Economic Record-Gasoline Price: The Right Decision
2 months ago
– – Gas price: the right decision
The war in Ukraine calls for a swift response to stop rising fuel prices and punish Russia.
For Vladimir Putin, every day gone by is too much oil growth in one day. There is an urgent need to reduce oil and gas consumption. And consider permanently cutting off the supply of hydrocarbons and other minerals that fund Russia’s dirty war. Not openly yet, but that’s what many Western governments think, even if they’re afraid of the price they pay. They are afraid of the anger embodied in France by the “Yellow Vest” movement and the inflation shock that can be out of control if mishandled.
However, studies published by both the European Commission and energy experts, the OECD (Proposal and Standardization Box for Developed Countries) or the International Energy Agency (IEA) are reassuring. Europe and even Switzerland can be done fairly quickly without Russian oil and gas. First of all, diversifying sources (ongoing), and above all, significantly reducing energy consumption. The IEA has released a catalog of 10 measures that can reduce petroleum fuel consumption by 2.7 million barrels (b / d) per day in four months. That’s equivalent to all the gasoline that China’s car fleet (302 million units) burns every day, or about half of Russia’s daily exports of petroleum products.
Therefore, reducing the speed of the road by 10 km / h will save about 15%. Work from home, save 5%, even 18% or 500,000bpd in 3 days, 1 day a week. According to the IEA, created in the aftermath of the 1973 oil crisis, a 50% reduction in New Zealand’s recently decided public transport ticket price will save 330,000 barrels per day. By comparison, a car-free city on Sunday is equivalent to a savings of 95,000 barrels / day.
Obviously, these are simple measures that can have a huge impact on reducing pollution related to motor vehicle traffic, a sector that cannot reduce emissions, while breaking the spiral of price increases in the global market. am. Of course, other measures are needed in the medium term. For example, replacing all household oil and gas heaters with heat pumps as soon as possible, or developing a green hydrogen strategy to replace natural gas in industrial processes. And obviously, we must not rely on the voluntary commitment of our citizens (it has never worked). The above measures must be imposed on a large scale to make an impact. This requires a little courage and targeted support to take into account social impact.
Are you going on the road to Switzerland? I am very skeptical of it. Ineffective, simple, and ultimately very costly measures are recommended. Measures considered stupid by serious economists and strongly discouraged by OECD experts, such as temporary tax cuts on gasoline and fuel. They propose to act through taxation by supporting the most vulnerable households, specialized sectors that cannot reduce fuel consumption quickly (agriculture, specialized transportation, etc.).
The IEA or OECD recommendations have only a slight impact on the comfort of European or Swiss homes, but have the great benefit of imposing a large penalty on Moscow while causing virtuous dynamics in terms of energy. Ecological transition as needed. We no longer have the moral time to procrastinate and waste money in bad ways. Follow the opinions of the competent authorities (IEA, OECD) that we have created to fund and help us build, not the recommendations of the UDC (Oil Lobby) or PLR (Pre-Election Populists). Not the right decision.
Pierre Veya 24 Heures, Tribunede Genève, Head of Economics at Matin Dimanche. He was previously the editor-in-chief of the newspaper Le Temps, Agefi, and head of the economic sector at L’Hebdo. His areas of expertise are finance, economics, high tech, environment, climate and agricultural policy.