Amid protests, Europe limited in curbing high energy prices

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This article was published 23/03/2022 (1644 days ago), so information in it may no longer be current.

MADRID (AP) — Across Europe, governments are slashing fuel taxes and doling out tens of billions to help consumers, truckers, farmers and others cope with spiking energy prices made worse by Russia’s invasion of Ukraine.

But it’s not enough for some whose livelihoods hinge on fuel.

Miguel Ángel Rodriguez was one of 200 concrete truck drivers who held a slow-driving protest around Madrid this week. He said filling up used to cost 1,600 euros ($1,760) a month, but he’s been forking out an extra 500 euros since the start of the year because of the rising price of diesel.

“We will continue striking because, at the end of the day, it’s pretty much the same for us to go out to work or to stay at home,” Rodríguez said. He warned that his rising costs were part of “a domino effect that is only going to drive us all to our ruin unless the government takes some definitive action.”

He’s among those in industries like trucking or fishing who are staging protests to push politicians to ease their financial pain. The war has exacerbated a monthslong energy crunch in Europe, which is dependent on Russian oil and natural gas. Governments have limited options to provide lasting relief as households and businesses face crippling energy bills, high prices at the pump and other effects. Volatile energy markets control natural gas and oil prices that have soared and fueled record inflation.

Countries like Italy, the Netherlands, Belgium, Greece, Sweden and Cyprus are doing what they can, passing temporary efforts to provide immediate help: slashing fuel taxes, rolling out heating and power subsidies or rebates, and capping energy bills for households and small businesses.

Such measures “are sensible, and some of them, such as energy tax cuts, could be sustained indefinitely — even if prices continue to increase,” said Elisabetta Cornago, a senior research fellow at the Centre for European Reform think tank who specializes in EU energy policy.

But she called them partial solutions that “only make a small difference.”

“The main problem is that these measures to keep energy prices low will also suppress incentives for energy efficiency, for investment in green energy generation, and for electrifying sectors that currently rely on fossil fuels — so they could make the long-term pain of adjustment harder,” Cornago said.

Raising interest rates, the tool wielded by central banks to tame inflation, also would do little to rein in energy prices — which European Central Bank President Christine Lagarde noted last month. That’s because “rising energy prices are due to fundamental shifts in energy markets,” Cornago said.

The energy crisis will be a hot topic at a European Council summit starting Thursday in Brussels, where leaders from Spain, Portugal, Italy and Greece will call for an urgent, coordinated bloc-wide response. EU officials on Wednesday said they would seek U.S. help on a plan to top up natural gas storage facilities for next winter and also want the bloc to jointly purchase gas.

In the meantime, workers are taking to the streets as gasoline across the EU’s 27 countries has risen 40% from a year ago, to an average of 2.02 euros per liter — the equivalent of $8.40 a gallon.

Truckers around France, dissatisfied with aid they consider “insufficient,” held a day of action Monday, with a group of independent drivers in Normandy and the English Channel region staging a blockade that prevented hundreds of trucks from moving.

Collateral damage included a Paris gig by British hard rock group Royal Blood. The band tweeted the cancellation of its show Monday night because its gear was stuck at a service station near Paris and “the protesters will not allow the (equipment) trucks to leave.”

In Cyprus, hundreds of livestock breeders protested Monday outside the country’s Presidential Palace and demanded compensation to offset the sharp increase in animal feed prices because of higher transport costs tied to fuel price hikes.

Spanish truck drivers have been disrupting delivery of fresh produce and other goods for supermarkets for more than a week, while farmers paraded their tractors through Madrid on Sunday. Outside government offices, cattle breeders poured out milk that they said costs them more to produce than they earn selling it.

With the country’s logistics in disarray from the trucker protests, Spain’s national fishing federation said members can’t even move their catch from the ports to the markets further inland.

“Right now, it makes no sense to set out to sea to lose money,” said Basilio Otero, head of the FNCP guild.

Italian truck drivers and fishing boat owners and crews also have held one-day protests over high fuel costs.

Their actions come even as governments have spent billions to help businesses and households. France last week unveiled a multibillion-euro economic assistance package, including partial subsidies of fuel for fishing boats and trucks over the next four months, and 3 billion euros to help some companies pay soaring gas and electric bills.

Greece is giving a one-off subsidy to taxi drivers, and Britain announced a package of tax cuts and support payments that fell far short of what consumer advocates demanded as utility bills are set to rise 54% in April because of soaring natural gas costs.

Officials in Cyprus say they have lowered fuel taxes to the “absolute minimum permissible” under EU regulations for the next six months, which will cost the government 30 million euros in lost revenue.

Albania, which normally relies on hydroelectric dams for energy, has ran up against a dry winter, forcing it to turn to fossil fuel imports. To save energy, the government has cut power to streetlights on some main roads and intersections and has public employees working from home for two to three days. It’s paying up to 80% of electricity bills for households and small businesses.

To bring down prices long term, there are two options, Cornago said: investment in renewables and measures like better insulation for homes or electrifying industries that rely on natural gas.

In the nearer future, an EU proposal for a common strategic gas reserve could work to improve security of supply by next winter.

“But realistically, refilling reserves at a time of tight gas markets is also going to result in higher prices for consumers generally,” Cornago said.

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AP journalists Elaine Ganley in Paris; Menelaos Hadjicostis in Nicosia, Cyprus; Nicholas Paphitis in Athens; Frances D’Emilio in Rome; Mike Corder in the Hague; and Llazar Semini in Tirana, Albania contributed.