Daily Times - 7/5/2006
Huge oil company profits fuelled debate among European finance ministers on Friday of a windfall tax on firms, some of which banked anything up to $1,000 per second in recent months as world crude prices hit new records.
The cat was let out of the bag by Luxembourg Prime Minister Jean-Claude Juncker, who told a news conference after a dinner for ministers on Thursday that a discussion had begun on the matter, although no proposals had actually been made.
Exxon, the world’s biggest oil company, racked up profits of roughly $1,000 a second in the first quarter, while Shell earned about $785 per second, BP some $660 and Total $550 a second.
Not all ministers took the same line. The Slovenians said it sounded good but the Dutch dismissed it outright.
Austrian Finance Minister Karl-Heinz Grasser, who chaired the talks on Friday, echoed what Juncker said about the idea doing the rounds.
French President Jacques Chirac’s long-standing proposal for an international tax to fund poverty relief has won few fans and is a victim of the same logic if everyone is not on board, nobody is.
German Deputy Finance Minister Thomas Mirow told reporters there had been no formal discussion in Brussels of an extra oil profit tax, but he said such a thing could develop because it was being backed by Juncker, a veteran of EU diplomacy. “Juncker has political weight”, he said.
Keeping trichet happy: The main business of the two-day gatherings in Brussels was a regular discussion of EU market integration and the economic outlook, and the tone was decidedly more upbeat about growth in the European economy than in recent months, despite the rise in oil prices.
Dutch Finance Minister Gerritt Zalm said new predictions to be published by the European Commission on Monday would include a slight rise in what has until now been forecast growth of 1.9 percent in the euro currency zone this year, after 1.3 in 2005.
Ireland’s Brian Cowen said people would just have to get used to costly oil. “If we are heading into a higher oil price regime we cannot shelter ourselves from that reality,” he said.
The ministers’ primary concern is whether the oil price rise sparks inflation, after warnings by the European Central Bank that it would not hesitate to raise interest rates further to keep such a threat at bay. reuters
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