European Union finance ministers said today member states would avoid unilateral tax cuts in response to high oil prices, as they sought a joint reaction to a recent surge in the cost of crude.
Arriving for a meeting in Luxembourg, ministers said the EU should foster an improved dialogue with OPEC (the Organisation of the Petroleum Exporting Countries) to ease upward pressure on the price of oil.
"Of course the price is high and there is no question we would prefer a lower one," Austria's Mr Karl-Heinz Grasser said.
"I think therefore it would be sensible to try at the European level to have a co-ordinated dialogue with OPEC."
Luxembourg Prime Minister Mr Jean-Claude Juncker, who is also his country's finance minister, said European states had agreed not to take tax measures on their own to combat the impact of dearer oil.
He said it had been agreed that "nobody should reduce his excise duties or have any fiscal or taxation reaction without consulting the others and for the time being, as the situation is, we don't think that excise duties should be reduced."
Euro zone finance ministers held a separate meeting yesterday evening, after which France said there was a broad consensus on the need for European countries to act in unison.
Paris unilaterally cut diesel fuel tax in 2000 to appease protesting truckers and farmers, but the initiative by former socialist Finance Minister Laurent Fabius sparked blockades and disruption in neighbouring states whose truckers demanded similar treatment.
"It is not a good solution to use the tax instrument," Belgian Finance Minister Mr Didier Reynders said on arrving for today's session. "We need to have a better dialogue with the OPEC countries."
High oil prices - U.S. crude hit a new record over $42 a barrel today - would not last, ministers said.
"I am optimistic that the oil price is only temporarily this strong and will not have any lasting effect," said Mr Grasser.
The EU executive Commission has said the rise in oil prices, at current exchange rates, would shave about 0.2 percentage point off its official 2004 growth forecast and add about the same amount to its inflation prediction for this.