Gas Price Hikes Less Painful to Europe’s Drivers : Energy: They already pay much more per gallon than Americans do. Thus, increases aren’t as large--in terms of percentage--as U.S. increases.
American motorists, fuming over high gasoline prices, can take some comfort from not living in Italy or Sweden or France.
European gasoline prices, which were already over $3 a gallon in many countries due to high government taxes, have skyrocketed in the wake of the Iraqi invasion of Kuwait to as high as $4.92 a gallon in Italy, $4.85 in Sweden and $4.37 in France.
To put that into perspective, a 15-gallon fill-up in Rome could cost as much as $74.
But Europeans, who use less gasoline than car-crazy Americans, probably won’t suffer as much as their stateside brethren, analysts said Friday. They’re used to conserving, and their cars on average get vastly better mileage.
Part of the European price increases reflect the weakening dollar, which has fallen dramatically against most European currencies in the last week. Prices translated into dollars appear higher than they might have a few weeks ago.
But the price hikes also reflect very real increases in the price of crude oil in Europe, most of which have been passed directly to consumers. Since the Iraqi invasion, crude oil prices have risen from less than $18 a barrel in July to as high as $32 before falling back to around $26 or $27.
Europe is heavily dependent on imported oil and refined products, mainly from the Middle East. A big source of European gasoline was Kuwait before the invasion shut down Kuwaiti refineries.
A survey of European gasoline prices on Aug. 25 by the Associated Press showed that Italy and Sweden had the highest prices, followed by Denmark ($4.46 a gallon), France ($4.37) and the Netherlands ($4.21). The lowest were in England ($3.56), Greece ($3.23), Spain ($3.14) and West Germany ($3.05).
Analysts said it was no accident that Italy, with strict price controls that prohibit price declines, had the highest prices, while West Germany, a major auto maker with no price controls, had the lowest.
On Friday, the U.S. Energy Department released a comparison of selected international price increases, excluding taxes and duties, between July 30 and last Monday. The biggest was 42 cents a gallon in the Netherlands.
Italy had the smallest increase at 21 cents a gallon. Other increases: 25 cents for Belgium, 26 cents for the United Kingdom, 34 cents for West Germany and 40 cents in France.
The French government has reportedly imposed price controls to stem increases since the Iraqi invasion. That has led to runaway demand--and problems at gas stations. “Dealers have had to close down early, or are refusing to operate at all,” said Philip K. Verleger Jr., an economist with the Institute for International Economics in Washington.
In Japan, prices were up only 6 cents a gallon. The Japanese government maintains strict controls on the pricing of gasoline, analysts pointed out.
By comparison, price hikes in the United States averaged about 16 cents a gallon, the Energy Department reported.
“The U.S. is a paradise for European motorists,” said Daniel Yergin, president of Cambridge Energy Research Associates in Massachusetts. “They regard our gasoline prices as virtually free.”
Despite the stiff price hikes, European consumers are less likely to be as adversely affected as their American counterparts, analysts said. For one thing, because European gasoline prices were high to begin with, the percentage increase in prices is less than in the United States.
Second, gasoline is almost a luxury item in Europe. And Europeans rely much less on gasoline than do Americans. In 1989, gasoline accounted for only 11% of the oil used in the Netherlands, 16% of the oil used in Belgium, 21% in France, 27% in West Germany and 33% in the United Kingdom, according to the consulting firm Booz, Allen & Hamilton in San Francisco.
By comparison, gasoline made up 43% of the total oil used in the United States.
“To a European, raising the price of gasoline is more like raising the price of a movie theater ticket than raising the cost of transportation,” said international oil analyst John E. Treat at Booz, Allen. “Cars for them are something that’s nice to have but not necessary to get to work.”
Gasoline prices have traditionally been much higher in Europe than in the United States because European nations use heavy gas taxes as a main source of revenue. Moreover, regulatory policies in some countries virtually prevent price declines.
Such policies have fostered strict conservation among Europeans.
“First of all, their autos get roughly twice the mileage of U.S. cars,” said Scott T. Jones, president of AUS Consultants in Philadelphia.
“Second, (because) gasoline prices have always been much higher than in the United States, people and families have adjusted to that.
“For example, it’s extremely unusual to see a three-vehicle family in Europe, where it’s fairly common here,” he said.
Europeans have the benefit of well-developed public transit systems in cities and railways between them. Moreover, commerce depends more heavily on rail rather than trucks, as in this country. And, perhaps most basic, countries are smaller and therefore the average distance motorists travel is shorter in Europe.
Some of the price hikes have spurred protests from regulators and consumers in Europe as they have here, though not as many.
The United Kingdom and West Germany are both reportedly investigating possible price gouging by oil companies, and Italy has been considering a freeze on prices of petroleum products.
In any case, Europeans are not likely to suffer from any shortages of fuel. On Friday, the Paris-based International Energy Agency said it foresaw no oil shortages developing in the next two months as a result of the worldwide embargo of Iraqi and Kuwaiti crude oil.
