Topline
The International Energy Agency (IEA) on Friday called on wealthy nations to cut speed limits on highways, fly less, drive less and work from home more to reduce oil demand and stave off the “risk of a crippling oil crunch” in the wake of supply issues following Russia’s invasion of Ukraine.
Key Facts
Russia’s invasion of Ukraine has potentially triggered one of the biggest oil supply shocks in decades, the IEA warned on Friday, proposing a “10-Point Plan to Cut Oil Use” to help mitigate the crisis.
The plan suggests reducing speed limits on highways by at least 10 km/h, working from home where possible, limiting air travel and the adoption of electric and more efficient vehicles.
The measures also suggest making public transport cheaper, implementing “car-free Sundays” in cities and increasing car sharing.
If fully implemented by advanced economies, the IEA said the measures could cut oil demand by 2.7 million barrels a day within four months.
The measures will help “reduce the price pain” felt by consumers, mitigate economic damage and cut a major source of income for Russia.
Big Number
$4.43 per gallon. That’s the average price of regular-grade gasoline in the U.S. this week, a record high as the conflict in Ukraine pushed prices up at pumps across the country. Prices in the U.K. also hit a record high of 165p a liter this week.
Key Background
Russia is the world’s largest exporter of fossil fuels and its third-largest producer. Its invasion of Ukraine has thrown global oil markets into turmoil and reliance on its hydrocarbon exports—particularly in Europe—has made the sector both vulnerable to and especially difficult to target with sanctions. The U.S. and Canada have announced bans on importing Russian oil, the U.K. plans to do so by the end of the year and the European Union, which is particularly dependent on fuel from Russia, has vowed to end its use of Russian hydrocarbons as soon as possible.
Crucial Quote
“As a result of Russia’s appalling aggression against Ukraine, the world may well be facing its biggest oil supply shock in decades,” said IEA Executive Director Fatih Birol. “IEA Member Countries have already stepped in to support the global economy with an initial release of millions of barrels of emergency oil stocks, but we can also take action on demand to avoid the risk of a crippling oil crunch,” Birol added.
Further Reading
A 10-Point Plan to Cut Oil Use (IEA)
Why the Toughest Sanctions on Russia Are the Hardest for Europe to Wield (NYT)
Soaring Gas Prices Could Have Been Mitigated If Energy Sector Plugged Huge Methane Leaks, IEA Says (Forbes)
