Briefing

Fuel Prices in Europe

September 13, 2005

T&E statement on the appropriate policy response to fuel price increases.

The European Federation for Transport and Environment (T&E), a network of 39 national environmental and transport non-governmental organisations (NGOs), urges European leaders not to bow to pressure to cut fuel taxes.

Fuel tax cuts are a counterproductive response to higher fuel prices.

Current prices reflect high and growing demand for oil. High demand creates high prices. It is clear that the current price of fuel does not reflect a short-term emergency or crisis, high prices are here to stay. Artificially lowering prices by reducing taxes would unbalance the market and boost demand. Indeed, research by the International Energy Agency (IEA) has said that cutting fuel taxes would be the worst possible response to high fuel prices.

Tax cuts would boost demand for petrol and diesel fuel at a time when Europe urgently needs the opposite – namely a massive reduction in energy consumption by the transport sector.

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