Different tactics to combat fuel prices

European leaders called for relief from high oil prices this week, with Britain’s Treasury chief urging OPEC to increase production and the French president asking oil companies to further cut prices and boost investment in renewable energy.

European leaders called for relief from high oil prices this week, with Britain’s Treasury chief urging OPEC to increase production and the French president asking oil companies to further cut prices and boost investment in renewable energy.

French Prime Minister Dominique de Villepin also announced partial fuel tax refunds for farmers hit by soaring oil prices in the wake of Hurricane Katrina.

With oil prices about 40% higher than a year ago, economic angst is growing around Europe.

Though the European Union has warned that governments should not “give into the temptation” of handing out aid to compensate for rising prices, Villepin said it was the government’s responsibility.

“The rise in fuel prices is hurting farms, which can’t always pass on the extra costs to their customers,” Villepin said at an agricultural show in western France. “We must help them.”

French President Jacques Chirac also urged his finance minister, Thierry Breton, to press oil companies to “strongly accentuate” price-cutting efforts. Oil companies announced gasoline price cuts in France last week after Breton threatened a new “special tax” if they did not hand back more of their bumper profits through lower prices.

Transport Minister Dominique Perben had announced tax cuts to compensate truckers for higher fuel costs.

Crude oil has retreated from the record highs it reached after Katrina hit, but the market is still jittery over supply concerns.

“Because this is, at root, a problem of demand outstripping supply, OPEC must respond at its meeting on September 19 to rising demand by raising production,” British Chancellor Gordon Brown said.

He also called on the Organisation of Petroleum Exporting Countries to be more open about reserves and development plans. Secretiveness, he said, encouraged speculation in the market.

The most immediate effect consumers have felt from the rising oil prices has been at the petrol pump. In Austria, several retail petrol chains slightly lowered prices followinga threat by Finance Minister Karl-Heinz Grasser to levy a special tax on gas stations unless prices were cut.

Codacons, an Italian consumer group, has urged people to turn off electrical appliances for five minutes to protest rising energy bills. Electricity prices in Italy have risen by almost 10% since last year, Codacons said. Petrol prices have risen 17% since January, the government says.

Further confirmation that consumers are feeling the pinch came from Germany, France and Britain, which all reported higher inflation rates – largely driven by energy prices.

In France, August’s consumer price index edged up 0.4 percent on the month, more than reversing a 0.2% month-on-month drop in July, the national statistics agency Insee said.

German consumer prices rose 0.1% in August from July and 1.9% compared to the same month a year ago, the Federal Statistics Office said. Germany said heating oil cost 34.7% more on the year and 3.4% on the month.

“Petrol is too high,” said Ruediger Leops, who has been driving a taxi in Berlin for 15 years. But he says he has learned to live with the high prices and has not changed his driving habits to conserve petrol.

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