International crude oil prices shot up to a new record high, closing at $138.54 a barrel as the first week of June ended. Soaring oil prices not only have raised concerns over the affected economies, but also fears that it could evolve into a crisis sweeping the globe. Europe, for one, is now experiencing an unprecedented energy crisis brought on by highly inflated crude oil prices.
Zhang Jinjiang, PD resident reporter in Spain
With the current record-breaking oil prices, the next shock for consumers is already at hand with fuel prices, especially diesel, set to skyrocket. Diesel prices jumped to 1.3 euros per liter this May, up nearly 3.7 percent over the same period last year, which was 0.95 euros a liter. On average, a lorry consumes 46.200 liters of diesel annually, which means 16.170 euros will have to be added to the annual bills, if calculated with the going rate. Heavy fuel consumers such as lorry drivers recently went on a massive strike last week calling on the government for subsidies or actions to remedy their loss induced by the oil prices hike.
People in Spain fear that the strike, which has disrupted deliveries, could cause shortages; and they are stockpiling fuel and food. Traders at Madrid's main food wholesale markets said supplies of fresh food would start to run out soon. Also in Spain, cars queued at petrol stations – 40 percent of which had run out of fuel in the worst affected area of Catalonia. As much as 15% of Madrid petrol stations have gone dry. Police on motorbikes escorted fuel tankers to some petrol stations to break picket lines and prevent attacks after some strikers slashed lorry tires on Monday. The crisis has already spilled over to manufacturers. Car producer Seat said it stopped production on Monday night and two shifts on Tuesday, cutting production by 700 cars a shift because supplies could not get through.
A strike by Spanish fisherman, now in its 12th day, shows no sign of ending. Now, only a trickle of fish passed through Vigo—Europe's biggest fishing port—compared to the 200 tons that is usually traded daily. In addition, the tourism industry, Spain's promising foreign currency earner, also took a hit. The energy crisis could soon escalate into a social crisis, posing a threat to stability and prosperity.
Trapped in this economic plight, the Spanish government decided to cushion the impact imposed by the soaring oil prices by providing immediate aid; postponing or cutting taxes in social security; and by other economic measures.
Zhang Niansheng, PD resident reporter in Belgium
I am living in Brussels and feel the same pinch as ordinary Belgians, as fuel prices have been going up daily. Diesel prices jacked up to 1.4 euros a liter this year, compared with 0.95 euros last year. A friend of mine, working at the EU headquarters, told me that he has already changed his daily routine to cope with daily frustrations at the gas pump. He takes fewer vacations, rides his bike to work and reaches for the phone instead of meeting friends in person.
The rapid rise of oil prices also forced up food prices. Take the Belgian favorite—potato chips – which went up 4 percent within weeks. The hot topics in the Belgian media are all centered on price hikes and the daily shrinking purchasing power of consumers.
However, the Belgian government has yet to find a way out to combat the inflation. The European commission, based in Brussels, sent a report to EU leaders on Wednesday warning that oil prices are bound to stay high and EU governments must quickly adopt a climate change package designed to secure stable and affordable supplies of oil, gas and nuclear power; generate energy savings; and develop more renewable energies. The report suggested that EU governments must avoid short term tax cuts, but opt for lower value-added taxes on green products and services.
Li Yan, PD resident reporter in France
Increasing oil prices prompted protests in France. French fishermen, angry over soaring oil prices, disrupted shipping in the English Channel and blocked deliveries to two refineries of oil giant Total SA, stepping up protests and crippling ports around France. Fuel costs have impacted various businesses, from airlines to independent truckers. Rising fuel prices also forced more and more drivers to abandon their cars.
The protesters have staged scattered blockages at ports and oil terminals along France's coasts since last week as part of a wave of French frustration at economic difficulties and President Nicolas Sarkozy's reform plans. However, the short-term solutions, such as the cap on value-added taxes on fuel proposed by Sarkozy will be rejected by European Commission as a chorus of ministers, diplomats and officials said fiscal measures would send the wrong signal to people that they are able to carry on consuming as before, and to oil producers that it does not matter how high prices go.
Some experts warned that the prices of oil would remain high for years to come, soaring to perhaps $200 a barrel.
By People's Daily Online
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