WRITTEN QUESTION E-1642/01

by Erik Meijer (GUE/NGL) to the Commission

(12 June 2001)

Subject: Price rises and pressure to reduce taxes as a consequence of increasing exports of petroleum products to America

1. Can the Commission confirm that recent rises in petroleum-product prices have in part been caused by under-capacity in United States refineries, in particular those capable of refinery techniques that comply with modern environmental requirements, and that the output of European refineries consequently is being bought up by purchasers in the United States?

2. Is the Commission also aware that the extent to which American purchases cause shortages of petroleum products varies widely between Member States, with the result that consumer prices for motor-vehicle fuel also vary more widely, and are being forced strongly higher in the Netherlands in particular?

3. How does the Commission assess the fact that, as a consequence of the developments referred to in paragraphs (1) and (2) above, pressure is again being exerted on governments of particular Member States to align fuel prices with those in neighbouring Member States by reducing taxes on them, so that the cash that has hitherto been collected in taxes goes instead to benefit the petroleum companies, with the result that exports are being indirectly subsidised?

4. What options are open to Member States to protect their home markets against prices being driven up as a consequence of unanticipated exports? Can they prevent petroleum products from being exported, and if so how?

5. Is the Commission considering a freeze on petroleum-product exports?

6. How, other than with a freeze on petroleum-product exports, does the Commission think it can help to counteract falling tax revenues in Member States, price rises in response to exports, and widening price disparities between Member States?

Answer given by Mrs de Palacio on behalf of the Commission

(3 September 2001)

1. The price volatility on the petroleum markets since winter 1999-2000 is essentially due to the historically low level of oil stocks (crude and refined products) since that time, this in turn being the result of the restrictive production policy of the Organisation of Petroleum Exporting Countries (OPEC). The level of stocks we have had since winter 1999-2000 does not allow the market the fluidity it needs. The limitations of US refining capacity are making matters worse.

The price rises of April-May 2001 were due in particular to the fraught situation on the petrol market in the Atlantic basin, especially in the United States. This brought with it a considerable improvement in refining margins in April-May, leading European refineries to increase their capacity utilisation. As the Honourable Member points out, there was indeed a substantial increase in petrol exports from Europe to the United States at that time. The situation has calmed down since: margins were back to normal in June and accordingly European refineries reduced their capacity utilisation.

2. It is true that the Dutch market was more sensitive than the other European markets to the recent tension in the Atlantic basin. This is understandable when one considers the central part played by Rotterdam in the operation of the refined products market. But such a purely ephemeral phenomenon (it has more or less disappeared since) must not be allowed to hide the structural phenomenon of price differentials which is unrelated to exports and was analysed in the Commission Communication on the European Union's oil supply(1): the price of Eurosuper 95 petrol before tax and duties is higher in the Netherlands than it is in France and Germany.

3. With regard to taxation, the Commission considers, as it states in its Communication on the European Union's oil supply, that the temptation to cushion oil price rises by reducing tax on petroleum products is to be discouraged. Such an approach would be contrary to the Community's environmental objectives, linked in particular to the Kyoto Protocol, and would amount to transferring tax revenue to the producer countries.

4. and 5. The problem of price volatility is not going to be solved by putting up trade barriers. Measures to restrict or redirect trade in petroleum products are only conceivable in the framework of the 1974 Agreement on an International Energy Programme, which set up the International Energy Agency. These procedures are applicable in conditions precisely (and quantitatively) defined by this Agreement, corresponding to a real shortage situation which is clearly not one in which we find ourselves at the moment.

6. Generally speaking, it ought to be clear that the only short-term way to put an end to price volatility is for OPEC to recognise that stocks have to be built up again and to adopt a production policy which allows this. More specifically, as regards price disparities between Member States, given the Commission's verdict that the only explanation for such disparities is oligopolistic behaviour and a lack of competition in distribution, the solution must lie in a vigorous competition policy. The Commission's Communication on oil supply gives a full and detailed overview of Commission policy with regard to the oil prices issue and the Green Paper Towards a European strategy for the security of energy supply(2) outlines a long-term energy strategy.

(1) COM(2000) 631 final.

(2) COM(2000) 769 final.