European Governments Scramble to Contain Fuel Price Shock

European governments are racing to ease the fuel price shock caused by wars in the Middle East and Ukraine. Seven of the 10 nations taking the most measures to contain economic damage are in the European Union, according to a report from the Organisation for Economic Co-operation and Development (OECD).

The EU imports nearly all its oil and 85% of its natural gas, with much of its domestically produced energy coming from renewable and nuclear sources. Europeans are becoming increasingly frustrated as pump prices reach record highs in some European countries, with drivers spending an extra €203 million a day on diesel alone.

Some European governments are spending billions to help their countries weather the current energy crisis. EU leaders have given member states temporary discretion to provide state aid to households and energy-intensive industries such as agriculture, transport, and fishing.

France has adopted an expanding array of targeted measures to cushion consumers and fuel-intensive businesses from higher prices. The French government announced a €450 million package to expand its relief measures, including broadening income-based aid for people who drive more than 30 kilometres on a round trip to work or more than 8,000 kilometres annually for professional purposes.

Germany and Spain have also cut fuel taxes, with Germany agreeing to renew tax cuts that will lower petrol and diesel prices by 17 cents per litre from 1 October until the end of the year. The US has become one of the EU's most important energy suppliers, with the EU tapping its strategic reserves as part of an agreement by the International Energy Agency's 32 member countries.