By Crispian Balmer

PARIS (Reuters) - Rocketing world oil prices aroused growing demands for action to hold down European fuel costs, ranging from calls from government leaders to road protests by truckers and blockades by fishermen.

French President Nicolas Sarkozy said on Tuesday the European Union should consider capping sales taxes on fuel products if oil prices rose further, but his proposal got short shrift from Brussels.

In an interview with RTL radio in which he sought to allay concerns about accelerating inflation, Sarkozy said there was no sign the price of oil would fall and called on EU partners to consider a joint approach to the problem.

"If the price of a barrel of oil continues to rise, are we going to allow VAT (sales tax) to keep rising proportionately? My proposal is that we should stabilise it," he said.

Any such move would need the approval of all 27 EU member states. Such unanimity may be hard to secure given EU finance ministers pledged in 2005 not to cut taxes on fuel in response to rising energy prices and have since reaffirmed the stance.

The Brussels-based European Commission said it was not clear if Sarkozy's idea was the best response to rising oil prices.

"On another occasion where oil prices were discussed, the Commission said with the member states' agreement that changing taxation on fuels in order to combat increasing prices would send the wrong message to producing countries," Commission energy spokesman Ferran Tarradellas said.

"This would show them that they could increase prices, and citizens would have to pay for this," he said.

Portugal's Economy Minister Manuel Pinho too urged the European Union to take action, warning of the "worrying impact on economic growth".

BLOCKADES

Sarkozy also suggested siphoning off extra revenues from sales taxes on petrol to create a fund for professionals such as French fishermen, who have been hard hit by the jump in energy prices and have mounted blockades of ports and fuel depots.

Sarkozy said he had asked the government to study how rising revenues from sales taxes on oil could be diverted into a special fund "to help those French who have the most need".

In a separate interview on Tuesday, Economy Minister Christine Lagarde told French television she would raise the question of whether oil producing countries should boost output with France's allies in the Group of Seven industrial nations.

Hundreds of British truck drivers caused road chaos in central London on Tuesday in a protest to demand government help over rising fuel prices. Britain has the highest fuel duty in the European Union.

Truckers from across Britain converged on the capital in convoy, closing a busy artery and causing traffic backlogs. Similar protests took place in Wales, in a fresh headache for Prime Minister Gordon Brown whose leadership is under fire.

The drivers said fuel bills had risen by almost half in a year and demanded a rebate, arguing they were an essential link in keeping the country moving and that many of their businesses were at risk of folding.

The protest came as members of Brown's ruling Labour Party, anxious after dismal electoral results and poll ratings, called for a rethink of plans to increase fuel and road taxes.

Fuel Protests Spread in Europe

EU leaders are uncertain how to handle the crisis as pickets and work disruptions are threatened by labor forces across the continent

by Philippa Runner

Fuel price protests threaten to spread around Europe in the run-up to the weekend following earlier action in the UK, France and Bulgaria, with EU leaders uncertain how to respond to the unfolding crisis.

Dutch and French truckers have promised to cause disruption on roads on Thursday (29 May), while fishermen in Italy, Spain, Portugal, Belgium and Greece plan to picket ports and government buildings Friday, newswires report.

On Wednesday, French fishermen eased port blockades, but farmers sealed off fuel depots near Frontignan and Toulouse, with riot police using tear gas to break the line. In Bulgaria, lorry and taxi drivers closed parts of Sofia to normal traffic.

The rocketing cost of petrol and diesel—up by 30 percent in France this year—is linked to record global oil prices and exasperated by the high levels of government taxation on fuel. In the UK, 65 percent of the price of petrol consists of tax.

"The global economy is facing the third great oil shock of recent decades," UK prime minister Gordon Brown said in a statement on Wednesday. "There is no easy answer to the global oil problem without a comprehensive international strategy."

Mr Brown called for oil to lead the agenda at G-8 talks in Japan in July and the Slovenian EU presidency has promised to discuss emergency fuel relief measures at the EU summit on 19 June.

Concrete ideas on how to respond to the problem have caused division in EU ranks so far, however.

French president Nicolas Sarkozy on a visit to Warsaw on Wednesday repeated his call for an EU-wide cut on fuel duties. "Should we really apply the same tax rate when the price of a barrel of oil has doubled in one year and tripled in three years?" he asked.

British daily The Guardian reports that London is planning to delay a planned 2p increase in fuel tax from October to next year in a move that would cost the UK budget €700 million.

But Mr Sarkozy's tax proposal has got a cold response from the European Commission and finance ministers from Austria, Italy and Belgium so far.

"During a period where prices are going up, you cannot really attempt to try to transfer the loss to other sectors within our own countries. What you can try to do is to try to use specific decisions targeted to each sector with very specific objectives," finance commissioner Joaquin Almunia said Wednesday.

"What will you do when prices fall again, reintroduce the tax? I'd like to hear the political discussions then," Austrian finance minister Wilhelm Molterer said, according to AFP.

Spanish, French and Italian agriculture ministers on Tuesday called on Brussels to raise the cap on state aid for the fisheries sector.

But the Netherlands and Portugal shot down the idea, with Portuguese farm minister Jaime Silva saying "short-term solutions are the most popular in political terms, but they have no lasting effect," AFP reports.