EU finance ministers rejected a proposal to impose a windfall tax on oil companies benefiting from record prices that are cutting consumers' purchasing power.
The price of oil has jumped 38 percent in the past year, reaching a record US$75.35 last month. That's pushing up fuel bills for households throughout Europe and eating into their ability to spend.
While Luxembourg Prime and Finance Minister Jean-Claude Juncker said on Thursday a levy on oil companies should be considered, ministers from the Netherlands, Greece and Austria yesterday dismissed such a policy as they arrived for talks in Brussels.
"We already tax oil," Dutch Finance Minister Gerrit Zalm said. "If you tax companies when they make high profits, what do you do when they make low profits? You would then be giving them a subsidy when the oil price is low."
"There are other ways to deal with the uncertainties of the oil market," said Greek Finance Minister George Alogoskoufis.
The world's five largest oil companies earned about US$29 billion in the first quarter, or US$4.46 for every person on the planet. Royal Dutch Shell Plc, Europe's second-largest oil company, on Thursday reported a 3 percent rise in first-quarter profit to US$6.89 billion. Total SA, No. 3 in Europe, on Thursday announced a 16 percent gain to 3.38 billion euros (US$4.27 billion).
Oil companies "appear to be the big gainers" and that is "starting to irritate parts of our public opinion," Juncker told reporters late on Thursday after chairing the first session of the two-day Brussels meeting.
An oil-company tax is "not realistic," Austrian Finance Minister Karl-Heinz Grasser said. "It's not really a proposal that has a big chance of being implemented. If it's possible to have such a tax on a worldwide basis, then I think we could discuss it."
In the US, President George W. Bush last week rejected calls from lawmakers to impose a tax on the gains oil companies have enjoyed. The biggest US oil companies had combined first-quarter net income of more than US$17 billion, or about US$8 million an hour.
European officials said their US$9 trillion economy had withstood costlier oil and would continue to do so.
"Despite the high oil prices, what we're seeing today is the good behavior of the European economy," Spanish Economy Minister Pedro Solbes said.