Ding of the Gas Pump Is Even More Painful for Europeans

From the country that introduced Americans to fahrvergnuegen, German for driving pleasure, comes another tongue-twisting emotion in these trying times of sky-high gas prices: schadenfreude--happiness at someone else’s misfortune.

U.S. drivers who have been fuming about fill-ups costing $1.75 a gallon should take a moment to smugly ponder the plight of Germans and other Europeans who are shelling out $4 to $5.75 for the same amount of unleaded.

Adding insult to injury, the leftist politicians in power across the Continent tend to applaud the rising prices as a benefit to both the environment and state coffers that rake in colossal taxes.

Gas prices have long been high in Europe because of the huge tax bite imposed by most governments and a higher consciousness on this densely populated continent about the environmental damage inflicted by fossil fuel emissions.

But as world oil prices soared to a post-Persian Gulf War high in recent months and Europe’s new common currency, the euro, lost clout against the U.S. dollar, by which oil is priced, even the usually stoic Germans have pleaded for relief.

They aren’t likely to get it, despite this week’s decision by the Organization of Petroleum Exporting Countries to boost production to strike a better balance between supply and fervent demand from the top gas guzzlers in the U.S. and Japan.

“We still have to pay for supplies in dollars, which is more expensive now due to the drop in the euro value,” said Juergen Albrecht, an analyst with the German Automobile Club. He predicted little or no drop in prices despite OPEC’s move.

Price increases usually spark less consumer complaining here than in the U.S., where car ownership, average annual mileage driven and gasoline consumption are all 50% higher than in Europe. But the triple whammy of high prices for crude oil, the shrinking euro and annual tax increases has pushed prices beyond the psychologically tolerable threshold of 2 marks per liter, or $3.80 a gallon.

“People are reacting very emotionally now because for us, gas is like the price of bread in other countries,” Albrecht said. “Gasoline is a major factor in most family budgets.”

A 25% rise in prices across Europe since January 1999 has sharpened a long-running debate, especially in Germany, about how much tax pressure is too much in discouraging car owners from getting behind the wheel.

European drivers have lately begun demanding tax relief from their governments as they see U.S. officials taking up the cause of cheaper gasoline for motorists across the Atlantic.

“As a European citizen, I think we are a little bit too dependent on American politics, and this annoys me,” said Giacomo Bonanni, a delivery man in Rome, complaining of the influence Washington wields over global oil prices. As the biggest gasoline consumers, Americans stand to reap more benefits from the OPEC action than will their European counterparts, who import smaller volumes.

In France, where taxes account for 73% of consumer gasoline prices, the Federation of Automobile Clubs earlier this month petitioned the government for a 1-franc cut in per-liter taxes, or about 56 cents a gallon, as it pondered how to reapportion a budget surplus.

That appeal fell on deaf ears: Paris officials decided instead to use the windfall to lower housing taxes.

In a fitting parable of life in angst-ridden Germany, all parties to the battle over gas taxes that has played out over the past 18 months can claim victory, but none is satisfied with the outcome.

The environmentalist Greens, who share power with the Social Democrats of Chancellor Gerhard Schroeder, tried but failed to impose tax increases to bring the cost of gasoline to 5 marks per liter by 2008, or $9.50 a gallon based on today’s exchange rate. Schroeder’s party bargained its partners down to a modest boost, with two annual tax increases having added about 25 cents to each gallon since late 1998.

The Social Democrats emerged as champions of the beleaguered drivers for defeating the higher “eco-tax” pushed by the Greens, but the concurrent global rise of crude prices and the weakening of the euro have added 63 cents a gallon over the same period, rendering the Social Democratic victory somewhat pyrrhic.

Opposition Christian Democrats and liberals with the Free Democratic Party also profited from the debate, because they opposed any increase in consumer taxes. Seeking to cast the government coalition as enemies of the auto owner, the FDP in January sponsored a one-day, one-station break from taxes to protest that more than 70% of the price at the pump is imposed by the state. Thousands lined up at the designated station in Berlin to fill up for as little as $1.14 per gallon, with the FDP making up the difference.

The Greens are pleased that world market dynamics have succeeded where domestic politics failed to bring about a bigger rise in gas costs. But they insist that more national action is needed to keep prices high enough to nudge commuters onto public transportation.

“We think events are running in the right direction,” says Mathias Samson, an advisor on air quality with the Greens. “But we still need a policy that is independent of global crude fluctuations.”

Some liberal analysts agree. When German gas prices first crossed the 2-mark-per-liter barrier in January, the influential weekly Die Zeit argued in an editorial that gas prices still needed to double to cover the actual costs of environmental cleanup, development of more efficient technologies and emergency services to respond to highway accidents.

But few Germans are any more willing than American drivers to surrender their beloved big cars for vehicles that get better mileage.

“Of course this is more expensive to drive than would be a Golf,” said Bonn computer specialist Winfried Ostermann, comparing his sleek new BMW to the Volkswagen compact. “But I’m going to hold on to it as long as I can.”

Researchers Reane Oppl in Bonn, Maria De Cristofaro in Rome and Achrene Sicakyuz in Paris contributed to this report.

* MORE OIL FROM MEXICO

Mexico said it will boost production in line with the supply hike adopted by OPEC. C1

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Higher Prices Abroad

Other countries pay much more for a gallon of gasoline:

U.S. dollars per premium gallon for week of March 20; *leaded; **unleaded

Belgium: $3.86*

Britain: $4.66*

France: $4.06*

Germany: $3.77**

Italy: $3.93*

Netherlands: $4.23**

U.S.: $1.71**

*

Source: Energy Information Administration