When fuel prices increased in 2000, there were concerns about the impact on the transport sector. Therefore, it was considered worthwhile to simulate the effects of a significant and durable change in oil prices on transport cost, transport demand, and transport externalities.

Using TREMOVE, the partial equilibrium model on the transport sector, which was developed in the context of the European Auto-Oil II Programme, this paper simulates what could happen to transport costs, transport demand and transport emissions if the low oil price or the high oil price were maintained in the long run.

This work is the first use of TREMOVE in the European Commission outside its initial purpose, which was to provide cost-effectiveness analysis for the measures defined in the Auto-Oil II Programme. As the model is currently being reviewed, both the outcomes of the simulation and the problems or limits encountered, constitute valuable input for the definition of an improved version of the model.