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Americans' Record $4 Gasoline Price Remains Bargain in Europe
By Jordan Burke
May 30 (Bloomberg) -- Anyone wondering why Americans show no signs of abandoning their vehicles as gasoline fetches almost $4 gallon, can find the answer in Europe where the price of petrol hasn't been that low in at least six years.
Gasoline rose 30 percent in the U.S. this year to a record $3.952 a gallon on May 28, according to AAA, the nation's biggest motoring club. In Germany, a gallon costs $8.33, more than double 2002 levels. The highest is $9.69 in Norway, where taxes are designed to curb consumption in world's third-biggest exporter of crude oil, data compiled by Bloomberg show.
``Individuals have often believed that increases in gasoline prices might be temporary, and indeed that was often the case,'' said Lynn Reaser, chief economist at Bank of America Corp.'s investment strategy group in Boston. ``In the current environment most Americans believe that $4 gasoline will be a permanent feature of the landscape.''
Gasoline prices are so high that Exxon Mobil Corp. Chief Executive Officer Rex Tillerson appeared on NBC's Today show two weeks ago to explain why fuel costs so much.
``This is a demand-driven price run-up,'' Tillerson said on the program. Economic growth in China and India ``lifted tens of millions of people out of poverty. That's a good thing,'' he said. ``The negative effect is huge demand for energy and that has put a lot of pressure on the price.''
Compared with Europe, U.S. motorists have nothing to complain about.
Americans paid about 12 percent in tax on every gallon of gasoline purchased in April, according to the Energy Department. More than 50 percent of the retail gasoline price in the U.K. goes to the government, said Luke Bosdet of the U.K.'s Automobile Association. That includes fuel duty of 39 percent and value-added-tax of 17.5 percent, he said.
`SUV Culture'
British gasoline costs $4.64 a gallon more than in the U.S., compared with an average $3.85 premium during the past five years, according to data compiled by Bloomberg.
``We have not seen the SUV culture evolve in Europe as it has dominated the U.S. consumer landscape,'' Bank of America's Reaser said. ``The American lifestyle has been cultivated by oil prices which were not a major part of the household budget.''
Europeans are becoming more vocal. Fishermen in France blockaded ports and refineries for a week to protest higher fuel costs. Truck drivers clogged London streets this week to demand Prime Minister Gordon Brown lower energy taxes.
Consumer confidence in France dropped to minus 41 in May, the lowest since the index was introduced in 1987, Insee, the Paris-based national statistics office, said May 28.
More here: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aB9b2rPXKVBY
By Jordan Burke
May 30 (Bloomberg) -- Anyone wondering why Americans show no signs of abandoning their vehicles as gasoline fetches almost $4 gallon, can find the answer in Europe where the price of petrol hasn't been that low in at least six years.
Gasoline rose 30 percent in the U.S. this year to a record $3.952 a gallon on May 28, according to AAA, the nation's biggest motoring club. In Germany, a gallon costs $8.33, more than double 2002 levels. The highest is $9.69 in Norway, where taxes are designed to curb consumption in world's third-biggest exporter of crude oil, data compiled by Bloomberg show.
``Individuals have often believed that increases in gasoline prices might be temporary, and indeed that was often the case,'' said Lynn Reaser, chief economist at Bank of America Corp.'s investment strategy group in Boston. ``In the current environment most Americans believe that $4 gasoline will be a permanent feature of the landscape.''
Gasoline prices are so high that Exxon Mobil Corp. Chief Executive Officer Rex Tillerson appeared on NBC's Today show two weeks ago to explain why fuel costs so much.
``This is a demand-driven price run-up,'' Tillerson said on the program. Economic growth in China and India ``lifted tens of millions of people out of poverty. That's a good thing,'' he said. ``The negative effect is huge demand for energy and that has put a lot of pressure on the price.''
Compared with Europe, U.S. motorists have nothing to complain about.
Americans paid about 12 percent in tax on every gallon of gasoline purchased in April, according to the Energy Department. More than 50 percent of the retail gasoline price in the U.K. goes to the government, said Luke Bosdet of the U.K.'s Automobile Association. That includes fuel duty of 39 percent and value-added-tax of 17.5 percent, he said.
`SUV Culture'
British gasoline costs $4.64 a gallon more than in the U.S., compared with an average $3.85 premium during the past five years, according to data compiled by Bloomberg.
``We have not seen the SUV culture evolve in Europe as it has dominated the U.S. consumer landscape,'' Bank of America's Reaser said. ``The American lifestyle has been cultivated by oil prices which were not a major part of the household budget.''
Europeans are becoming more vocal. Fishermen in France blockaded ports and refineries for a week to protest higher fuel costs. Truck drivers clogged London streets this week to demand Prime Minister Gordon Brown lower energy taxes.
Consumer confidence in France dropped to minus 41 in May, the lowest since the index was introduced in 1987, Insee, the Paris-based national statistics office, said May 28.
More here: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aB9b2rPXKVBY
