An echo of the 1970s resounds Friday in the appeal of IEA director Fatih Birol: an energy crisis is imminent and governments must now take measures to mitigate the worst consequences. On Sunday, cities must temporarily become car-free and the speed limit on highways must be reduced by at least 10 kilometers per hour to save fuel. In addition, governments must again advise employees to work from home at least three days a week.
Savings are necessary because the supply of oil from Russia will fall sharply in the near future and there are no alternatives. The world must therefore prepare for an unprecedented oil shock, the IEA warned last Wednesday.
Pinching
The first signs of fuel shortages seem to be already showing. According to Bloomberg, the diesel situation is particularly dire in Northwestern Europe. The diesel price reached a new record on trading platforms at the end of last year, because a lot of stuff and raw materials have to be transported by ships and trucks due to the reviving economy.
European refineries are struggling to meet exploding demand. This is partly due to the high natural gas prices. Natural gas is needed for the production of hydrogen, which is used to desulphurize diesel. Expensive natural gas makes desulphurization so expensive that it has consequences for diesel production. Some (anonymous) traders foresee diesel shortages.
Save fast
On top of the high natural gas prices, now comes the expected drop in Russian oil production by 3 million barrels per day. This will make the situation in the energy market precarious in the coming weeks, according to the IEA. The savings could amount to nearly 3 million barrels of oil per day with these measures, according to the energy agency; exactly the amount that threatens to fall away.
With lower speeds, significant savings can be made quickly: if trucks and cars drive 10 kilometers per hour slower, that saves 430 thousand barrels per day. The work-from-home advice yields a potential saving of 500 million barrels per day. Further is advised temporarily making public transport cheaper and discouraging business flying as much as possible. Short flights should be replaced as much as possible by train journeys.