Amid protests, Europe Limited to curb high energy prices | Economic news
By KELVIN CHAN and ARITZ PARRA, Associated Press
MADRID (AP) — Governments across Europe are slashing fuel taxes and doling out tens of billions to help consumers, truckers, farmers and others cope with soaring energy prices made worse by the invasion of Ukraine by Russia.
But that’s not enough for some whose livelihoods depend on fuel.
Miguel Ángel Rodriguez was one of 200 concrete truck drivers who staged a protest against slow driving around Madrid this week. He said refueling costs 1,600 euros ($1,760) a month, but has been shelling out an extra 500 euros since the start of the year due to rising diesel prices.
“We will continue to strike because, at the end of the day, it’s pretty much the same for us to go to work or to stay at home,” Rodríguez said. He warned that its rising costs were part of “a domino effect which will only lead us all to our ruin unless the government takes definitive action”.
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He is one of those who, in sectors like trucking or fishing, organize demonstrations to pressure politicians to alleviate their financial difficulties. The war has exacerbated a months-long energy crisis in Europe, which depends 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 are controlling natural gas and oil prices which 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 relief: cutting fuel taxes, deploying subsidies or rebates for heating and electricity and capping energy bills for households and small businesses. .
Such measures “make sense, and some of them, such as energy tax cuts, could be sustained indefinitely – even if prices continue to rise,” said Elisabetta Cornago, senior researcher at the center. of reflection on European reform, specializing in the 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 remove incentives for energy efficiency, investment in green energy generation and electrification of sectors that currently depend on fossil fuels — so they can take the long-term pain of adjustment harder,” Cornago said.
Raising interest rates, the tool used by central banks to control inflation, would also not help to control energy prices, as the Bank’s president noted last month. central European, Christine Lagarde. That’s because “rising energy prices are driven by fundamental changes in energy markets,” Cornago said.
The energy crisis will be a hot topic at a European Council summit starting in Brussels on Thursday, where leaders from Spain, Portugal, Italy and Greece will call for an urgent and coordinated bloc-wide response. . EU officials said on Tuesday they were moving towards jointly purchasing natural gas and ensuring the bloc’s storage facilities are replenished.
In the meantime, workers take to the streets.
Truckers across France, unhappy with aid they say is ‘insufficient’, staged a day of action on Monday, with a group of self-employed drivers in Normandy and the Channel region who staged a blockade that prevented hundreds of trucks from moving.
Collateral damage included a concert in Paris by British hard rock band Royal Blood. The band tweeted the cancellation of their show on Monday night because their gear was stuck at a gas station near Paris and “protesters won’t allow trucks (of gear) to leave.”
In Cyprus, hundreds of livestock farmers protested outside the country’s presidential palace on Monday and demanded compensation to make up for the sharp rise in feed prices due to rising transport costs linked to price hikes. fuel.
Spanish truckers have been disrupting the 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 ranchers poured milk which they claimed cost them more to produce than they earned selling it.
With the country’s logistics in disarray following protests by truckers, Spain’s national fishing federation said members could not even move their catch from ports to markets further inland.
“Right now it makes no sense to go to sea to lose money,” said Basilio Otero, head of the FNCP guild.
Italian truckers and fishing boat owners and crews also staged day-long protests against high fuel costs.
Their actions come even as governments have spent billions to help businesses and households. France unveiled a multibillion-euro economic aid package last week, including partial fuel subsidies for fishing boats and trucks over the next four months, and €3 billion to help some businesses to pay soaring gas and electricity bills.
Greece is giving a one-off subsidy to taxi drivers and Britain is pledging to help households as utility bills are set to rise by 54% in April due to soaring natural gas prices.
Cypriot authorities say they have lowered fuel taxes to the “absolute minimum allowed” under EU rules for the next six months, which will cost the government 30 million euros in lost revenue.
Albania, which normally depends on hydroelectric dams for power, experienced a dry winter, forcing it to turn to fossil fuel imports. To save energy, the government cut power to streetlights on some major roads and intersections and made public employees work from home for two to three days. It pays up to 80% of household and small business electricity bills.
To bring prices down in the long term, there are two options, Cornago said: investing in renewable energy and measures such as better insulation of homes or the electrification of industries that rely on natural gas.
In the nearer future, an EU proposal for a common strategic gas reserve could help improve security of supply by next winter.
“But realistically, filling reserves at a time when gas markets are tight will also drive up prices for consumers in general,” Cornago said.
AP journalists Elaine Ganley in Paris; Menelaos Hadjicostis in Nicosia, Cyprus; Nicolas Paphitis in Athens; Frances D’Emilio in Rome; Mike Corder in The Hague; and Llazar Semini in Tirana, Albania contributed.
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