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New Year Worries Over Oil

  • January 5th, 2008
  • Posted by EUEditor

cars-ld-resize4.jpgFears of economic stress put a quick dampener on New Year spirits when the world crude oil price broke the $US100 bbl limit (3.1.08) and unemployment jumped in the United States.


Senior European Commission officials were quoted as saying already moderate growth forecast for the European Union (Euro Zone) could drop below the 2% mark in 2008, due to oil, and to pressure on stock markets after the flow-on from the American prime-rate mortgage squeeze last year.

The British Press Association (PA) said the rise in oil prices followed the announcement of an unexpected drop in US reserves, speculative activity, weakening of the $US, and geopolitical disturbances including trouble in Nigeria.


It said motorists in the United Kingdom were paying UK 103.3 pence per litre (A$2.33;, 5.1.08), so the cost of a fifty-litre fill-up had gone up by 7.36-pounds (A$16.63) in a year.

Crude oil prices fell back a little after Thursday; Nymex Crude Future quoted at $US 97.91 a barrell (A$112.058) on 5.1.08.

Concerns about a flow-on from weakening of the American economy were aggravated by the news on Saturday that the US unemployment rate had increased over one month to December from 4.7% to 5%, higher than forecast, and accompanied by a steep weakening in job creation.


European car makers have braced for a possible tough year, with the higher petrol costs and instability on global financial markets, certain rises in fuel tax, new EU pollution controls, and the continuing competition from Asian imports.

The EU car makers did make headway though in 2007.

German manufacturers did well with exports, sustaining a record level of car production: the export of 4.3 million passenger vehicles, the highest ever, was three-quarters of overall production.

However sales within Germany failed to keep up with the bumper year 2006, slipping by 9%, the lowest in 17 years, and there are complaints in the industry that the country will be hardest hit by the EU regulations because it specialises in big cars.

In France sales rose 3.2 % in 2007, remaining around two-million p.a., after having fallen below that mark during 2005 and 2006.

Sales went up by 7% in Italy (2.49 million news cars) and the Netherlands 4%, (504 000).

Analysts said sales patterns were complicated by people buying vehicles to avoid impacts of new taxes on the way, e.g. an impost on heavy fuel users in the 4WD market in the Dutch market.


Bloomberg, Nymex Crude Future, 5.1.08.…, (5.1.08)

Deutsche Welle News, “European Car Markets Hit by Fuel Tax, Global Insecurity in 2007”, 3.1.08.,2144,3036704,00.html, (5.1.08).

John Wilen, AP, “Oil prices fall on jobs report”, 5.1.08. …, (5.1.08).

Le Monde, “Le chomage au plus haut depuis deux ans aux Etats-Unis” (Highest unemployment for two years in the United States), 4.1.08. …, (5.1.08).

PA, Oil prices remain at record high, 5.1.08.…, (5.1.08).

Xin Hua, “EU feels uneasy about soaring oil prices”, Peak Oil, 5.1.08,…, (5.1.08).