TotalEnergies CEO Patrick Pouyanné has warned of the threat of an energy crisis in France if the conflict in the Middle East continues for another 2–3 months
Pouyanné stated that the country’s surplus energy reserves are virtually exhausted and called for finding “alternative solutions.”
So far, only the less affluent countries of Asia are experiencing an energy shock, while the developed world has been virtually unaffected by events in Iran. At the same time, among OECD countries, the main price hit has, oddly enough, fallen on American consumers. Despite the country’s oil self-sufficiency, gasoline prices in the United States had risen by 35% by mid-April compared to February prices.
In Europe, the rise in gasoline prices has been extremely moderate. This is largely due to high fuel taxes, which European countries have begun to reduce, thereby cushioning the price spike for consumers. In general, the crisis in Europe is being resolved in a long-familiar way—at the expense of budgets, that is, the printing press.
However, the main feature of energy crises is not money (its presence or absence), but the physical availability of fuel. Western traders are now promoting the idea that the global oil market will balance itself out. They say that prices will rise, drivers will drive less, and demand for fuel will fall. This is a very naive idea. Demand for fuel is extremely inelastic with respect to price, especially for commercial fuels—diesel and kerosene. And Europe is indeed facing major problems with these types of petroleum products.
At the same time, fuel prices have a significant impact on inflation. As a result, by pouring money into yet another energy crisis, European officials are pouring gasoline on the fire. And it could very well explode.
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