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Amidst the escalating energy prices triggered by geopolitical tensions in the Gulf region, European Union (EU) member states have adopted a range of measures to mitigate the impact on consumers. However, these actions lack a unified strategy, leading to a piecemeal approach across the bloc.

The closure and subsequent reopening of the Strait of Hormuz by Iran and the USA have had significant repercussions, emphasizing the EU’s vulnerability to global oil and gas price fluctuations. Ursula von der Leyen, President of the European Commission, highlighted the critical need for coordination among member states, which has been conspicuously absent. Instead, each country has been crafting its response independently.

Diverse Responses Across the Union

In response to the crisis, Germany temporarily reduced its energy tax on fuel by 17 cents per liter, while Italy made a more substantial cut of 25 cents. Spain unveiled a comprehensive relief package exceeding five billion euros. These national measures, while providing short-term relief, have not been orchestrated at the EU level, except for the coordinated release of 92 million barrels of oil from national reserves by 23 countries.

This lack of synchronization is not just about different fiscal capabilities but also reflects varying levels of dependency on fossil fuels among member states. Countries like Hungary, Croatia, and Italy were quick to react due to their significant reliance on traditional energy sources.

Call for a Unified Strategy

The Jacques Delors Institute reported that since the onset of the conflict at the end of February, 23 out of the 27 EU members have implemented over 150 measures, costing around twelve billion euros. Alice Moscovici, a researcher at the Paris-based think tank, criticized these measures for benefiting even the wealthier households capable of affording higher prices, thereby diluting the incentive to adopt more sustainable energy solutions.

France, facing fiscal constraints, has promised targeted aid to sectors like agriculture and fisheries and is pushing forward with electrification, banning gas heaters in new buildings from the end of the year. On the other hand, Ireland has rolled out several social packages in response to large-scale protests.

Moscovici points out the emergence of a “two-speed Europe,” where some countries can afford extensive fiscal measures and push for energy transition, while others lack the fiscal space to act decisively. This disparity underscores the urgent need for an EU-wide strategy to not only address the immediate price pressures but also to prevent internal competition that could drive prices even higher.