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Indicator Assessment
Nominal prices of all transport fuels have risen considerably; the average price is now nearly three times higher than at the start of the data series in 1980. The real average price of road fuel in the EU (inflation corrected with the Harmonised Index of Consumer Prices (HICP), reference year 2015) has increased to a lesser degree. However, in real terms, fuel is now approximately 25 % more expensive than in 1980 but 55 % more expensive than in 1990. In recent years, fuel prices have also become more volatile.
The percentage share of taxes in fuel prices has generally declined with the increase in crude oil prices in recent years. In absolute terms, tax revenues per 1 000 litres (excise duties and VAT) showed an upward trend in the 1990s; jumps in 1991 and 1994 reflect the significant German fuel tax increases used to fund reunification. Fuel taxes peaked around 2001 and have since shown a fairly constant long-term trend, except in 2009 when they reached a minimum.
The overall rate of tax on diesel is lower than on petrol in all EU Member States, except the UK where diesel and petrol tax values are equal. Therefore, in August 2018, diesel was cheaper at the pump than petrol in all countries except the UK. This taxation strategy is followed despite evidence to suggest that the external costs of diesel vehicles are on average higher than those of petrol vehicles. This has contributed to a shift from petrol to diesel vehicles in recent decades. In 1980, petrol accounted for about two thirds and diesel for one third of fuel sales. More recently, the share has reversed, with diesel accounting for 75 % of fuel consumption by weight since 2014. This trend can be explained by both a growth in road freight transport (relative to transport by passenger car) and a higher proportion of diesel passenger cars in the European fleet.
Fuel prices can be used to assess and explain developments in transport demand as they are closely linked through price elasticities of demand. Changes in the price of fuels can lead to a change in the demand for transport and they also have a significant impact in the longer term on the efficiency of vehicles bought by the user. Despite the fact that real fuel prices have shown a fluctuating but slight upward trend over the last two decades, this has not been sufficient to deter overall growth in road transport demand. Methods to incorporate price internalisation have not significantly changed, with recent fuel price increases attributed to the rise in the price of base oil. The price per litre of Euro-Super 95 has decreased by 9 % without taxes over the last 4 years (September 2014-September 2018, EU weighted average) and decreased by 5.5 % with taxes (excise duty and other indirect taxes plus Value Added Tax (VAT)). In September 2018, the weighted average share of taxes and duties on fuel prices in the EU-15 was 60 % for unleaded petrol and 54 % for diesel. In the EU-13, shares were 53 % and 49 %, respectively.
Road fuel excise duties in the EU-28 are shown in Figure 3 (data as of January 2019). Apart from Belgium and the UK, all other Member States tax diesel less than petrol. The largest differences are found in Greece (where diesel is taxed approximately 41 % less than petrol) and in Denmark and the Netherlands (where diesel taxes are more than 30 % lower).
This indicator considers the price of fuel in the EU, including cost price, excise duty and VAT.
Definitions:
Fuel prices include cost price, excise duty and VAT and are expressed in Euros per litre.
Fair and efficient transport pricing is a crucial precondition for sustainable transport. It implies that users pay for the full (environmental and social) costs of transport. Therefore, the price and tax levels of fuel are important for three key reasons:
The European Transport White Paper (EC, 2001) proposed to 'harmonise excise duty on diesel for commercial uses, which in practice would be higher than the current average tax on diesel'. The aim of this harmonisation is to achieve better internalisation of external costs. Harmonisation also aims to improve the internal market by establishing a level playing field for shippers from different EU Member States and creating more stable prices in road transport. However, a 2002 Commission proposal to do so was rejected by the Council. The proposal resulted in decreases in excise duty incomes for several countries, up to 50 % in the UK. Also transport organisations argued against fuel tax revision. More recently in the European transport White Paper of 2011 (EC, 2011), the Commission has proposed to 'revise motor fuel taxation with clear identification of the energy and CO2 component' by 2016.
EU minimum levels for road fuel taxes are set out in Council Directive 2003/96/EC on the taxation of energy products. As a result, the minimum excise duty for unleaded petrol increased from EUR 287 to EUR 359 per 1 000 litres. For diesel fuel, the minimum rate increased from EUR 245 to EUR 302 per 1 000 litres in 2004, and up to EUR 330 per 1 000 litres in 2010 (EC, 2007).
The EC’s 'Europe 2020' strategy (EC, 2010) includes a positive approach to energy taxes and greening transport: 'where taxes may have to rise, this should, where possible, be done in conjunction with making the tax systems more 'growth-friendly'. For example, raising taxes on labour, as has occurred in the past at great cost to jobs, should be avoided. Rather, Member States should seek to shift the tax burden from labour to energy and environmental taxes as part of 'greening' of taxation systems'.
The 2011 Transport White Paper suggests that EU motor fuel taxation should be restructured to clearly identify the energy and CO2 components.
Fuel prices and taxes are presented weekly in a DG Energy Oil Bulletin (prior to 2006, data were also presented in a monthly format). Information is available for each of the EU Member States (including the EU-10 from mid-2004, and Bulgaria and Romania as of January 2008). Fuel prices are corrected for inflation using the Harmonised Indices of Consumer Prices (HICP) for each Member State. Prices are then weighted by fuel consumption to calculate an EU-28 average.
As leaded petrol was replaced by unleaded petrol during the period studied, an equivalent price for unleaded fuel has been calculated. This is a consumption weighted average, corrected for the slightly different energy content of the two fuels.
No methodology for gap filling has been specified.
No methodology references available.
There is little uncertainty in the methodology used. However, information on annual fuel consumption is not currently available.
Prior to 2006, quarterly data were used, i.e. 15.01, 15.04, 15.07 and 15.10. After 2006, weekly data have been published. The HICP only makes monthly data available, so the same HICP index is used for every fuel price data point in each month. Consumption data are available annually, so calculations for the weighted average price by consumption use the same consumption data for every week in a given year.
Information on fuel prices and taxes is considered to be a reliable data set.
No uncertainty has been specified.
For references, please go to https://eea.europa.eu./data-and-maps/indicators/fuel-prices-and-taxes/assessment-4 or scan the QR code.
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