Transport fuel prices and taxes
Since 1980 the real price of transport fuel (all transport fuels, expressed as the equivalent consumption in unleaded petrol, corrected for inflation to 2005 prices) has fluctuated between 0.75 and 1.25 Euros per litre, with an average of 0.94 Euros. Real prices per litre peaked in summer 2008 at around 1.25 Euros, but then fell by around a third later that year, largely due to a significant drop in the price of crude oil.. Since then, in 2009 and early 2010, real prices have recovered to just over one Euro per litre. The average real price in June 2010 was 1.04 Euros per litre, just 5% higher than the price in 1980, 0.99 Euros. As the price of fuel is an important determinant of the demand for transport and the efficiency with which fuel is used, it is clear that price is not currently countering the impact of growth on transport demand.
Are fuel prices leading to decreased pressures on the environment?
Road transport fuel prices (including taxes) in EU Member States
Note: Road transport fuel prices (including taxes) in EU Member States. Definitions: * ‘All petrol’ is a consumption-weighted average price of both leaded and unleaded fuel, corrected using energy-content to the equivalent amount of unleaded petrol. * ‘All fuel, unleaded petrol equivalent’ is a consumption-weighted average price of unleaded, leaded petrol and diesel, corrected using energy content to the equivalent amount of unleaded petrol. * ‘Nominal’ is the price with no adjustment for inflation. * ‘Real’ is the price corrected for inflation, using 2005 as the baseline year. * ‘Average, all fuel, unleaded petrol equivalent (real, weighted by consumption)’ is the consumption-weighted average of the ‘All fuel, unleaded petrol equivalent (real)’ line across the full time series.
Fuel price source 1980 - 1993. Quarterly values taken from original spreadsheet. http://ims.eionet.europa.eu/IMS/ISpecs/ISpecification20070821110939/full_spec
Fuel price source 1994 - 2005, Weekly values taken from Oil Bulletin. , http://ec.europa.eu/energy/observatory/oil/doc/time_series/time_series_country.zip
Fuel price source 2006 onwards Weekly values taken from Oil Bulletin: ,
While nominal prices of transport fuels have increased considerably, the real average price of road fuel in the EU (inflation corrected with HICP, reference year 2005) has increased by a lower degree during the last decade, apart from short periods of price increases influenced strongly by political instabilities. The price in June 2010 was 5% higher than at the start of the data series in 1980, but remains within around 30% of the average price of 0.94 Euros throughout the period.
In mid-2004, shortly after the accession states joined the European Union, average total tax levied on fuel in the EU-15 was around 40% higher than in the EU-12. In the third quarter of 2010, this gap had narrowed to just over 25%. Converging fuel tax rates within the European Union may impact upon road freight by reducing the advantage of cross-border refuelling although there is still significant variation between individual member states.
Currently (August 2010), the overall rate of tax on diesel is less than on petrol in all EU Member States; this has lead to diesel being cheaper than petrol for consumers in all Member States but the UK and Romania. 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 (see TERM25 ‘External Costs of Transport’). 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 a third of fuel sales. More recently in August 2010, the share has reversed, with diesel accounting for just over two-thirds of fuel consumption. 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 also has a significant impact in the longer term on the efficiency of vehicles bought by the user. Given that real fuel prices have, apart from short term fluctuations, remained relatively constant over a period during which there was considerable economic growth, it is clear that the price of fuel is not currently sending a strong, consistent message in favour of demand reduction and fuel efficiency.
Indicator specification and metadata
This indicator considers the price of fuel in the EU, including cost price, excise duty and VAT.
- ‘All petrol’ is a consumption-weighted average price of both leaded and unleaded fuel, corrected using energy-content to the equivalent amount of unleaded petrol.
- ‘All fuel, unleaded petrol equivalent’ is a consumption-weighted average price of unleaded and leaded petrol, and diesel, corrected using the energy content of an equivalent amount of unleaded petrol.
- ‘Nominal’ is the price with no adjustment for inflation.
- ‘Real’ is the price corrected for inflation, using 2005 as the baseline year.
- ‘Average, all fuel, unleaded petrol equivalent (real, weighted by consumption)’ is the consumption-weighted average of the ‘All fuel, unleaded petrol equivalent (real)’ line across the full time series.
The units used in this indicator are Euros per litre.
Policy context and targets
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 level of fuel are key variables to monitor.
Fuel taxes are the subject of a variety of EU initiatives. 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 road transport prices. 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 – while transport organisations argued against fuel tax revisions. More recently, in the European transport White Paper of 2011 (EC, 2011), the Commission proposed to “revise motor fuel taxation with clear identification of the energy and CO2 component” by 2016.
However, to date, fuel taxation is not generally used to internalise the environmental externalities of transport, possibly because a high fuel tax is not often politically viable. A new proposal to revise the Energy Tax Directive was presented by the Commission in 2011. It aimed to restructure the taxation of energy products (including those used in aviation), in order to remove current imbalances and distortions, and support the EU's wider environmental and energy goals. However, after unsuccessful negotiations between EU Member States in the Council, the proposal was withdrawn by the Commission in 2015.
The 2011 Transport White Paper suggests that EU motor fuel taxation should be restructured to clearly identify the energy and CO2 components.
Related policy documents
COM (2001) 370 final. European transport policy for 2010.
WHITE PAPER European transport policy for 2010: time to decideCOM (2001) 370 final
'Keep Europe Moving – Sustainable mobility for our continent'. Mid-term review of the Transport White Paper, published in 2001 by the European Commission: Communication from the Commission to the Council and the European Parliament of 22 June 2006. COM (2006) 314 final
‘Proposal for a council directive amending Directive 2003/96/EC as regards to the adjustment of special tax arrangements for gas oil used as motor fuel for commercial purposes and the coordination of taxation of unleaded petrol and gas oil used as motor fuel
COM(2010) 2020 final, Europe 2020: A strategy for smart, sustainable and inclusive growth
European Commission, 2010. Europe 2020: A strategy for smart, sustainable and inclusive growth. COM(2010) 2020 final.
Council Directive 2003/96/EC
Restructuring the Community framework for the taxation of energy products and electricity. EU, 2003.
Transport White paper 2011
Roadmap to a Single European Transport Area - Towards a competitive and resource efficient transport system
Methodology for indicator calculation
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.
Methodology for gap filling
No methodology for gap filling has been specified.
- DG ENER Oil Bulletin The European Commission's Oil Bulletin presents weekly consumer prices for petroleum products in EU countries, in order to improve the transparency of oil prices and to strengthen the internal market, .
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 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 uses the same consumption data for every week in a given year.
Data sets uncertainty
Information on fuel prices and taxes is considered to be a reliable data set.
No uncertainty has been specified
provided by Directorate-General Energy (DG-ENER)
DPSIR: Driving force
Typology: Descriptive indicator (Type A - What is happening to the environment and to humans?)
- TERM 021
Contacts and ownership
EEA Contact InfoDiana Vedlugaite
EEA Management Plan2010 2.9.2 (note: EEA internal system)
Frequency of updates
For references, please go to http://www.eea.europa.eu/data-and-maps/indicators/fuel-prices-and-taxes/assessment or scan the QR code.
PDF generated on 26 Mar 2017, 07:04 AM