The energy crisis caused by the Iran war has only “limited” effects on disposable incomes for most Dutch households. This is the conclusion of the Central Planning Bureau (CPB) in an analysis published on Thursday. However, that conclusion does not apply to everyone. “The financial consequences of the war vary greatly per household and there are significant outliers,” says the main researcher on behalf of the CPB, Rutger Teulings.
Last March, Iran closed the Strait of Hormuz, one of the main oil and gas trading routes, in retaliation for attacks from the United States. In addition, several attacks have been carried out on energy infrastructure in the Middle East. At the same time, the supply of fuels elsewhere in the world is increasing to partly fill the gaps that have arisen, for example from the US and Venezuela. On Sunday, Iran and the US concluded an agreement in principle that should lead to the reopening of the Strait of Hormuz, although much is still unclear about the agreement.
Due to nervousness in the market, oil and gas prices have been on a roller coaster for months. The price of a barrel of Brent oil has even exceeded $110 a few times in recent months. The leading International Energy Agency (IEA) spoke in March of the largest energy crisis ever.
However, according to the CPB, the financial consequences for households in the Netherlands are generally not too bad. Assuming that energy and fuel prices develop according to market expectations, “an average household will lose less than 1 percent of its disposable income” this year and next. By market expectations, the CPB means the market prices as the financial market expects them to develop.
Even in the CPB scenario in which oil prices remain high for longer, with 140 dollars per barrel of oil by the end of this year, the loss of income will only amount to about 1 percent in 2026 and 2 percent in 2027.
Better protected
“The effects [zijn] not yet as large as during the energy crisis of 2022,” the authors write. The CPB calculated at the time that the lowest income groups lost up to 8 percent of their spending capacity, with peaks of more than 15 percent. Government measures, such as the price ceiling and the energy surcharge, compensated for part of that blow.
Compared to the energy crisis of 2022, CPB researchers see clear improvements in the protection of households against rising energy prices. More homes are insulated and have a heat pump or solar panels. More Dutch people also drive electric cars. The number of insulation measures increased from less than 70,000 in 2021 to 250,000 to 280,000 in 2023 and 2024. In addition, housing associations also made their homes more sustainable.
Electric cars often remain out of reach for the lowest incomes. A leasing subsidy could help them, the planning agency thinks.
More households also have a fixed gas contract than during the 2022 energy crisis, which means that the higher gas prices are not immediately noticeable. However, according to the Central Planning Bureau, rising gas prices will ultimately have more influence on household expenditure than higher fuel prices, because fixed contracts will expire in the coming months while gas prices will rise towards the winter.
Many households therefore have to renew their permanent contract when gas prices are high. “In April, 33 percent of households had an energy contract that was concluded after the outbreak of the war,” according to the CPB. “At the end of 2026 that will be 83 percent and over 95 percent in the course of 2027.” The researchers do think that the increase will be less than in 2022.
Help people specifically
People with lower incomes generally feel the consequences of the crisis more than those with higher incomes. Everyone uses approximately the same amount of gas. Households with higher incomes may live in larger houses, but those houses are also better insulated. People with a low income therefore spend a relatively large amount of money on energy.
Two groups are overrepresented in the outliers that are more affected by the energy crisis: people with large, old owner-occupied homes and residents of social housing – probably because these homes are poorly insulated. Due to increased fuel prices, lower income earners with a car are also hit hard, but relatively speaking this is a somewhat smaller group with diverse backgrounds. This makes them difficult to trace for the government.
In mid-April, the government presented a support package totaling approximately 1 billion euros for entrepreneurs and households with a low income. The package included support for energy costs, subsidies for insulation and a higher tax-free travel allowance. According to an evaluation by the CPB, the latter measure only mitigates the consequences of the energy crisis to a limited extent. Moreover, low incomes benefit little because they more often do not have a car and work less often.
The planning agency advises against broad support measures, such as a reduction in fuel taxes. Such measures are expensive and can slow down the energy transition. For the longer term, the planning agency calls “further sustainability of the housing stock and the vehicle fleet crucial.”
The CPB also believes that targeted aid to low-income households that will be in trouble next winter is justifiable. The Temporary Energy Emergency Fund, which low-income households can tap if they encounter financial problems due to their gas bill, is seen as effective. The CPB expects that this will require more money than is currently reserved.
Oil prices are falling
The price for a barrel of Brent oil has now fallen somewhat; on Wednesday the price was just under $80. Prices for diesel and petrol at the pump have also fallen slightly compared to a month agothe Netherlands Authority for Consumers and Markets (ACM) calculated on Wednesday. But prices are still “much higher than before the war in Iran.” Last Sunday, Iran and the US concluded a peace agreement, but whether and for how long it will last remains to be seen.