Honourable Members of the European Parliament,
The Council is aware of the impact of rising prices on European citizens, and their negative effect on the entire European economy. For this reason, the Council has addressed this matter in its recent meetings. In the context of high food prices, the issue will be discussed also by Heads of State and Government during their meeting this weekend.
Analyses of the reasons for high oil prices indicate complex structural shifts in oil supply and demand in the global economy. Oil production in the short term is unlikely to keep pace with the sustained strong demand of developing economies. As the reasons for high oil prices were well presented by the European Commission in its report last week, I will not discuss them in detail. The European Union experiences the impacts of such change in oil prices through higher inflation, higher household bills, problems in the agricultural and fisheries sectors, in the field of transport and in various industries, e.g. automotive and chemical.
Based on the assumption that the reasons for the rise in oil prices are of a structural nature and that such trend are likely to continue into the future, the Union needs to find long term solutions. In tandem with encouraging competitiveness in energy markets and better transparency of oil markets, measures need to focus particularly on further support for energy efficiency and diversification of energy supply.
As regards energy efficiency, allow me to recall that the March 2007 European Council called for an increase in energy efficiency so as to achieve the objective of 20% savings by 2020. The Energy End-use Efficiency and Energy Services Directive adopted in 2006 has contributed to achieving this aim. But we cannot achieve everything through legislation. Households and businesses could make a significant contribution by behaving more rationally, which the Council and the Parliament could encourage with ongoing awareness-raising.
The other crucial measure refers to the efforts for diversification of energy supply. In this regard the 2007 Spring European Council adopted an Action Plan "Energy Policy for Europe", which sets a binding target of a 20% share of renewable energies in overall EU energy consumption by 2020, including a 10% minimum target for the share of biofuels in overall EU transport petrol and diesel consumption.
Over the past years, the Union therefore adopted some measures which could reduce the sensitivity of the European economy to a surge in oil prices. Current policies will have to be upgraded in future.
When discussing the rise in oil prices at its recent meeting, the ECOFIN Council, inter alia, reiterated the Manchester agreement adopted in September 2005. According to this agreement, fiscal and other policy interventions should be avoided when responding to high oil prices, as they distort competition and prevent the necessary adjustment by economic agents. Measures that can be considered to alleviate the impact of high oil prices on poorer sections of the population should remain short-term and targeted, and should avoid distortionary effects.
Rising fuel prices were also discussed last week by the G8 finance ministers representing the most developed countries. They stressed, inter alia, that increased prices of oil and food are a global problem, and that solutions should therefore be sought at the international level.
I would also like to mention that Monday’s GAERC meeting approved the 18-month programme of the three upcoming Presidencies. Their work in the Council will include many tasks focused on tackling the issue of high food and oil prices efficiently.
Allow me to conclude by saying that in order to tackle the above-mentioned challenges we need coordinated policies, within the EU and at the international level. We need to be careful not to create new imbalances and problems with these policies. In further tackling these burning issues, we also look forward to the constructive collaboration of the European Parliament, in particular when discussing the necessary legislative proposals.
Thank you for your attention.
