In the first section of this paper, the four basic components of fuel price variation at the pump level (i.e. crude oil price, exchange rate, profit margins and taxes) are identified for the 15 EU countries, showing how the same variation in crude oil price is translated into a broad range of final fuel price variation between Member States and fuels. The second section describes the model used for the simulations (TREMOVE, the partial equilibrium model on the transport sector, developed in the context of the European Auto-Oil II Programme, for nine Member States (D, EL, E, F, IRL, I, NL, FIN, UK)) and the base case used as reference. In the third section, the results of two simulations of fuel price levels are described. In the end, the resulting cost to society variation (compared with total transportation cost) is small. The fuel taxation level acts as the main shock absorber, and the final impact in the transport monetary cost is partially offset by adjustments in the demand, variations in travel time, pollutant emissions, other side effects and in taxation revenues for public budget (these four latter elements together represent 25% of the change in monetary transport cost).
Abstract