely opt for something less consensual like getting homes to reduce their thermostats or easing up on the gas pedal.

However, deciding which industries will have their energy supplies cut is a difficult political decision that forces governments to use the same ruthlessness as in wartime.

DENT TO GROWTH CAN BE SLOW

Europe could replace Russian crude oil imports almost entirely with foreign sources but it is not likely to be able do the same with natural gas.

It is possible to ration gas, should Russia turn off its taps as a result of the sweeping economic sanctions.

Economists believe that economic growth will be hampered by the small amount of damage it would cause.

According to the European Central Bank, the impact of a 10% decrease in energy supply on European businesses will be approximately 0.7% of the Euro Area’s Gross Value Added. This is a measure of products and services made in Europe.

It is consistent with previous precedents in Japan following the Fukushima nuclear catastrophe of 2011 and Britain’s 1970s embargo.

When China suffered its own power shortage last year, Europe’s service-oriented economies were likely to be more fortunate than China’s manufacturing-heavy counterparts.

Capital Economics said that past episodes of energy rationing were not as harmful as we might have expected and that firms are adept at attaining large efficiency gains whenever necessary.

Danish Crown, a pork exporter, has begun to convert some of its gas-fired plants to diesel. In March alone, diesel generator sales in Denmark increased 300-400%.

According to an ECONtribute paper, even Germany, which is the most dependent on Russian energy in Europe, a 8% reduction in oil, gas, and coal consumption would have a 1.4% impact on GDP.

There are also more optimistic scenarios. Nomisma Energia projects that the Italian economy would be hit by 5.6% if Russia’s gas supply drops to roughly half. This assumes some efficiency gains but not a switch to other sources.

Without public support, rationing won’t work.

Heated rationing is a strategy that aims to save households, and to concentrate the pain onto companies.

This is an important lesson that was learned in the 1970s. Public backlash forced the European countries of Sweden and Netherlands to swiftly change their policies.

Instead, governments allowed fuel prices to rise and lowered demand.

These measures were deemed more fair by the majority of people, and included lower speeds limits as well as frequent access to public transportation.

Is rationing possible? It is a function on the public’s willingness and support it”, said Alan Pisarski. He was the one who helped to create the U.S. strategy in response to the 1973 oil embargo.

He stated that Europe should be focusing on getting people to lower their heating, a campaign which is already in place in certain countries.

ECONOMY IN WAR

History shows that even a simple list of industries to receive fuel the longest can prove difficult.

The oil embargo struck the United States and the Senators from the Mountainous States of Colorado and New Hampshire opposed the idea of closing down ski lifts. They also sought to divert attention from energy being used for floriculture in hot houses, Pisarski recalls.

BASF Chemical Group in Germany has already warned about a “complete cessation” of operations if the supply of chemicals is reduced to less than half current demands.

They will be prioritised by industries that use heat to produce their products, including those making chemicals, metals, and paper.

Interruptible contract holders are most likely to experience supply interruptions and could even be forced to reduce their work week as in China last year during rationing.

“The rationing required by an immediate embargo would basically be comparable with the allocation mechanism of a war economy,” said Kirsten Westphal, a member of the German Institute for International and Security Affairs that advises the government, in an interview with the Clean Energy Wire https://www.cleanenergywire.org/news/russian-energy-embargo-would-force-drastic-rationing-decisions-security-expert.

(Additional reporting Gavin Jones in Rome, Ludwig Buerger in Frankfurt and Stine Jacobsen in Copenhagen; Editing by Mark Potter)