Oil crisis in Middle East: IEA calls for home office and speed limits

The Iran war has triggered the most severe supply disruption in the history of the global oil market. As shipping traffic through the Strait of Hormuz has come to a near standstill, the world market is missing around 20 million barrels of crude oil and oil products daily. This corresponds to about 20 percent of global consumption. The International Energy Agency (IEA) therefore warns of drastic economic consequences for households and businesses, as crude oil prices have already exceeded the $100 mark, and diesel and kerosene in particular are becoming significantly pricier.

Although the IEA member states have already decided to release 400 million barrels from emergency reserves. However, according to the institution, these supply-side measures alone are not sufficient to fill the gap. In a new report, the IEA therefore urges immediate behavioral changes on the demand side. The focus is particularly on road traffic, which accounts for almost half of global oil demand.

One pillar of the strategy is the expansion of home office. According to the IEA, just three additional days of remote work per week could reduce the oil consumption of cars at the national level by two to six percent. For the individual commuter who drives to work every day, such a change would even mean a saving of up to 20 percent in personal fuel consumption.

In advanced economies, about one in three jobs is suitable for mobile work, the agency explains. In emerging economies, it is around 20 percent. The IEA advises governments to motivate companies to allow teleworking and to set a good example in the public sector. This could mean, for example, closing authorities on certain working days. The first countries, such as Pakistan or the Philippines, have already introduced shortened working weeks for civil servants.

Speed limit stop against the price shock

In addition, the IEA calls for a reduction in highway speed limits by at least 10 km/h. This measure is particularly effective because it can be implemented immediately and reduces a car's fuel consumption by five to ten percent. At the national level, this could save between one and six percent of passenger car oil consumption, depending on the infrastructure. In this context, the German environmental organization Deutsche Umwelthilfe (DUH) recalled its petition to introduce a speed limit in Germany for the sake of climate protection, human lives, and less dependence on oil imports.

The IEA also sees potential here for heavy goods vehicles: Despite the generally lower speeds of trucks, a reduction of 10 km/h leads to fuel savings of about five percent per vehicle. This would particularly relieve the strained supply situation for diesel. Historical precedents for such steps can be found in the oil crisis of 1973, when countries like France drastically lowered the limits. Currently, Pakistan has already reduced the maximum speed on highways for passenger cars from 120 to 100 km/h.

The IEA proposes further steps to reduce pressure on the markets. These include increased use of public transport, which could be promoted through cheaper fares or free offers like in Luxembourg or Malta. Carpooling, more efficient driving (eco-driving), and reducing business travel by plane could also reduce the demand for kerosene and gasoline by double-digit percentages in the short term.

In cities, the agency recommends temporary driving bans based on license plate numbers to minimize traffic jams and the associated unnecessary consumption due to idling and stop-and-go traffic. It emphasizes that such approaches are crucial for reducing costs for consumers and ensuring energy supply for essential areas.

German price debate

In Germany, the price increase, which has pushed gasoline and diesel above the two-euro mark in many places, has sparked a heated political debate. While automobile clubs and parts of the opposition are calling for a “fuel price brake” through tax cuts or the suspension of the CO2 tax, the federal government has so far reacted rather cautiously with regulatory instruments. It initiated a package of fuel measures. For example, it provides that gas stations may only increase their prices once a day at 12 p.m. This is intended to increase transparency and strengthen competition. Economists are against blanket subsidies like a new fuel discount, as they obscure the actual scarcity.

The IEA also calls on industry to do its part. In countries where the supply of liquefied petroleum gas (LPG) is under pressure, facilities could switch to alternative raw materials. Overall, government subsidies should be targeted and time-limited. The goal is to cushion social hardships without undermining the incentive to save energy.

(nie)