PositionEurope's oil requirements

For a region so dependent on energy imports, the European Union is showing a striking lack of energy in its response to rising oil prices. Soothing noises may help to avert short-term panic and aggravated market tensions. But there is a surprising reluctance to address the fundamental challenges that Europe faces.

"The economic consequences of higher oil prices are likely to be limited", intoned EU Finance and Economy Ministers at their informal meeting last weekend. "Our current analysis is that there is no visible and significant impact on the European economyo, according to the Commission's spokesperson on economic affairs. And Energy Commissioner Andris Piebalgs considers rising oil prices "have not slowed the economy as much as some may believe".

Even if these words of comfort are valid right now, the stark reality is that unless some serious adjustments are made, the EU's heavy dependence on energy imports - about 50% at present - is going to increase sharply. On current trends, by 2030 the EU will need to be importing 70% of its overall energy needs, and 90% of its oil.

And this grim scenario glibly assumes constant availability. It makes no allowances for further disruptions - from more Katrinas, or from local difficulties in volatile source regions across the Middle East and Central Asia. It also ignores the all-too-evident rise in...

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