Activist group 350.org has said that while the announcement of a two-week ceasefire between the United States and Iran is welcome, ‘fossilflation’ – inflation caused by the rising price of oil and gas – is likely to continue.
It has urged governments to use this opportunity to ‘double down’ on accelerating the shift away from fossil fuels, welcoming the initiative of five European finance ministers, from Italy, Germany, Spain, Portugal, and Austria, to call on the EU to revive windfall taxes on oil and gas firms benefiting from the conflict.
These windfall taxes should be used to both directly support consumers and ramp up the deployment of renewable energy, it noted.
‘Prioritising resilience’
“Even if the Strait of Hormuz reopens and the ceasefire holds, oil and gas prices will stay above pre-war levels and consumers will pay,” commented Andreas Sieber, 350.org’s head of political strategy. “Volatility remains high, and supply will stay tight due to infrastructure damage and inventory rebuilding. LNG markets are still exposed, with few alternatives to Hormuz.
“This will deepen energy poverty, hunger and inequality. Protecting people means prioritising resilience and affordability now. The ceasefire must become permanent and extend across the whole region. This is not a temporary shock but a structural crisis. The only lasting answer is to replace volatile fossil fuels with homegrown, affordable renewable energy.”
Additional costs
According to 350.org, price spikes due to the Iran war have cost consumers and businesses an additional $104.2 billion to $111.6 billion in the first month alone.
Taxation on windfall profits was employed most recently in 2022, it noted, where the EU’s ‘solidarity contribution’ following price spikes caused by the outbreak of the Ukraine war taxed roughly €28 billion on excess fossil fuel profits.
Fanny Petitbon, 350.org France country manager, added that fossil fuel companies are likely to announce “massive” first quarter profits as a result of the Iran war, which she described as “money effectively siphoned from the pockets of ordinary people. The EU must not let this great highway robbery play out. Governments must act now – or risk the fallout of an even deeper crisis.” Read more here and here.
