Europe’s energy ministers met as oil and gas costs surged under the strain of the Iran war, and the European Union cautioned that any ending of hostilities would not bring an immediate return to past price levels. EU energy commissioner Dan Jørgensen warned Tuesday that even if peace were reached “tomorrow,” prices would remain high “in a foreseeable future,” as global market pressures continue to feed through to households and businesses.
Jørgensen told reporters after a meeting of EU energy ministers that the EU has not detected immediate oil and gas supply shortages across the bloc of 27 member states. Instead, he pointed to continuing stress in fuel availability and in the broader pricing dynamics that follow disruptions, describing “increasing constraints” in global gas markets.
He said the constraints are translating into higher electricity prices, with pressure also showing up in specific sectors that rely on fossil fuels. Jørgensen said there is particular pressure on diesel and jet fuel supply as Europe faces the ongoing effects of the war-related disruption of energy supply chains.
The warning came as Jørgensen described EU planning for a “string of measures” aimed at helping families and businesses weather the spike in oil prices. He said the measures are intended to blunt the impact of the higher costs that have followed the war, and he linked the preparation to the need for coordinated action among member states.
Jørgensen said the EU’s executive arm has been preparing the measures to avoid “fragmented national responses and disruptive signals to the markets.” He said the EU’s “toolbox” is expected to be presented “quite soon,” and he described a set of options that includes ways for governments to decouple gas prices from electricity prices.
He also said a tax cut on electricity that has been suggested by Commission President Ursula von der Leyen is among the possibilities being considered. In addition, Jørgensen said there are “good opportunities” for EU governments to provide financial support to vulnerable groups or industries facing what he described as “extraordinary stress,” and he said the Commission would seek to make those options “simpler and wider.”
On how the EU views possible windfall profits from prior energy crises, Jørgensen said he does not foresee a repeat of the 2022 natural gas crisis in which companies profited from a massive gas price hike. He added that a one-time “windfall tax” on companies taking such profits “is a possibility.”
Jørgensen also encouraged EU member states to consider a 10-point plan from the International Energy Agency that includes steps meant to reduce energy demand, such as work-from-home arrangements, reduced highway speeds, encouraging public transport and increasing car sharing. The commissioner’s remarks tied those consumption-reduction ideas to the broader expectation that constraints could persist even if the conflict ends.
He said the EU also remains committed to its ban on Russian gas purchases, describing the move as part of efforts to reduce dependence on Russian gas and restrict funding for Russia’s war in Ukraine. Jørgensen said reliance on Russian gas fell from 45% before the war to 10% now, and that it is intended to be reduced to zero as imports from other suppliers increase, including supplies from the United States.
Jørgensen said the EU is looking to add supply from countries including Azerbaijan, Algeria and Canada, as well as smaller producers. He also warned against any return to approaches that could let energy markets be used as leverage, saying EU members should never “repeat the mistakes of the past allowing Putin to weaponize energy against us and blackmail member states,” and he added that it would be “totally unacceptable” for the bloc to keep buying energy that would “indirectly help finance the terrible war that Putin is conducting in Ukraine.”