Local view for "http://purl.org/linkedpolitics/eu/plenary/2005-09-28-Speech-3-232"
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"en.20050928.23.3-232"2
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".
Mr President, the European Commission is highly concerned about the current situation in the oil market, characterised by a strong rise in prices. The underlying cause for these high prices is the increasingly tight balance between supply and demand, mainly due to a strong growth in the demand for oil over the last years, particularly in the United States and China, and, as a result, the current significant lack of spare crude production and refining capacities. In fact, in 2004, there was the largest worldwide increase in oil demand ever. In such circumstances – where there is limited spare capacity – specific events, such as the war in Iraq and Hurricane Katrina, fuel speculation, pushing prices ever higher.
Other dialogues with important oil-producing countries – like Russia, Norway and the Persian Gulf countries – with the oil and gas industry and with the main oil-consuming countries in the world – like China, India and the United States – will also be continued. A 'China-EU Action Plan on energy efficiency and renewable energies' has recently been set up.
Finally, I will be meeting shortly with executives from the major oil companies, as I consider it very important that oil companies behave in the most responsible manner given this situation. In particular, I will insist on the need for more investment by them, and to determine which additional measures can be taken to remove bottlenecks preventing further investment, particularly in refining capacity.
Fifthly, we must react effectively to emergency situations with respect to oil stocks. In this context, the Commission has supported the proposal of the International Energy Agency on 2 September for increasing oil supply by 2 million barrels per day over a period of 30 days. While most of this international collective effort will initially consist of releasing security oil stocks in the international market, the Commission strongly advocates encouraging energy-saving behaviour, which may lead, if needed, to the use of demand restriction measures by Member States if further actions are required. This is particularly true if the loss in supply is finally expected to persist for several months.
As you may know, under EU law, all Member States must keep emergency oil stocks equivalent to 90 days of normal consumption, to be used in the event of short-term physical supply disruptions. While the EU has security oil stocks, it has never used them since it has no legal means to do so. Europe needs to play its own role, as not all EU Member States are members of the International Energy Agency.
In this respect, the Commission has already started convening the Community's Oil Supply Group on a regular basis in order to discuss oil prices, the emergency measures taken by Member States and more efficient ways of coordinating emergency measures at Community level.
Recent events show the clear need for a mechanism that assists in coordinating the use of oil stocks in the European Union. The Commission is now considering how best this can be done, and will discuss this with all stakeholders at a new Fossil Fuel Forum I have established, that will meet for the first time in Berlin in October. I should note that in developing such a proposal I shall pay careful attention to the view taken by the European Parliament on the previous Commission proposal on this matter.
As a final comment, I should note that the Commission does not believe that the best reaction to high oil prices is lowering taxes to compensate. This only encourages consumers to continue to consume. The Ministers at the last informal Ecofin meeting have clearly agreed that distortionary fiscal and other policy interventions that prevent the necessary adjustment should be avoided. It is a fact that uncoordinated fiscal reductions can have a distorting effect on competition in the internal market.
In conclusion, the Commission has been very active in proposing measures for remedying the situation. It will be a success only if all concerned – European institutions, industry, third countries and international organisations – work together. I am determined, therefore, to use the balanced energy policy model developed in Europe as a model for more international change, and to demonstrate our commitment to helping vulnerable populations both in the EU and in developing countries.
Because these high prices are beginning to have a significant negative impact on the wellbeing of our citizens, particularly the most vulnerable, and upon our economy, the Commission as well as the Member States must focus its efforts on this challenge. Whilst, of course, the Commission alone cannot solve this problem, I believe that it can make a significant contribution towards bringing prices to more reasonable levels. This is essential for EU citizens, but also for the vulnerable populations in developing countries for whom the impact is ever more devastating.
Following in-depth debates within the College and with the full support of my colleagues, and in particular President Barroso, I have recently presented a five-point plan of measures that the Commission is already taking, and which will now be accelerated to deal with this challenge.
Our first action must be to save energy and to reduce demand. Since I took office I have made this my first priority. The Commission has already adopted a Green Paper on Energy Efficiency in June 2005, which identifies the potential for Europe to save as much as 20% of its existing energy use in a cost-effective manner. Existing legislation, when fully implemented, could achieve some 10% energy savings. The Commission is therefore taking measures to accelerate a European Action Plan on energy efficiency which will follow up the Green Paper with a series of concrete measures to achieve the 20% potential; increasing pressure for the full and rapid implementation of the new Buildings Directive, and pushing strongly for an agreement on the proposal for an Energy Services Directive.
However, for Europe alone to save energy will not provide an answer. The real challenge is to use the good example developed in Europe to push for energy policies abroad that also focus on constraining demand rather than simply increasing the supply of oil and gas. In this context, the European example can illustrate how increased energy efficiency can reduce production costs. I am making this my priority in my bilateral contacts with other major energy-consuming nations and through the International Energy Agency. At the same time, we are sensitive to the specific situation of the heavily oil-dependent and vulnerable developing countries.
Our second action must be to increase Europe's use of alternative forms of energy. The most logical response to high oil prices is to switch to using alternative, competitive and, wherever possible, more environmentally friendly energy sources. For instance, the energy potential of biomass in the EU needs to be developed. A Biomass Action Plan will be tabled before the end of the year. We should also boost research on wind, wave and solar energy, hydrogen – in particular with respect to transport – and on clean coal and carbon sequestration, and I shall be arguing for proper funding of this in the Seventh Framework Programme. The proper implementation of the Biofuels Directive can also be fruitful in this sense. Finally, before the end of 2005, the Commission will present a communication on financial support schemes for renewable energy sources. Furthermore, we should work actively to build global alliances to explore more viable use of renewable energy sources, especially in the developing world.
Thirdly, we must increase the transparency and predictability of the oil markets. The lack of transparency on world oil markets facilitates speculation and inhibits investment in the oil sector. The Commission will pursue several actions to address this situation, such as accelerating the creation of a European Energy Market Observation System within the Commission. The aim of this observation system would be to provide reliable information to facilitate investments of private operators in the energy sector, as well as to improve decision-taking by policy makers. The Commission will also speed up measures to make its services able to publish data on the level of European oil stocks on a more regular basis.
Fourthly, we must increase the supply of oil and gas. Whilst priority must be given to reducing demand and switching from oil, it would be wrong not to recognise the fact that the world will need more oil and more refining capacity. To this end, the Commission will strengthen producer-consumer dialogue with oil-producing countries, including OPEC. This dialogue was already initiated this spring and on Sunday, 18 September, I met the President of the OPEC Conference, Mr Sheikh Fahad al Sabah, in Vienna. I conveyed to him our concerns about the current oil situation, as well as the expected cooperation from OPEC.
In this respect, let me inform you that OPEC has committed to help to stabilise the international oil market and to contribute to bringing oil prices back to sustainable levels. In that meeting OPEC emphasised the need for investment along the entire oil-supply chain and, in particular, it pointed out the insufficient refining capacity in the oil market. OPEC also declared that it is looking forward to getting more opportunities to invest in the European oil downstream sector. On the Commission side, we conveyed to OPEC our concerns about the fact that current insufficient spare capacity contributes to facilitating speculative movements on the international level and creates additional pressure on the oil market."@en1
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