Early this week reports swirled that President Trump was threatening European countries with a diesel export ban unless they release their reserves – in an effort to quickly lower energy prices ahead of the US midterm election. On Thursday, the EU convened a meeting with G7 members France, Germany, Italy and the UK to coordinate a united response. People at the meeting briefed Politico afterwards that they had agreed to react to the threats with “one voice” and an “assertive” response. Yesterday they indeed responded with one voice, but you’d be hard pressed to call it assertive.
French President Emmanuel Macron convened an emergency call of G7 leaders, including Donald Trump. After that meeting, it was Trump who announced the capitulation. “Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil,” he posted on Truth Social. “The process will begin immediately.”
Shortly afterwards, the G7 confirmed this in a statement. They will release 100 million barrels “to begin immediately over 4 months, including a frontloaded substantial diesel release within the first 20 days,” – ie, the run-up to the midterm election. The G7 statement makes it clear why the European leaders agreed to this. Not because it will lower prices for their citizens, but in order to get the US to commit to “refrain from export restrictions on energy and energy products between G7 countries.”
Trump got the headlines he wanted. “Europe bows to US pressure to release diesel reserves ahead of midterm elections,” declared CNN. Another victory for the US president in the extortion of his European vassals. Whether or not the release does end up materially impacting Europeans, the optics are clear: European leaders are still willing to be pushed around by the US president. Greenland and the Iran War have not changed that.
Eager to maintain her role as the face of European surrender, European Commission President Ursula von der Leyen quickly put out a statement after participating in the G7 meeting, claiming this was done for EU citizens. “Our citizens need and deserve affordable energy,” she wrote. “We welcome the decision of G7 countries not to impose any export bans on allies and the continued solidarity between partners. We support an IEA-coordinated release of fuel stocks. While staying the course on the clean transition, to gain more energy security.”
There was no explanation of how releasing Europe’s vitally-needed energy storage ahead of a winter with major risks of supply shortages will help deliver affordable energy to her citizens. President Macron, speaking to reporters after the call, was no more convincing. Asked whether the decision had been taken as a result of the US threats, he insisted, “The tone of our discussion was not one of threats; it was constructive.” But he gave away the game when he added that as part of the agreement Trump had been “very clear” that there would be no export ban.
Does anyone believe the French president? It is likely that if, as expected, this release does not quickly cause energy prices to fall in the US, Trump will return to the export ban threats in two weeks.
I’ve spoken to some energy experts about this last night and there is mixed opinion about what the release will mean for Europe’s energy security. Tapping into Europe’s emergency reserves risks leaving this continent exposed if supply disruptions as a result of the Iran and Ukraine wars continue through the winter. EU Energy Commissioner Dan Jorgensen has said “energy prices will get worse in winter because we don’t see any immediate solutions to the crisis in the Strait of Hormuz.” Lower reserves will compound that problem. Even if energy prices in Europe are slightly reduced in the coming two months as a result of the release (experts are sceptical it will even have any effect at all), eventually Europe will have to refill their strategic reserves, which will add demand and push prices up again later. Simply put, it is crazy to release energy reserves just before winter starts.
But it is clear that the effects of a US diesel export ban would be much worse. Europe now relies on the US for half of its diesel imports because they have stopped importing Russian diesel. As I’ve written before, Europe has been busy replacing its Russian energy dependence with American energy dependence – while it tears up the legislation designed to stimulate the growth of homegrown and secure renewable energy.
The closure of the Strait of Hormuz as a result of Trump’s war on Iran have already disrupted Europe’s imports from the Middle East (20% of supply), increasing the reliance on the US. Mistakes have clearly been made in Europe. And because of that, there is right now no alternative to the US as a diesel supplier in the short term. Trump has them over a barrel. And this is exactly why people have been saying that President von der Leyen’s moves to increase US energy dependence – notably by committing to buy $750 billion worth of US liquified natural gas in her surrender deal with Trump last year (the Turnberry Agreement) – is lunacy. We can already see the impacts of her decisions – Europe is even more susceptible to American extortion that it was before.
Diesel is more common as a fuel for cars in Europe than in the US – particularly in France. But it wouldn’t just be these drivers that would be majorly impacted by a US export ban. Diesel powers trucks, tractors, trains and machinery, so the pain would actually show up in freight costs, food prices and farm costs even before it reached diesel car drivers. Households that heat with oil would pay more too, since heating oil is closely related to diesel. Analysts say governments would face another round of emergency intervention, and the pressure on inflation would follow.
Some will insist that Europe had no choice here but to give in to the extortion because the impacts of the threatened US action would be so severe. This is the argument we have heard each time the US has made threats and Europe has surrendered over the past two years. Our leaders simply do not have the nerve to take risks, so they don’t call Trump’s bluff. But a diesel export ban could majorly backfire on the US, and people in the White House know it. Experts say US pump prices might fall by only a few cents, and would soon rise again. Analysts at S&P Global estimate that US refiners could be forced to cut runs by roughly 2 million barrels a day. Morgan Stanley warns this could feed back into US gasoline prices. One economist compared it to Nixon’s 1973 soybean embargo, which pushed buyers toward Brazil for good. US industry flat out opposes a ban.
So yet again, our European leaders have immediately surrendered to America without even stopping to question whether the White House would really have the nerve to carry out its threats given the major potential for blowback. That is not how leaders in China, India and Brazil have reacted. And each time they have called Trump’s bluff, they have been rewarded.
Why does this keep happening? A number of recently-published books, including my own The Owned Continent, have examined the structural reasons why. In particular, chapter seven of my book is devoted to how and why Europe has over the past five years increased its dependence on US energy – previously the one area where Europe wasn’t dependent on America. Another book I’d recommend on this topic is Glyn Morgan’s The Rise and Fall of American Europe, which came out in May. It traces the history of how America built modern Europe, the only Europe anyone alive today has known, and placed itself as the indispensable core.
That is why Europe finds itself structurally unable to say no to Washington while other parts of the world are able to. If Europeans want to end their American servitude, then they need to take a long hard look in the mirror and acknowledge the reality of the world they live in. Just like an alcoholic, the first step is admitting you have a problem.
Source: davekeating.substack.com
