EU warns against unilateral steps over high oil

EU member states should avoid unilateral steps to ease the pain from high oil prices on individual industries, the EU executive warned, the day before finance ministers will discuss responses to record energy costs.
Such uncoordinated action by member states would trigger a spiral of demands for similar state help from the same and other sectors in other European Union member states, Commission spokesman Amelia Torres told a news briefing on Thursday.
High oil prices already curbed growth in the 12 countries using the euro in the second quarter and the Commission acknowledged they would continue to slow growth somewhat. "We believe that there will be an impact on growth in the European Union ... but that impact should be limited," Torres told a news briefing.
Record high oil prices were one of the reasons behind a cut by the European Central Bank of its eurozone growth forecast this year to 1.3 percent last week. The ECB also cut its 2006 growth outlook.
Some EU countries, like Poland, have decided to cut the excise tax on petrol to limit the effects of rising fuel prices on the economy. Germany will consider cutting its eco-tax on petrol after elections on September 18 and Belgium is considering sending a 75 euro cheque to low-income families.
France has promised to compensate its protesting truckers for the increase in fuel prices, drawing implicit criticism from the Commission.
"Compensating families for increased costs of fuel is something that doesn't seem problematic," Torres said.
"But other measures that would compensate a particular sector in a particular country would obviously inevitably trigger calls from the same sector in another countries or other sectors considering they are equally affected by oil prices to get the same treatment and be compensated," she said.
She said high oil prices were there to stay for some time because they were caused by demand from the fast growing economies of China and India rather than a shortage of supply. The policy responses should take that into account, she said.
"We don't object to compensation as such. We object to compensation where it then triggers this race to the bottom for everybody to be compensated," she added.