Anyone who dismisses calls for energy conservation as patronizing is turning a blind eye to reality. While global shortages are mounting rapidly and the crisis is deepening, the Netherlands remains mired in complacency. This underestimation is not only naive, but could end up costing us dearly.
Just over a week ago, Fatih Birol, Executive Director of the IEA, warned of the biggest energy crisis in decades. The impact could be greater than that of all the oil crises of the last century combined. That is why the IEA presented a 10-point plan to conserve energy. With every passing day of the war, global shortages of oil, petroleum products, and natural gas are worsening.
The IEA has already released more than 400 million barrels of oil (out of 1.6 billion) from strategic reserves and is considering increasing this amount further. However, that is nowhere near enough to offset the loss of exports from countries around the Persian Gulf. We have no strategic reserves of natural gas.
“Even if peace comes tomorrow, it will still be a long time before the situation returns to normal”
EU Energy Commissioner Dan Jørgensen stated this week that EU countries need to consider energy-saving measures in light of a potential prolonged disruption to international energy trade. He rightly pointed out that it will be a long time before oil and gas exports from the region return to pre-war levels, even if peace is achieved quickly.
Critical gas infrastructure in Qatar has been damaged, and repairs could take months or even years. In addition, hundreds of tankers are currently idling in the Persian Gulf. From the period following the COVID-19 lockdowns, we know how long it takes for global shipping to return to full capacity.
“Focusing solely on national consequences is not only short-sighted, but also selfish”
“Paternalistic,” is how VVD party leader Brekelmans described the calls from the International Energy Agency (IEA) and the European Commission to use energy more sparingly. It sounds a bit like: “Go ahead and sleep soundly; the crisis will get worse even without you.” Yet discussions about shortages here remain strikingly limited to the Netherlands. That is not only short-sighted, but also selfish. After all, energy markets are global. Disruptions elsewhere have ripple effects on the global market—and thus here as well.
Moreover, the Netherlands is not a typical country within this system. Our role as a transit country and gas hub makes us more resilient on the one hand: thanks to our ports, infrastructure, and refineries, physical shortages are likely to be delayed here. On the other hand, that same position makes us more vulnerable to price fluctuations and international developments.
Physical shortages are already being felt in poorer Asian countries. Richer countries in the region are actively competing with European players to secure scarce fuel supplies. LNG tankers that were originally headed for Europe are now changing course toward Asia.
Thanks to remaining inventories (although gas stocks are at historically low levels), lower seasonal demand, and our financial strength, we are currently seeing mainly higher prices. But it would be naive to think that the crisis has already peaked—and selfish to focus solely on our own situation.
“Where the comparison with the 2022 energy crisis completely falls short is the assumption that we’ve already reached the peak”
People often draw parallels with the 2022 energy crisis, but these comparisons fall short in key respects. Back then, too, we were all plunged into an energy crisis after Russia’s invasion of Ukraine led to mutual sanctions, forcing a rapid reduction in oil and gas supplies to Europe.
Still, there are significant differences. Many people are now pointing out that current gas prices, for example, are nowhere near as high as they were during the peak in August 2022. And that’s true. Indeed, current gas prices are still well below the August 2022 peak, when prices rose to around €306 per MWh. Currently, they are hovering around €50. But that is still double what they were just a few months ago.
Gas prices began to rise as early as the summer of 2021, initially without any apparent cause. It later emerged that Gazprom had deliberately failed to replenish European gas reserves. This led to shortages during the winter of 2021–2022. Russia’s invasion of Ukraine further exacerbated the situation, but the real price spike didn’t come until months later, when Europe decided to replenish gas reserves “at any cost.”
The current crisis is still in its early stages. The conflict between the U.S./Israel and Iran has only been going on for a few weeks, yet prices have already doubled. By way of comparison: in week six of the previous crisis, we were still well below the level that later turned out to be the peak. And now, too, we are on the verge of replenishing gas reserves. Not to mention the fact that this time, many more energy-related fuels and raw materials—such as diesel, kerosene, fuel oil, helium, methane, and fertilizer—are being affected.
“There is a good chance that the worst effects of this energy crisis are yet to come”
That is why it is unwise to dismiss international calls for energy conservation in our country as patronizing. If the crisis continues to escalate, more and more people will be unable to pay their energy bills, and physical shortages could arise here as well. Energy poverty is already a real problem, even in the Netherlands, and is likely to increase in the coming months.
The fear of losing voters or playing into the hands of populists by calling for austerity (too) early could backfire later on. Because if measures are implemented too late, the consequences will be more severe and the costs higher—and those costs often end up being borne by the taxpayer.
My advice to policymakers is therefore simple: be honest about the seriousness of the situation and err on the side of caution. It is better to err on the side of caution now than to be forced to take drastic measures later. Because the energy crisis is far from over. In fact, we may only be at the beginning.
Hans van Cleefis Head of Energy Research at EqoLibrium(This column was written in a personal capacity and was previously published in Studio Energie Opinie.)
