High oil prices: The EU's response

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As record-high fuel prices sparked protests across Europe in Spring 2008, the EU is preparing both long and short-term policy responses, including tax breaks for energy savings and increased transparency of oil inventories.

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Overview

The continued rise in oil prices has affected Europe in a manner not seen since the oil shock of the 1970s. Prices reached new highs in 2008, with crude reaching a record $147 per barrel in July. Some analysts even predicted that prices could easily surpass the $200 mark in 2009 although that now seems increasingly unlikely due to the looming economic recession.

Protests against rising fuel prices took the EU by storm in June when fishermen staged blockades in France, Spain, Italy, Portugal and the UK (EurActiv 02/06/08). Anger also spread to other sectors, including transport and agriculture. In France, thousands of demonstrating farmers blocked oil depots throughout the country. At the same time, dairy farmers in Germany went on strike, blaming rising fuel prices for pushing up their operating costs. They were followed by farmers in Austria, Denmark, the Netherlands and Belgium. Truck and taxi drivers also blocked the streets of London, Paris and Sofia in calls for government help. 

However, European governments are split on how to deal with the crisis. While protesters are demanding immediate tax breaks, some governments and consumer groups are concerned that they would simply lead to losses of public revenue and encourage those sectors to continue burning more fuel and damage the environment.

The European Commission initially resisted calls, led by French President Nicolas Sarkozy, to propose fiscal measures. But it finally bowed to pressure, presenting a wide series of taxation options for discussion at an EU summit on 19-20 June 2008. 

Follow-up proposals are expected before the end of the year.

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