The European Union is taking another big step toward cutting its energy ties with Russia.
The 27-nation bloc is banning Russian refined oil products like diesel fuel and joining the U.S. and other allies in imposing a price cap on sales to non-Western countries.
Companies have already felt the pain. “We’re leaving money in the road to provide our services,” said Hans-Dieter Sedelmeier of the family-run German bus and travel company Rast Reisen.HOW WILL THE EMBARGO AND PRICE CAP WORK? The cap is enforceable because it bars Western companies that largely control shipping and insurance from handling diesel priced above the limit as it heads to countries like China and India. Evasion is possible but requires setting up alternative insurance or organizing a fleet of off-the-books tankers.
“When Russian exports are constrained, for whatever reason, that would of course cause some trouble in this whole reshuffle process,” said Hedi Grati, head of fuels and refining research for Europe at S&P Global Commodity Insights. “Europe would be competing with other big importers, and that would cause upward pressure on pricing.”The hope is to reproduce the effect of the West's $60-a-barrel price cap on Russian crude oil.
Because 15 of its 25 buses are part of the regional public transport network, the company can’t automatically raise fares, and government increases so far are “a droplet on a hot stone,” said Sedelmeier, managing director for public transport.
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