Rocketing energy and food prices are making Europe poorer, the EU’s top economy official said today.
“As Europe is dependent on energy from the outside world and as we also import a great number of commodities, this means the European economies are becoming poorer because of these price rises,” said Economic and Monetary Affairs Commissioner Joaquin Almunia.
“This is a fact we are going to have to accept if we are to come up with responses,” he said.
He also warned others against a rash response to the price rises that are dragging down the European economy – another rebuke for governments such as France that have suggested lowering fuel taxes to ease the burden on people paying far more to fill up their cars.
Mr Almunia blamed “imbalance in the supply-demand situation” for the high prices as emerging economies like China buy far more oil. “Supply has not responded,” he said.
Last week, oil-producing nations rejected an EU plea for more oil, saying speculators are to blame for soaring prices and there was already enough oil coming out of the ground.
Oil rose to a new record high above US$143 a barrel today, as expectations of a weaker dollar spurred investors to put their money into oil futures as a way of shielding themselves against higher inflation.
The EU produces just under a fifth of the oil it needs, a figure that will slip in the years ahead as North Sea wells run dry.
Worried about a growing reliance on both oil and natural gas imports, the European Commission set out an ambitious plan last year for Europe to seek new supplies and routes for energy imports while cutting consumption and developing more homegrown alternative energy sources.