The conflict in the Middle East has triggered a major shock to global energy markets, with the effective closure of the Strait of Hormuz triggering the largest supply disruption in the history of oil markets and significantly impacting supplies of natural gas and a range of energy-related commodities.
As concerns over supply security have grown, prices have risen across several parts of the energy system, increasing pressure on household budgets, public finances and economic activity more broadly. In response, many governments have announced emergency measures to protect consumers from higher energy costs. The IEA has supported these efforts by launching its largest-ever release of emergency oil stocks, publishing a menu of demand-side measures that governments, businesses and households can take to shelter consumers from price pressures, and tracking the actions being taken through its new Energy Crisis Policy Response Tracker.
So far, governments have supported consumers in two ways: through direct price relief, such as fuel price caps or tax cuts, and through demand-side measures aimed at reducing energy use. Designing these measures well is critical, and international experience offers useful lessons.
While easy to deploy, untargeted energy bill support primarily benefits higher-income households and puts pressure on public finances
When prices rise sharply, governments often first turn to broad-based price support measures that can provide immediate relief to consumers. This is already happening, with several countries in Asia and Europe temporarily capping fuel prices or reducing energy taxes. (....)