WRITTEN QUESTION E-3097/00

by Juan Naranjo Escobar (PPE-DE) to the Commission

(4 October 2000)

Subject: Rising price of oil

The year 2000 has provided further evidence of the instability in oil prices, the grave repercussions of which highlight the high dependency of the EU on hydrocarbons for its energy. Europe consumes 19,6 % of the oil on the world market. Moreover, according to the Europe 2020 study published by the Commission, average dependency on external energy in Europe is rising from 50 % to 70 %. We are now witnessing the third increase in crude oil production so far this year, with output having been increased by 800 000 barrels a day in the hope of bringing the price of oil into line with worldwide growth. Contrary to the predictions made about it, oil has once again highlighted the volatility capable of affecting this market.

In such circumstances, what measures is the Commission adopting to manage the demand for energy and energy savings and to develop domestic resources, thereby finally giving a boost to renewable energies?

What criteria does the Commission advocate for Member States as regards the management of strategic resources?

In the economic forecasts it presented last April, the Commission predicted that inflation would remain at 1,8 % this year and stand at 1,7 % in 2001, the assumption being that the price of a barrel of oil would remain more or less stable at around USD 24,50. That assumption no longer reflects the real situation. Will the Commission, therefore, revise its calculations when it presents its economic forecasts this coming autumn? Has it entertained the possibility that oil companies might be reaching certain price-fixing agreements as a means of distorting competition, contrary to the provisions set out in Articles 81 and 82 of the Treaty?

Answer given by Mrs de Palacio on behalf of the Commission

(24 November 2000)

The present high price of oil is largely beyond the control of policy makers in the consumer countries in terms of supply and underlines the need to continue developing a new demand strategy aimed at the gradual replacement of oil by other energy sources, the increased use of renewable and alternative energy sources, demand management, the improvement of energy efficiency, and the promotion of energy savings, in particular in buildings. As announced in its recent communication on oil supply in the European Union(1), the Commission will present a plan on energy savings and diversification covering both the boosting of energy efficiency, in particular in buildings, and support for the development of a new generation of vehicles at the European Council in Gothenburg.

In addition, the future and the respective places of the different energy sources (oil, coal, gas, nuclear, renewables) is the subject of a Green Paper on security of supply which will be adopted by the Commission by the end of 2000.

With regard to the use of strategic reserves, the Commission will be examining how strategic oil stocks could be strengthened by pooling their use at Community level. In order to combat speculative movements, ways need to be found, similar to those used in the money markets, to limit price volatility.

As regards the impact on economic forecasts, if oil prices remain around USD 30 per barrel for the rest of this year, the negative impact on growth of the price rise should be 0,3 % for 2000 and 0,5 % for 2001. The price rise would add 1 % to inflation.

As far as competition is concerned, the Commission does indeed believe that, even if some cost factors may vary from one Member State to another, oligopolistic behaviour and a lack of competition in distribution are the only explanation for the significant price differences, excluding duties and taxes, between Member States. This diagnosis obviously raises the question of whether or not there are infringements of competition law, in particular whether cartels exist (price fixing). The national authorities of a number of Member States have started investigations on this subject. In Italy and Sweden, sanctions have been imposed on petrol companies by the competition authorities. In general terms, it is essential to promote a more open and competitive structure in the fuel distribution sector. A critical factor is the development of a genuine internal market for refined products (in the wholesale market) to make for ready and competitive supplies to all distributors, including those who are not national refiners.

(1) COM(2000) 631 final.