WRITTEN QUESTION E-1791/00

by Cristiana Muscardini (UEN) and Sergio Berlato (UEN) to the Commission

(8 June 2000)

Subject: Harmonisation of the prices of petroleum products

It is common knowledge that the prices of petroleum products differ greatly from one Member State to the next. As at 1 December 1999, prices for unleaded petrol ranged from ITL 1 378 per litre in Greece to ITL 1 946 per litre in Italy, while heating oil cost ITL 752 per litre in Austria and ITL 1 544 in Italy. Now the price of petrol in Italy has risen again, and diesel oil has reached ITL 1 705 per litre. The prices of these products in Italy are far higher than the European average. In the Commission's view:

1. what are the reasons for these divergences?

2. can a single market in petroleum products ever be established as long as prices differ so greatly?

3. do such differences not undermine competitiveness, to the detriment, in particular, of those countries and areas (such as mountain areas in the case of heating oil) where prices are high?

4. what, if any, are the objective obstacles preventing it from proposing harmonisation in this area?

5. why are the higher costs for heating products not taken into account in the measures relating to the less-favoured mountain areas, given their cooler climate?

Answer given by Mr Bolkestein on behalf of the Commission

(28 July 2000)

1. The structure of fuel prices is composed of three principal factors: the cost of the crude, the refining cost and distribution, and finally taxes. In general, fuel price differentials are mainly due to differences in tax levels and in particular the way each Member State applies the fiscal provisions included in the Community legislation. Differences in competitive structures of the markets can also play a role.

2. Since 1992 the Community system for taxing energy products has been based essentially on two directives relating to excise duties on mineral oils, which were drawn up with a view to establishing the internal market on 1 January 1993. These are Council Directives 92/81/EEC(1) and 92/82/EEC1(2), which establish a minimum tax level for each mineral oil

to be applied Community-wide according to its use (motor fuel, industrial or commercial use, heating purposes). In practice, most Member States apply rates that by far exceed these Community rates. However, these directives were the first step in an effort aimed at reducing existing differences in the levels of taxation of energy products and similar efforts were expected to follow.

3 and 5. Council Directive 92/81/EEC provides in its Article 8 for the possibility for total or partial exemptions or reductions in the rate of duty to mineral oils, under fiscal control, in order to take into account parameters such as the environment and competitiveness of industry in disadvantaged geographical areas. Article 8(4) of Directive 92/81/EEC allows Member States, following a unanimous decision of the Council, to introduce exemptions or rate reductions other than those expressly provided in the Directive, on the basis of specific policy considerations. Italy has been authorised so far to apply reduced rates of duty on domestic fuels, liquefied petroleum gas (LPG) and other mineral oils consumed in certain regions or particularly disadvantaged geographical areas(3).

4. The Commission has no plans, for the time being, to propose legislation aimed at harmonising the levels of taxation of mineral oils in all Member States. In 1997 the Commission adopted a proposal for a new directive, restructuring the Community framework for the taxation of energy products(4). This proposal, if adopted, would modernise the Community system for the taxation of mineral oils and would extend its scope to all energy products. It would also allow the Community to reap the full benefit of the single market and meet its environmental objectives. The proposal is still under discussion in the Council and its adoption has proved very difficult to achieve due to the need for unanimous decisions on fiscal matters.

(1) OJ L 316, 31.10.1992.

(2) OJ L 331, 23.12.1999.

(3) 1999/880/EC: Council Decision of 17 December 1999 authorising Member States to apply and continue to apply to certain mineral oils, when used for specific purposes, existing reduced rate excise duty or exemptions from excise duty, in accordance with the procedure provided for in Directive 92/81/EEC (OJ L 331, 23.12.1999).

(4) OJ C 139, 6.5.1997.