Governments throughout Europe are creating subsidies, tariffs, and policy changes to protect their economies, businesses, and increasingly resentful populations from record gasoline and diesel costs as a result of the wars in the Middle East and Ukraine.
The Organization for Economic Cooperation and Development claims that from the beginning of the war in Iran, nations have stepped in to lessen the economic impact of reduced energy supplies and skyrocketing fuel costs.
According to a report released by the OECD on Wednesday, seven of the ten countries actively attempting to limit the economic harm are members of the European Union.
Lithuania lowered train ticket rates by half. Greece is taxing gambling more to pay for public relief operations. Italy delayed the scheduled demolition of coal-fired power facilities and cut the required paperwork for oil and natural gas projects.
The Netherlands raised funds for a program that provides free energy-saving services in homes. Poland has suggested severely taxing the record earnings of select gasoline producers and sellers.
Russia’s war in Ukraine generated unrest in Europe and interrupted global energy supply prior to the United States and Israel attacking Iran.
Eighty-five percent of the EU’s natural gas and almost all of its oil are imported.
According to the EU’s statistical office, 57% of the bloc’s energy demands are met by imports, with a large portion of its domestic energy coming from nuclear and renewable sources.
As gas prices rise above $12 per gallon in several nations, Europeans are growing increasingly irate.
The European advocacy group Transport & Environment claims that every day, EU citizens spend an additional 203 million euros ($231 million) on diesel fuel alone.
The organization’s expert Antony Froggatt stated, “It’s a cruel irony that the U.S. is the least vulnerable to a crisis of its own making, while Europe’s economy again takes the hit.”
To help their nations weather the present energy crisis, some European governments are investing billions.
In Brussels, EU leaders granted member states temporary latitude to offer state assistance to households and energy-intensive sectors such as transportation, fishing, and agriculture.
Additionally, they provided a small amount of flexibility from EU spending regulations for projects that improve energy security and lessen the bloc’s long-term need for imported natural gas and oil.
In her yearly State of the European Union speech last week, Ursula von der Leyen, President of the European Commission, stated, “The pressures from higher energy prices and borrowing costs are biting for people and for businesses.”
To “give us independence and drive down energy prices,” “we need to double down on our affordable, homegrown, clean energy, be it renewables and nuclear or biomethane and others.”
France introduces diesel relief and Red Sea deployment.
To shield everyday consumers and energy-dependent companies from inflation, France has implemented a growing list of targeted financial aids.
The French administration unveiled a €450 million ($512 million) financial package on Tuesday to scale up its ongoing support.
The new plan widens the criteria for income-dependent aid, making it available to individuals who commute over 30 kilometers (18 miles) round-trip for their jobs or log more than 8,000 kilometers (4,900 miles) a year for work.
According to officials, this expansion allows 5.5 million employees to qualify for a €100 ($113) subsidy to help offset fuel expenses through the rest of the year.
The updated relief plan also extends fuel subsidies for agricultural workers, fishers, and building contractors through the end of the year.
Additionally, it accelerates the distribution of winter energy vouchers—ranging from €48 to €277—by releasing them three months ahead of schedule to help 5.8 million households manage their heating costs.
French President Emmanuel Macron has requested that European Commission President Ursula von der Leyen ease EU fuel quality standards—including rules on density and sulfur levels—to boost European diesel and jet fuel manufacturing.
This move mirrors temporary regulatory rollbacks implemented during the COVID-19 pandemic.
In a recent letter, Macron cautioned that global oil markets face imminent, sharp price spikes unless the Strait of Hormuz reopens to tankers and Saudi Arabia fixes its East-West pipeline to the Red Sea.
Additionally, he proposed increasing the allowable limit of conventional biodiesel in standard diesel from 7% to 10%.
French President Emmanuel Macron announced during a television interview on Thursday that France will send military personnel, radar technology, and defensive systems to Saudi Arabia.
This deployment aims to safeguard critical energy infrastructure against strikes by Iran-backed Houthi forces, who have recently captured new territory near the Bab al-Mandab strait—a vital global shipping corridor.
Macron emphasized the strategic importance of the area, noting that France is taking steps to secure an export terminal in Yanbu on the Red Sea, which previously handled over 5 million barrels of oil per day via Saudi Arabia’s East-West pipeline.
Germany and Spain have slashed fuel taxes to provide financial relief to drivers.
While Germany’s previous two-month tax holiday ended in late June, officials agreed last week to reinstate the program.
From October 1 through the end of the year, the renewed cuts will lower petrol and diesel prices by 17 cents per liter, a measure the German government estimates will cost €2.5 billion.
Additionally, the government announced upcoming negotiations with the oil sector to implement a fuel price cap by January 1, mirroring long-standing policies in neighboring Belgium and Luxembourg.
Meanwhile, Spain extended its gasoline and diesel tax cuts, which were originally launched in March as part of a €5 billion ($5.7 billion) package to offset the impact of the Iran conflict on domestic energy costs.
While the tax relief stood at 5 cents per liter this month, an automatic trigger will bump it to 20 cents per liter if year-over-year fuel inflation surpasses 15%.
Spain also prolonged targeted fuel subsidies for transit companies, farmers, livestock ranchers, and fishers.
The United States has emerged as a key energy provider for the European Union.
In tandem with domestic relief initiatives, EU countries have drawn from their strategic oil reserves, contributing to a broader International Energy Agency agreement among 32 member states to release 400 million barrels of emergency crude into the market.
French President Macron also stated on Thursday that he intends to push G7 nations to authorize further stockpile releases.
Concurrently, the EU is actively scaling back its dependence on Russian energy imports by boosting renewable power generation and transitioning industrial systems to run on electricity rather than fossil fuels.
European Commission President von der Leyen noted that accelerating this electrification strategy could shrink the EU’s annual spending on foreign fossil fuels by €260 billion ($296.6 billion) by 2040.
The European Union’s efforts to reduce its reliance on Russian energy have increased its dependence on the United States, highlighted by a deal struck last year by European Commission President Ursula von der Leyen and President Donald Trump committing the EU to purchase $750 billion worth of American energy over three years.
The ongoing war with Iran has intensified this relationship while adding new complications, as the EU relies heavily on the U.S. for diesel imports.
Recent statements from Trump supporting a potential ban on U.S. diesel exports to lower domestic prices have sparked deep concern within the bloc, which would be forced to scramble for alternative fuel supplies.
Consequently, Brussels officials are actively lobbying Washington to abandon any plans to halt overseas diesel sales.
European Commission spokesperson Olof Gill expressed strong opposition on Thursday, calling a potential export ban a poor decision.
He emphasized that energy cooperation between the EU and the U.S. is robust, steady, and mutually advantageous, warning that any disruption to this partnership would threaten to harm both economies.
