U.S. gas still cheap
compared to Europe

May 1, 1996
Web posted at: 10:15 p.m. EDT (0215 GMT)

From Correspondent Margaret Lowrie

LONDON (CNN) -- Although gas prices in the United States have gone up a lot in the past month, leading to loud and lengthy griping by most car owners, the fact is that by European standards, American gas is still dirt cheap.

Gasoline costs much more in Europe than in the United States because it is taxed at a far higher rate.

"The cost of producing gasoline is not that much different between the Gulf Coast of the U.S., the Atlantic Coast of the U.S., Rotterdam, UK refineries, Spanish refineries," said Peter Gignoux of Smith Barney. "But national taxes, and to a minor degree, transportation, will fill up that difference."

In Germany, for example, the average price of a gallon of gas at the pump is $5.79 -- almost four times the average price in the United States. Italy ranks second in Europe at $4.50; France, third, costs $4.42 per gallon. Britain is able to offer the cheapest gasoline in Europe because of its North Sea oil reserves. But at $3.34 a gallon, it still costs almost three times as much as in the United States.

Such prices would cause anarchy in the streets of America, but are accepted in Europe with hardly a murmur. "We're used to it," said one woman. Another said, "It's typically British really to accept anything that's thrown at you."

A taxi driver agreed. "We just pay, that's all we do. There's not anything we can do about it."

Gignoux, who is an oil analyst at Smith Barney, is amused by the average European attitude towards gas costs. "The average European just can't conceive of gasoline costing a third or a quarter of the price they pay," he said.

Oil analysts say as much as 80 percent of Europe's average pump price goes to taxes. Taxes account for only 35 percent of gasoline's pump price in the United States.

Oddly enough, the cost of oil itself is not an issue. OPEC prices have remained relatively constant for the last 10 years or so. What has gone up is the amount of tax individual governments apply to gasoline.

To Europeans, the perception is not so much that gasoline is expensive on their side of the Atlantic, but that it is "cheap" in the United States. The attitude reflects a cultural difference. While Americans tend to act as though "a car in every garage" is practically a constitutional right, in Europe, cars are treated as a necessary luxury.

Related stories:

• Gas Prices: Filling up and fed up - a roundup of CNN Interactive's coverage
• Feedback: Filling up and fed up
• Analysts: Gas prices likely to drop soon - May 1, 1996
• A nation that thrives on driving - May 1, 1996
• Justice Department to probe gas price rise - Apr. 30, 1996

Feedback Send us your comments. Selected responses are posted daily.

| CONTENTS | SEARCH | CNN HOME PAGE | MAIN WORLD NEWS PAGE |

---

Copyright © 1996 Cable News Network, Inc.
ALL RIGHTS RESERVED.
External sites are not endorsed by CNN Interactive.