“Europe must take serious action to reduce its oil and gas consumption”

lThe Russian decision to cut off natural gas supplies to Poland and Bulgaria marks a serious escalation in Russia’s attempt to use energy as a weapon against Europe. More disruptions could soon happen, turning into reality what has until now been just a theoretical doomsday scenario for Europe.

In light of this rapidly deteriorating situation, European governments must finally take the reduction in demand for oil and gas seriously and take two steps: stop subsidizing oil and gas worldwide and ask people to consume less. Although politically difficult, both measures are now urgently needed, both from an energy security and public finance point of view, and can no longer be postponed.

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Because Europe needs to take a serious approach to reducing its oil and gas consumption. Since the onset of the European energy crisis in the summer of 2021, European governments have heavily subsidized oil and gas consumption, through a wide range of interventions, ranging from direct subsidies to tax cuts. Initially intended to provide a quick solution to what should have been a temporary problem of high energy prices, these measures have now become structural and much more important.

Flat-rate transfers and rising energy prices

Since September 2021, major European countries such as Germany, France, Italy and Spain have each spent around €20-30 billion artificially lowering gas and electricity bills, as well as petrol and diesel prices. Such large oil and gas subsidies are not only unsustainable from a public finance point of view. They are also harmful from a geopolitical and energy security perspective, not to mention the environment.

Since Europe imports 40% of its gas and 25% of its oil from Russia, these are essentially subsidies to Mr Putin. And as Europe has to import most of the oil and gas it consumes, European governments need to understand that in the current situation, rising energy prices must be an essential part of the solution, as reducing oil and gas demand is essential. is for Europe to increase its resilience in the face of a possible disruption of Russian flows.

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