Gas Prices to high? Try Europe!

By Peter Ford, Staff writer of The Christian Science Monitor
Fri Aug 26, 4:00 AM ET

PARIS - When Guy Colombier pulls his economy car up to a Paris pump, he allows himself just 15 Euros ($18) worth of gas - barely enough for three gallons. Since prices started rising rapidly earlier this year, says Mr. Colombier, a printing press worker, "I drive a lot more slowly ... and I'm looking for a place to live closer to where I work."

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Colombier's pain is shared by drivers all over Europe, where fuel prices are the highest in the world: a gallon of gas in Amsterdam now costs $7.13, compared with just $2.61 in America. The contrast in prices and environmental policies - and the dramatically different behaviors they inspire - signals a widening transatlantic energy gap. And it raises the question: Does Europe offer America a glimpse of its future?

Indeed, while Europeans have learned to cope with expensive fuel (mostly due to taxes), there's scant evidence yet that US drivers are adopting their conservation tactics.

"Societies adjust over decades to higher fuel prices," says Jos Dings, head of Transport and Energy, a coalition of European environmental NGOs. "They find many mechanisms."

Chief among them, say experts, is the habit of driving smaller and more fuel-efficient cars. While the average light duty vehicle on US highways gets 21.6 miles per gallon (m.p.g.), according to a study by the Paris based International Energy Agency (IEA), in Paris, its European counterpart manages 32.1 m.p.g.

"European consumers are very sensitive to fuel economy and sophisticated about engine options," says Lew Fulton, a transport analyst with the United Nations Environment Program (UNEP). "European car magazines are full of comparisons of fuel costs over the life of a vehicle."

Europe's cars: 40 percent are diesel
That approach has given a special boost to diesel cars, which make up more than 40 percent of European car sales, compared with just 4 percent in the US.

Just ahead of Colombier in the line at the gas station Thursday was Nicole Marie, a high school teacher, who was using her husband's diesel Audi, rather than her own gasoline-powered car, to take her daughter to Normandy for a final week of vacation by the sea.

"I only use my car in town," she says. "We bought a diesel car deliberately because it is cheaper to run."

That is partly because the French government encourages the use of more- efficient diesel fuel by taxing it less heavily. Only in four European countries is diesel more expensive than gasoline, the way it is in America.

But efficiency alone does not explain the huge disparity between fuel-use figures on either side of the Atlantic: European per capita consumption of gas and diesel stood at 286 liters a year in 2001, compared to 1,624 in the US, according to IEA figures.

The nature of cities plays a role, too. "America has built its entire society around the car, which enabled suburbs," points out Mr. Dings. "European cities have denser centers where cars are often not practical."

In Paris, for example, about half the trips people make are by foot, by bicycle, or on public transport, says UNEP's Mr. Fulton. In America, that figure is more like 20 percent.

Impact of fuel tax
"The single most effective measure" that has brought down motorists' fuel use in Europe, however, is taxation, says Dings.

On average, 60 percent of the price European drivers pay at the pump goes to their governments in taxes.

In Britain, the government takes 75 percent, and raises taxes by 5 percent above inflation every year (though it has forgone this year's rise in view of rocketing oil prices, and the French government has promised tax rebates this year to taxi drivers, truckers, fishermen, and others who depend heavily on gasoline.) On August 8, for example, the price of gas in the US, without taxes, would be $2.17, instead of $2.56; in Britain, it would be $1.97, instead of $6.06.

"There is really good evidence that higher prices reduce traffic," says Stephen Glaister, a professor of transportation at London's Imperial College. "If fuel prices go up 10 percent ... fuel consumed goes down by about 7 percent, as people start to use fuel more efficiently, not accelerating so aggressively and switching to more fuel-efficient cars. It does change people's behavior."

The US authorities, however, "are unwilling to use resource price as part of their strategy" to conserve oil, says Lee Schipper, head of transportation research at the Washington-based World Resources Institute, an environmental think tank.

"The biggest hole in our policy today is fuel taxation," he adds. "Tax increases are something Americans should do but don't know how to do, and I wonder if they will ever be able to.

"Consumers want muscle cars, manufacturers say they make what the consumer wants, and the government panders to both constituencies," Mr. Schipper continues. "It's a vicious cycle."

Europeans may drive smaller cars, but there are few signs that the current record gas prices are making them drive less.

Germans who live close to the Czech Republic can drive across the border to take advantage of the lowest prices in Europe, but most people "cannot react to [the prices] because they still need to drive a lot," says Jürgen Albrecht, an official with Germany's largest auto club, the ADAC. "I can't say I'm not going to drive the 50 kilometers [31 miles] to work because of the high gas prices. It doesn't work that way."

"Most people have no alternative, particularly those who live in rural areas," says Paul Hodgson of the RAC, the British motoring association. "A lot of motorists tell us that if there was a decent and affordable public transport system they would use that ... but we are still a long way from having an alternative."

Prices vary widely across Europe. The Greeks, for example, are getting off comparatively lightly, with just $4.32 a gallon. But they're not exactly celebrating.

On the Greek isles, where almost everything comes in by boat, residents are hit even harder by rising fuel prices. "Whatever you do, it all comes back to gasoline," huffs Dimitra Vogiatzi, who sells produce on the far-flung island of Patmos, as she slams closed her massive ledger.

Ms. Vogiatzi has been obliged to raise her prices, and more and more of her customers are buying on credit, she complains. "Imagine if we need a doctor, or someone has to have a baby," she adds. "All the boat fares, coming and going - isn't that gasoline?"

Though shipping costs in the Aegean may remain high, European Union regulations are forcing vehicle manufacturers to make their products even more efficient than they already are.

Though their primary motivation is to reduce CO2 emissions, in line with targets set by the Kyoto Protocol, bio-fuel and hybrid cars are still so rare that increased fuel efficiency is the fastest route to lower emissions, says Dolf Gielen, an expert at the IEA.

CO2 emissions from new European cars fell by 12 percent from 1995 to 2003, according to Mr. Gielen, and manufacturers have voluntarily pledged to reduce them by a further 14 per cent by 2008, he adds.

European governments are proposing tax breaks to encourage motorists to take advantage of these possibilities. Belgian drivers who buy a low-emissions vehicle get a 15 percent price rebate; Spain cuts $865 from the cost of registering a car if it replaces a car using leaded gas more than 10 years old; Hungary waives registration tax for hybrid cars.

End of the road for SUVs?
Though US vehicles' fuel efficiency has improved greatly over the past 30 years, overall consumption has risen in the past decade because consumers and manufacturers have used the leeway offered by the new technology to buy and build bigger and more powerful vehicles, experts say.

Environmentalists wonder whether the current price spike in gas prices might lead to a lasting change in US behavior. "The exciting thing now is that we are almost at the real high point of prices in 1981," says Mr. Schipper. "We'll see if American manufacturers, authorities, and drivers realize that these prices may now be locked in."

"Sales of big SUVs have been dropping in the last few months," points out Fulton. "We are now at the point where people believe this is real and they are reacting. The longer it goes on, the more they will react."

• Mark Rice-Oxley in London, Andreas Tzortzis in Berlin, and John Thorne in Patmos contributed to this article.