The Economics of Rising Fuel Costs and European Fisheries

The huge increase in fuel prices - about doubling since 2004 - represents a major economic shock to European fishing fleets. Before this latest price hike, fuel accounted for 15 per cent of the operating costs of most fleet segments. Thus, in spite of various fuel saving measures, this fuel price increase has probably reduced the profitability of European fishing fleets by well over 5 per cent of revenues on average. What is perhaps less obvious is that the fuel price increase also serves to bring the industry more into line with the biological productivity of the fish stocks. Many European fisheries today are characterized by excessive fishing fleets and severely overexploited fish stocks. It is shown in this article that lower profitability in fishing serves to reduce this excessive fishing pressure leading to some fish stock recovery and the possibility of higher sustainable catches. Thus, as painful as it is to the fishing industry, this fuel price increase may actually contribute to a healthier fishery in the longer run, and by increasing sustainable catches also benefit consumers of fish. These benefits, however, will not materialize if the impact of the fuel price increase is neutralized by inadvisable financial subsidies to the fishing industry. © The Agricultural Ecomomics Society and the European Association of Agricultural Economists 2007.