Since the start of the war in the Middle East on February 28, and the blockage of the Strait of Hormuz through which a quarter of the world’s oil trade, as well as significant volumes of liquefied natural gas and fertilizers, pass, the cost of energy has been steadily rising worldwide.
Prices at the pump have followed the barrel inflation and drivers are feeling the pinch. Faced with discontent and recession fears, countries are organizing.
Each one has its strategy. While France, hampered by its budgetary difficulties, has targeted the most vulnerable professions such as farmers, fishermen, and small truckers, other states are making broader and costlier choices.
Reduction of taxes in Norway, Poland, and Spain
Most recently, Norway has adopted a comprehensive plan to reduce taxes on fuels. Starting Wednesday, and for three months, taxes on gasoline will be reduced by 4.41 crowns per liter (39 euro cents) and those on diesel will be lowered by 2.85 crowns per liter (25 euro cents). The reduction, approved by Parliament despite government refusal, also applies to mineral oils used for fishing and hunting, the government clarified.
Parliament estimated the cost of this tax cut at 6.3 billion crowns (560 million euros) last week, a relatively low cost explained by the fact that nearly a third of the Norwegian car fleet consists of electric cars, complemented by 12.6% hybrid cars.
Poland announced a reduction in VAT and a price cap. Similarly, in Spain, the Parliament approved a 10% reduction in VAT on gas and fuels, down from 21% previously. And in Italy, a decree-law reduced fuel prices by 25 cents per liter. Similar measures have been taken in Portugal and Sweden.
Rationing and subsidies in India, Greece, and Slovenia
Greece has introduced four “targeted” subsidies totaling 300 million euros on automotive and maritime fuels, diesel, and fertilizers to be implemented by the government in April and May. In Australia, Prime Minister Anthony Albanese announced a reduction of 26.3 cents (16 euro cents) per liter of gasoline and diesel sold on Monday. The bill is expected to amount to 2.55 billion Australian dollars, or 1.5 billion euros. On Saturday, the states of Victoria and Tasmania had announced free public transport, one month for the former and three months for the latter.
The UK is currently following France’s lead from two weeks ago by sanctioning distributors if they overcharge due to the price hike at the pump. However, the Starmer government has promised assistance to low-income households that use domestic oil for heating.
Slovenia is currently the only EU member state to ration fuels. The measure seems symbolic: individuals are limited to purchasing only 50 liters per day, while businesses and farmers can obtain up to 200 liters.
While rationing purchase quantities, India also reduced taxes on gasoline and diesel for domestic consumption by 10 rupees per liter (9 euro cents) last Friday and imposed customs duties on fuels exported out of the country.
Governments are resorting to various measures, including allowing the use of less refined but more polluting fossil fuels or encouraging the population to reduce their travel, akin to the times of Covid.
Telecommuting, reduced work days, and cycling
In Egypt, shops, restaurants, and cafes have been ordered to close earlier since Saturday, while a telecommuting day is mandated for all “non-essential” workers. Ethiopia has taken it a step further by requiring public enterprises and institutions to place non-essential staff on leave. Meanwhile, the Philippines has implemented a four-day work week for civil servants as part of the national emergency. With 98% of its oil imported from the Gulf, this Asian country has seen diesel and gasoline prices more than double.
In Sri Lanka, a country still recovering from a financial crisis, school, university, and government institution work days have been shortened. Fuel is also rationed, allowing 5 liters per week for motorcyclists and 15 for motorists.
In Thailand, employees have been allowed to remove their jackets and work in shirts to reduce air conditioner usage. Civil servants who can are working from home.
In Myanmar (formerly Burma), private vehicle circulation – except for electric ones – is allowed on alternate days based on license plate numbers. A QR code system per vehicle is in place to monitor each one’s consumption. Vietnam has combined these ideas by encouraging the population to prioritize cycling and walking while temporarily suspending its environmental tax on gasoline and diesel.
