European Federation for
Transport and Environment
Secretariat Bd De Waterloo 34,
1000 Brussels Tel + 32 / 2 / 502 9909 Fax
: + 32 / 2 / 502 9908 e-mail: info@t-e.nu
Fuel price protests in the EU: a commentary
Popular hostility
to the fuel price increases in Europe has been widespread, even though fuel
prices are pretty low in real terms. Crude oil prices are not even
at an all time high, but are simply the highest since the Gulf war. Even after taking taxation increases into
account, motoring costs are low in real terms compared to other costs and
income levels.
So why the protests, and why have they received
such widespread support?
One reason why hauliers may be justified in
protesting is the lack of a level competitive playing field in what is now a
single transport market. Firms
operating in countries with low fuel taxation rates have a comparative
advantage over their competitors in other Member States. Of course this is frequently counterbalanced
by lower taxation on staff costs, but this is less of a factor for the
“owner-driver” sector of the market which has been at the forefront of the
protests.
The question remains, however, whether high
fuel prices do in fact hit the road haulage industry hard. Firstly the road freight industry has seen
strong growth in the recent past.
Indeed the road freight sector has seen faster growth than the economy
as a whole. This is undesirable from an
economic standpoint, as it results in the economy as a whole decreasing in
efficiency.
There needs to be a change in policy. We need a system which ensures the
efficiency of the economy as a whole improves with respect to transport, in
addition to ensuring a level playing field for competition in the transport
sector.
A way of achieving this is to shift the
emphasis away from fuel taxation towards charging for the use of roads – a
kilometre tax. This is exactly what the
Swiss people have decided, in a popular referendum to do with heavy goods
vehicles using Swiss roads[1].
There are three major impacts from road transport in Europe: air pollution, noise and accidents. Congestion is of course also a problem.
Air pollution encompasses climate change[2] and polluting emissions[3], which damage human health in a variety of ways, destroy buildings and forests and cause rivers to choke up from excess nutrients. Polluting emissions from road haulage are among the most damaging to human health.
Noise is known to be a tremendous problem across Europe, with approximately one in three Europeans disturbed by noise in their personal environments. The human health impacts of noise have been well-documented by the World Health Organisation. Here again, the larger cargo vehicles are the most disturbing.
Accidents are perhaps the most visible of road transport’s impacts, with tens of thousands dying and well over a million being injured on Europe’s roads each year[4]. Yet more Europeans die from air pollution annually than from road accidents[5].
The combined cost of these impacts is enormous, and are mostly not met by the polluters themselves, but rather by society as a whole. The part of the total cost not met by road users is known as external cost.
Far more difficult to measure is the damage caused to communities split by roads and road building. The resulting loss to quality of life is difficult to measure in financial terms and is therefore not included in cost-assessments: it is nevertheless a very real problem which divides communities.
The total external costs of transport in 1995, excluding congestion costs, has been calculated at €530 billion, or 7.8% of the EU’s total GDP[6]. With 92% of this cost being caused by road transport it is clear that road users are paying far too little, not too much, for the privilege.
Motoring costs have been falling in real terms for years, while public transport costs have increased substantially. This has led to a massive advantage for private road transport over public transport.
Furthermore it is ironic that a result of
higher fuel prices is an increase in VAT revenue. The final destination for these revenue streams is the EU
coffers.
Half of the resulting expenditure funds the
Common Agricultural Policy, the CAP. Of
the other half the overwhelming majority is spent on cohesion and structural
polices – the majority of which to date have been transport infrastructure
projects.
Thus the beneficiaries of the additional VAT
from fuel are those leading the protests – farmers and truckers! Moreover,
farmers receive generous tax concessions for the fuel they use on farms (93% in
the UK[7]), whilst the tax burden for the
road freight industry is disproportionately small compared to those they share
the road with – private cars.
In other words, those protesting are the least
deserving of additional government support and the least worthy of public
sympathy – especially when such sympathy is motivated by the financial squeeze
ordinary people feel, which is partly as a result of subsidising these sectors
of our economy.
Responsible sections of the road haulage industry compete not by low prices and small margins, but utilise smart logistics and modern business management techniques. Indeed, for most transport purchasers dependability and service quality are far more important considerations than price alone. Those who compete only on low price rather than quality of service are also prone to cut corners. Common practices include long working hours, dangerous overloading, poor vehicle maintenance, operating without full insurance, and speeding or reckless driving with the resulting road safety consequences. If this sector of the industry is forced to change because of high fuel prices we will all benefit.
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