Europeans are obsessed with cars and won’t reduce oil demand

The European Union depends on imports for 96% of its crude oil supply, of which about 30% comes from Russia. Oil is by far Russia’s largest source of export revenue — more than double the revenue from its gas exports — of which the EU is give Vladimir Putin $285 million a day.

Inside climate news clearly describes the situation: “Just weeks before Putin’s invasion of Ukraine on February 20, the Russian Ministry of Finance announced the fiscal windfall it had enjoyed in 2021 due to surprisingly high oil and gas prices . Russian government oil and gas revenues exceeded initial estimates by more than 51%. In October, as Europe grappled with high natural gas prices, caused in part by a slowdown in Russian supplies, Russia was taking in nearly $500 million a day in fossil fuel revenue.

In view of the above, the best response to Russian President Putin’s aggression may be an immediate and substantial reduction in oil consumption. Such a measure would reduce Russia’s income not only because of its ability to export less, but also because when demand falls, prices generally fall as well.

It is amazing that many governments have implemented or are planning to implement measures that stimulate oil consumption, apparently playing into Putin’s hands. the The Japanese government has more than tripled existing fuel subsidies at $0.15 per litre. Ireland reduced excise duty of 20 cents per liter on gasoline and 15 cents per liter on diesel. the The French Prime Minister announced that it would introduce a rebate of 15 cents per liter for four months, which would cost the government more than 2 billion euros. Sweden plans to cut taxes on petrol and diesel and pay each car owner SEK 1,000 as a one-time support payment. Even one of the most vocal opponents of Russian aggression, Poland reduced VAT on transport fuels from 23% to 8%.

the Hungarian government set a price cap of €1.26 on petrol and diesel, reduced excise duties by around 7 cents and provided a subsidy of around 5 cents per liter to small filling stations. With the price of fuel now well below the market price, daily fuel consumption has tripled. Although this is mainly due to the increase pump tourism, fuel smuggling and storing cheap fuel for later use, it dramatically increased road traffic, especially in some border regions.

Lower fuel prices lead to higher fuel consumption, exacerbating the very problem that governments are trying to solve. Fuel subsidies therefore also lead to more environmental pollution and more greenhouse gas emissions.

Moreover, transport fuel subsidies are taxpayers’ money, and therefore, ultimately, they will not benefit at all from increased fuel subsidies. Such measures are all the more perverse since the increase in subsidies mainly benefits the rich (for example, in the Nederlandsthe richest 10% of the population spend 14 times more on transport fuel than the poorest 10%, and in Hungary 7 times more), thus contributing to social inequalities and injustice, and funding the people who contribute by far the most to climate change.

Prove Putin wrong. Pixabay license. Free for commercial use.

They are even more perverse, given the huge amount of fossil fuel subsidies that already exist. According to the International Monetary Fund (IMF), the global fossil fuel industry receives grants of 11 million US dollars every minute, and in Europe this subsidy amounts to more than 500 billion euros per year. These subsidies must be removed urgently (the EU and other G7 countries promised to eliminate them by 2025) and must not be increased under any circumstances.

One of the reasons given for freezing fuel prices and subsidies is that it can help reduce inflation. But it is war and environmental pollution that cause the greatest inflation. There is hardly anything else that would increase the costs more than the sickness and death of masses of people and the destruction of economic assets. For example, if agricultural production in Ukraine is disrupted due to war, food prices will skyrocket in the whole world.

More importantly, as increased subsidies on petroleum products lead to increased demand for oil and higher market prices, more and more money is flowing into the Russian government to fund its war machine.

In order to counter Russia’s aggression, national governments must immediately repeal tax cuts and subsidies on petroleum products. The European Commission should call on the respective governments to take such action and if they refuse, all EU funding should be immediately suspended.

There are certainly legal grounds for the latter: an unjust and terrible war must not be financed with public money, and — in accordance with the declared position of the Commission — no EU money should go to countries that weaken the rules protecting our environment.

National governments should also suspend all investments requiring large quantities of petroleum products (eg road construction). Empty flights should be banned and the airline ticket tax should be introduced or increased. Local governments must put in place emergency measures to reduce the use of cars and trucks, inter alia, through effective traffic calming measures, the promotion of environmentally friendly modes of transporting passengers and goods the environment, increasing parking fees and organizing car-free Sundays every week.

Since most people in Europe are not fully aware of the relationship between Russia’s oil exports and its aggression against Ukraine, it is essential that national and local governments launch a large-scale campaign informing people that our dependence on oil is fueling the Russian war machine and asking them to save oil as much as they can. They should only use cars when absolutely necessary and refrain from flying. Companies should reconsider how and when they transport goods. Everyone should sign Avaaz’s appeal for $top fueling Putin’s war!

Targeted aid must be given to the poorest sections of society. This should not be a problem for governments since all EU Member States already have various social support systems in place. The poor would benefit the most even if the same monthly payment were made to each citizen (see for example the case of Canada and Hungary).

All of these measures can be put in place within a few weeks. Even the announcement of these measures would certainly have an immediate effect. In the current situation, we can’t even wait a minute.

Putin is probably convinced that Europeans are so obsessed with their cars that they won’t stop using them, even temporarily, no matter what he does in Ukraine. Let’s prove him wrong.

Originally published on Transportation & Environment.


 

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Felix J. Dixon