OT: Help with my research paper, high euro gas prices

[micjordan]

Hey guys. I know this is a bit off topic but everyone here is pretty knowledgable about all things reguarding cars and most are into all things European. So heres my research "question/topic". What is the reason for gas prices being so much higher in europe than the states? If you want to comment with personal knowledge thats cool too but what I really want is where people have written articles, papers, etc with statistics, numbers and all the technicals surrounding the issue.

[Martin in Bellevue]

tax, tax, & more tax.

[micjordan]

Is that tax to counter the enviromental effect of so many cars in a much smaller space whereas the US is much less dense and doesnt have to control air quality so strictly?

tax, tax, & more tax.

[dave b]

Is that tax to counter the enviromental effect of so many cars in a much smaller space whereas the US is much less dense and doesnt have to control air quality so strictly?

In an idealistic sense, sure.

In reality, they all spend more money so they need to tax more. I have some sources from my econ days in school that I can forward you tonight.

In the meantime, check out the regular economists like Paul Krugman - he's got a web page full of his articles. Friedman might also have some items published on the web.

[Loke]

Im European, from Norway to be exact, and you can ask me questions if you like. Norway - being an oil producing country - has one of the worlds most expensive gas. We pay around $1.30 - $1.50 for one metric litre. You do the math on how this compare to US prices. I think its about 3-4 times more than you pay for 1 metric litre.

Your presumption of why gas prices are cheaper in the US than Europe, is completely wrong. It has nothing to do with density or population, although it was a funny read :-)

The issue might be more complicated than 1 reason alone, but I can give you some ideas where to start:

1. The US has a history of making muscle cars. From what Ive seen, much from the US follows the "big is beatiful" principle, including cars. So every time the US car industry try to introduce environmental friendly cars - eg. hybrid, hydrogen, electric cars, small engine (~100 hp and 1.6L - 1.9L) NOBODY wants it. The car industry is into the business for making money, and therefor they dont push environmental friendly cars. Why? Because gas is cheap. And gas will continue to be cheap, so theres no reason to introduce other more environmental friendly alternatives - because they will be more expensive.

Lets face it: You only need 1.6L - 1.9L engines with todays engine technology. Yes, they arent as fun to drive - but they do the job of getting you from A to B with relative ease. Anything over 2.0L in Norway is considered BIG by the general public. A 525 has a HUGE engine, while a 740 has a ridiculously HUGE engine :-P So the most sold cars here are 1.6 - 1.9 diesel station wagons. The typical family car (yes, most families only have 1 car).

2. USA is one of the biggest environmental UNfriendly countries in the world. In fact, the US a disgrace compared to other industrial contries when it comes to environment.

* The average Americans consume ALOT more energy than the average european.

* The average American produce ALOT more garbage than the average european. The numbers are 10-folds more than the average european...

And the list goes on and on. And bear in mind: europeans are heavy consumers also, so this puts americans in an even uglier light.

Bush refused to sign the KYOTO agreement, because he is afraid what the big companies will do to his election campaign next election.

Something you have to understand - in the US there is no such thing as politics governed by the average joe (some europeans might even say the US isnt a democracy any more). You might disagree, but I will continue claiming this. And I will give you the reason: Lobying. Big firms with great $$$ pretty much dictate the environmental politics (and every other politics) in the US, through their "I scratch your back - you scratch my back" lobying. Politicians get hired by big firms after they end their period etc etc you get the picture. This is an extremely bad circle, and sadly its something we've seen increasingly more in europe lately. I can only hope people are aware of this before we get the same situation here as in the US. In fact, American lobbying firms in the EU has much less success than they want to admint - fortunately!

As long as this situation remains, sadly things wont change. Its a shame the USA isnt more devoted to environmental protection. Sadly, I dont see this changing for many years to come...

3. As stated above, over half of what we pay for gas is taxes. So of about $1.30 - $1.50 about half is tax. On top of that everyone owning a car has to pay +$400 a year for roadtaxes. If you own more than 1 car, you have to pay +$400 for each car. On top of that (as with you I recon) we must have insurance. Its required by law. For example a 1991 BMW 525i the cheapest alternative is around $1000 with 20% bonus. And this is just responsibility (?) insurance - eg. you have to pay for damages to your own vehicle. And to top it of, nearly everywhere we drive we have to pay on toll roads. Its usually $2-5 for each passing, and a "normal" workday include 2-6 passings depending on where you live.

As you now understand, people in europe want cars which are environmental friendly (read: use less gas). So the governments sponsors private people buying hybrid cars, electric cars, hydrogen cars etc. Electric cars for example dont pay road taxes, toll roads or parking. Also the government sponsors part of the car when you buy it. They can use the community roads (where buses and taxis go) freely and everywhere there are charging stations you can use for free if you need to. This way the government tries to encourage people into using environmental friendly alternatives.

Also cars with huge engines and high load, is taxed ridicilously high. A Ford Excursion with the smallest V10 engine is priced...hold on... to aprox $100.000 (Yes, that is 5 zeros) where I recon 50-70% is taxes. . So efficiently the government is "forcing" people into buying small cars with small engines. Norway is extreme - too extreme to my liking, and among the most tax-horny countries in the world. But on the other end of the scale is the US :-)

So the problem is very complicated - in essence its a mixture between US tradition (where people are reluctant to change) and national politics. I can only hope the average american gets more concerned with global environment in the future - although I sadly dont think I'll see a change in the nearby future.

