Spain approves energy saving measures to offset oil hike

March 6, 2011 - 0:0
MADRID (AFP) — Spain's cabinet on Friday approved 20 energy-saving measures, including a lower speed limit, to reduce the country's fuel consumption in response to the spike in oil prices. The measures will reduce oil imports by five percent, saving the country 2.3 billion euros ($3.2 billion) annually at current prices, the industry ministry said in a statement after the plan was approved by cabinet. The new speed limit for highways will be 110 kilometers (68 miles) per hour, instead of the current limit of 120 kph. The reduced speed limit, first announced last week, will come into effect on Monday and will remain in place until June 30. It may be extended beyond that date if needed. ""Sometimes you have to adopt measures, even if they are unpopular. With the price of a liter of gasoline at its highest in history, we have to save because what is at stake is the economic recovery,"" Deputy Prime Minister Alfredo Perez Rubalcaba told a news conference. Other measures include price cuts on commuter and medium-haul trains, greater use of low-consumption light bulbs to illuminate streets and roads, and subsidies for energy-efficient tires. The government will subsidize the purchase of 240,000 tires designed to cut down on fuel consumption, which will benefit at least 60,000 vehicles, at a total cost of 4.8 million euros. Other changes include increasing the amount of bio-fuel which oil companies are required to include in all diesel and gasoline to 7.0 percent from the current mandatory 5.8 percent. Spain depends on imports for 75 percent of the energy it consumes, compared to an average of 60 percent for the entire European Union. Each increase of 10 euros in the cost of a barrel of oil adds some six billion euros to Spain's annual energy bill, according to the government. Spain's economy crawled out of a year-and-a-half recession in the first quarter of 2010, but government belt-tightening aimed at shrinking the public deficit and battered consumer sentiment kept growth virtually flat through the rest of the year. The government predicts the economy will expand by 1.3 percent this year, after contracting 0.1 percent in 2010, before picking up to 2.5 percent next year. But higher world oil prices and a possible rise in borrowing costs on the part of the European Central Bank later this year is threatening Spain's fragile economic recovery.