Energy crises like potential Strait of Hormuz closure shouldn't lead to bad subsidy policies. Many countries ignore multilateral advice and implement blanket road-fuel subsidies. This approach destroys incentives to conserve energy and fails to target those most in need. The Resolution Foundation suggests a social energy tariff for low-income households with high energy use, but this creates cliff edges and perception issues.

Effective support should focus on low-income households with high energy consumption rather than broad fuel tax cuts. Policies must lower measured inflation while minimizing costs to taxpayers. The UK government could implement means-tested social security increases and adopt Germany's 2023 approach of universal discounts on energy bills. This method preserves market incentives while reducing costs for households.

Governments should consider temporary solidarity taxes to distribute losses between current and future taxpayers. Policy parameters can be calibrated to match the degree of pain as the crisis unfolds. Unlike the expensive, blunt tools deployed in 2022-23, responses must reflect lessons learned. The energy shock remains smaller than previous crises, allowing for more modest, targeted support that addresses genuine need without distorting markets.