Europe’s top energy official warns the EU could face an enduring energy shock

Europeans have been warned to prepare for a “long-lasting” energy shock that could lead to measures such as fuel rationing.

Dan Jørgensen, European Commissioner for Energy and Housing, says the bloc is assessing “all possibilities” to tackle long-term effects of the Middle East conflict, including releasing more oil from strategic reserves.

“This will be a long crisis ... energy prices will be higher for a very long time,” Jørgensen told the Financial Times. The Dane also warned that for some more “critical” products, the EU could “expect it to be even worse in the weeks to come”.

Preparing for tough times

His message comes amid energy market disruption caused by the near-closure of the Strait of Hormuz and strikes on Gulf infrastructure. Prices have soared alongside fears of long-term supply shortages, potentially higher inflation, and slower economic growth.

While Jørgensen explained the EU was “not in a security of supply crisis, yet”, Brussels was devising plans to tackle “structural, long-lasting effects” of the war.

Jørgensen continued. “It certainly is our analysis this will be a prolonged situation, and countries need to be sure that they ... have what they need.”

Governments have been creating strategies to support consumers. The commissioner said the EU was “preparing for the worst scenarios”, including rationing critical products such as jet fuel or diesel, although it was “not there yet”.

“Better to be prepared than to be sorry,” he said, also reiterating there would be no change to EU legislation to end Russian LNG imports this year.

The politician said relying instead on the US and other partners to provide additional supplies was acceptable, as they operate in “the free market”.

Potential relief levers 

Jørgensen also spoke about loosening jet fuel regulations to permit more US imports and allowing more ethanol blending for automotive fuel.

He again said the EU was “not there yet” but was examining all possibilities.

“It’s clear the more serious the situation gets, the more, of course, we will also have to look into legislative tools,” he said.

Jørgensen would also “not exclude” another release of strategic energy reserves “if the situation becomes more dire”, without revealing the bloc’s “exact analysis” on when that might be required.

EU countries actioned the largest release of strategic oil reserves in history last month, in a bid to tame soaring prices.

Jørgensen added: “We need to keep our possibilities open, and if this is indeed, as I project, a long-lasting crisis, we need those tools also at a later stage. It needs to be done at the exact right time, and it needs to be proportionate.”