[Jon M.]

Loke - A reaction to your points..:

1 - I pretty much agree with you, though would point out that if Europeans had the same tax structure and lower fuel costs, they would probably also drive 'ridiculously overpowered' cars. Europeans do not have a lock on morality.

2 - On a per-capita and absolute basis, Americans produce more of the world's collective GDP than Europeans and other countries, and that accounts for a significant portion of the differential.

Bush didn't sign the Kyoto treaty because it was a treaty that was never going to be implemented, and furthermore was backed up by dubious science. The Europeans knew it, but signed it anyway to placate their respective environmental lobbies, and provide them with a costless way of being 'for' something. We have some of the same hypocrites here.

3 - It is more than simply tradition in the US as to why we have low taxes for fuel. If you note the size of our two respective nations, it might give you an indication as to why our fuel taxes are lower, or at least why it is so much more politically painful to increase those taxes. Norway contains roughy 3% of the land area of the US. All the countries in Europe together contain roughly the same land area, including the UK and Ireland and Eastern Europe, as the US, while housing something like close to twice the population. Western Europe alone, excluding the UK, is significantly smaller than the US.

My point being that the distances the average american travels here via car are significantly larger than the distances covered in Europe. To have fuel taxes that raise the price of gas here to something like $6 a gallon would have enormous implications on the fundamental way people live their lives here.

You might say there is a chicken and egg question, and I might agree with you, though if you look at the structure of the way people live here, it is very different, and we are much more reliant on our vehicles. That is simply a reality, and as I say, I can't disagree with a lot of what you said.

Personally, I would love to buy one of those new high-performance diesels, but our environmentalists here say that the particulate emissions from diesels, even the ultra-clean newer vehicles, is still very high. Europeans have decided not to worry about that. As far as hydrogen goes, you figure out a good way, other than Nuclear, to isolate hydrogen on a big-enough scale that doesn't use more energy than it creates, then let's come back to that idea. Again, personally I think that Nuclear is a fine idea, but environmentalists here, as well as security-minded folk, are a bit concerned about storing the spent fuel. Hybrids? they're on their way and selling quite well here from what I understand.

[rickm]

My point being that the distances the average american travels here via car are significantly larger than the distances covered in Europe. To have fuel taxes that raise the price of gas here to something like $6 a gallon would have enormous implications on the fundamental way people live their lives here.

It wouldn't be such a big deal if we didn't have so much urban sprawl....if our cities were designed so you could live in them (and not worry about drivebys, etc) things might be different. (I spent a few years living in a town where I could walk to work, shopping, restaurants, etc, it was pretty damn cool!)

[Ian W]

Our fuel is amongst the most expensive, fuel tax is not ring fenced and is in effect a general tax, this and other tax's on items such as cigarettes and alcohol (the list could go on) allow us to have a much lower income tax than the eurozone countries, which are borderline communist.
Naturally this is unpopular with the companies trying to sell these products.

Taxation of this nature is not popular, but generally accepted as necessary. It leaves the choice with the taxpayer, the highest earner in the land can if he wishes drive a diesel, abstain from the vices and pay less tax.
This also means if that if the someone is a alcoholic, 40 a day, petrolhead he will pay more of his income in tax. That is his/her choice.
Which seems fair to most.

There is now no excuse for big gas guzzling cars, not one. There are now motors able to provide all the necessary go to carry a family and their luggage without fuss and economically.

4 X 4 's are a visible incarnation of the worst side of human nature, 'I'm alright Jack', ' F**k you and the school outing stood at the roadside when my prozac'ed up wife mowed them down' attitude. Lovely.

Eurozones too controlling, Americas controlled by the pushers... I mean corporations.

Where all doomed, I'm of for a lay down.

Big cars are fun , but they are history. Buy an efficient new motor keep the 2.0+ as a bit of nostalgia , use with care.

[AllanS]

I think the future will include "Big cars" (and therefore, large displacement engines), but technology will, once again, step up to the plate. During the period of the oil "crisis" and the push for "environmentally friendly" and fuel efficient vehicles, yes, power and displacement of engines may have gone down for a while, but technology like fuel injection and catalytic converters were developed.

Now, I see selective cylinder shutoff as the future- big (not really, but over 2l) engines with 6 or more cylinders, and the ability to shutoff cylinders under cruise or closed throttle conditions, determined by the engine management system. Dodge's new "Hemi" is a somewhat poor example of this, as it only gets 25mpg even while using such technology, but it's a start, and that's where I see automotive companies moving to in the next decade- simply using what you have more efficiently through better technology.

[Hector]

well, you are mistaken there too. The US, specifically, CA has clean energy on their minds. Sales for hybrid cars have picked up and soon GM will be coming out with their hybrid SUV and Lexus with their own vehicle. Momentum in this area has been slow but steady. Solar PV and wind power have also picked up as well. Look at it from a venture capital investment point of view. While clean energy is trending downwards with the rest of the energy market--because of the Bush administration and corrupt oil cartels--clean energy has grown as a percentage of the total venture market. Winston Churchill once said, "A fanatic is one who can't change his mind and won't change the subject," thus Bush. So as long as he is in power, we will always be lagging behind from our foreign competitors. Clean energy now accounts for 2.3% of total VC, compared to 0.7% just 3 yrs ago. So the heat is on to rival our competitors