The geopolitical landscape grows more…
Oil prices spiked on Wednesday…
As well as the controversial proposal to charge airlines with taxes for the carbon emissions they produce whilst flying in European airspace, the European Commission also planned to change the region’s tariff scheme that would see a 4.7 percent levy added to all jet fuel imports.
According to the International Energy Agency, European demand for Jet fuel in 2012 was 1.2 million barrels a day, with one third of that made up by imports, mostly from the Middle East.
In June 2013, the EU said that the new tariffs would be imposed on all imports from the Gulf Cooperation Council states, after having already removed the group from the generalised scheme of preferences, which offers trade advantages to developing economies.
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Organizations in Europe’s aviation industry, along with fuel traders, and oil producers in the Middle East and India had all been worried that a change to the tariff scheme, planned to go into effect on the 1st of January 2014, would result in a large increase in price and therefore a decrease in demand.
Thankfully, to the relief of those traders in the Middle East, the European Commission has now submitted a new proposal that would keep jet fuels exempt of the duty, scrapping the January tariffs.
The Commission released a statement on Monday saying that it has decided “to propose exemption of all jet fuel imports from customs duties, regardless of their country of origin.”
Even the European airlines had urged the Commission in recent months to scrap the planned tariffs as they were creating uncertainty in negotiations to set up 2014 jet fuel purchasing programmes with the producers in the Middle East and India.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com