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The $6.66-a-Gallon Solution
The New York Times ^ | April 30, 2005 | Simon Romero

Posted on 04/30/2005 7:02:14 AM PDT by pjsbro

OSLO, April 23 - Car owners in the United States may grumble as the price of gasoline hovers around $2.25 a gallon. Here in Norway, home to perhaps the world's most expensive gasoline, drivers greeted higher pump prices of $6.66 a gallon with little more than a shrug.

Yes, there was a protest from the Norwegian Automobile Association, which said, "Enough is enough. "

And a right-wing party in Parliament, the Progress Party, once again called for a cut in gasoline taxes, which account for about 67 percent of the price.

But "those critics are but voices in the wilderness," said Torgald Sorli, a radio announcer with the Norwegian Broadcasting Corporation who often discusses transportation issues. "We Norwegians are resigned to expensive gasoline. There is no political will to change the system."

Norway, the world's third-largest oil exporter, behind Saudi Arabia and Russia, has been made wealthy by oil. Last year alone, oil export revenue surged 19 percent, to $38 billion.

But no other major oil exporter has tried to reel in its own fuel consumption with as much zeal as Norway. These policies have resulted in Norwegians consuming much less oil per capita than Americans - 1.9 gallons a day versus almost 3 gallons a day in the United States- and low car ownership rates. On city streets and rural roads, fuel-efficient Volkswagens and Peugeots far outnumber big sport utility vehicles.

[Norway's gasoline policies stand in contrast to those in the United States, where President Bush made cheaper gasoline a priority during his discussion of energy policy at his news conference on Thursday.]

Gasoline, of course, is not the only expensive commodity in Norway, a traditionally frugal and highly taxed nation. At a pub in Oslo, for instance, a pint of beer might cost the equivalent of $12 and an individual frozen pizza $16. But expensive gasoline is rare among large oil-producing countries that often subsidize fuel for their citizens. Gasoline prices in Norway - with a currency, the krone, strong in comparison with the dollar - have climbed 30 percent since 1998, outpacing a 15 percent increase in the consumer price index in that period, the national statistics bureau said.

Having the world's highest gasoline prices is just one strategy to combat greenhouse gases in this redoubt of welfare capitalism and strict environmental laws. Overall energy consumption, especially of electricity, is quite high, however, with Norway blessed with not just oil but ample hydropower resources.

Norway not only taxes its gasoline. Norwegians also pay automobile taxes as high as $395 a year for each vehicle, and in Oslo there is even a "studded-tire" fee of about $160 for vehicles with all-terrain tires that tear up asphalt more quickly in the winter.

Then there are the taxes on new passenger vehicles that can increase the price of imported automobiles. Norway has no auto manufacturing industry aside from an experiment to produce electric cars, and economists have suggested that that has made it easier to limit automobile use in Norway because there is no domestic industry to lobby against such decisions as in neighboring Sweden, home of Saab and Volvo.

Norway designed the duties to make large-engine sport utility vehicles much costlier than compact cars. For instance, a high-end Toyota Land Cruiser that costs $60,000 in the United States might run as much as $100,000 in Norway.

Economists argue that gasoline prices and other auto taxes in Norway are not so expensive when measured against the annual incomes of Norwegians, among the world's highest at about $51,700 a person, or the shorter workweek of about 37.5 hours that is the norm here. (Norwegians also get five weeks of vacation a year.) The government frequently makes such arguments when responding to criticism over high fuel prices.

"We do not want such a system," Per-Kristian Foss, the finance minister, said in a curt response to the calls for lower gasoline taxes this month in Parliament.

Other European countries have also placed high taxes on gasoline, and some like Britain and the Netherlands have gasoline prices that rival or at times surpass Norway's. In Oslo, as in other European capitals, there is ample public transportation, including an express airport train that whisks travelers to the international airport from downtown in 20 minutes. Yet Norway, with a population of just 4.6 million, differs from much of Europe in its breadth, with an extensive network of roads, tunnels and bridges spread over an area slightly larger than New Mexico.

"Rural areas without good public transportation alternatives are hit a little harder," said Knut Sandberg Eriksen, a senior research economist at the Institute of Transport Economics here who estimates the government collects about $2.4 billion in fuel taxes alone each year, or about $519 for every Norwegian. Some of the revenue supports Norway's social benefits.

"Our government has been grateful to use the automobile as a supreme tax object," Mr. Eriksen said. "The car is its milking cow."

Perhaps as a result of such policies, Norway has lower levels of car ownership than other European countries, with 427 cars per 1,000 people in 2003 compared with more than 500 cars per 1,000 people in both France and Germany, according to the Economist Intelligence Unit. The United States has more than 700 cars per 1,000 people.

The average age of a passenger car in Norway is 18 years when it is scrapped, though this might be changing in a strong economy with the lowest interest rates in 50 years. Registrations of new passenger cars last year climbed 29 percent from 2003. But the frugality of some Norwegians, even in rural areas, suggests older cars will remain at many households.

"Personally I have no need for a new vehicle; I'm proud to hold on to my own for as long as I can," said Johannes Rode, 69, a retired art and music teacher and owner of a 29-year-old red Volkswagen Beetle in Ramberg, a coastal town in northern Norway. "To do otherwise would be wasteful and play into the oil industry's hands."

Caution about oil's risks is common in Norway. The government created the Petroleum Fund more than a decade ago as a repository for most of the royalties it receives from oil production. The $165 billion fund, overseen by the central bank, is intended for the day when oil resources in the North Sea start to dry up.

Meanwhile, unlike other large oil producers like Saudi Arabia, Iran or Venezuela, Norway has done little to encourage domestic petroleum consumption. In part because high gasoline prices deter such a luxury, Norway consumes little more than 200,000 barrels a day of oil while exporting nearly its entire production of 3.3 million barrels a day. This confounds some Norwegians.

"Norway is a rich, oil-producing country with no foreign debt," said Egil Otter, a spokesman for the Norwegian Automobile Association, a sister organization to AAA. "We think that Norway, with its enormous and complicated geography and distances, deserves pump prices at an average European level. Motorists find it very difficult to be taxed into these extremes."

Such opinions contrast with the quick defense of high gasoline prices often voiced around Norway, which is celebrating its 100th year of independence from neighboring Sweden and so far has opted out of joining the European Union.

Sverre Lodgaard, director of the Norwegian Institute of International Affairs, said Norway had a responsibility to manage its oil resources soberly because of its support of worldwide limitations on greenhouse-gas emissions.

"We are engaged on this front," Mr. Lodgaard said. "It is difficult for us to view the example of the United States, which is overconsuming to an incredible extent."

The United States, which uses about a quarter of the world's daily oil consumption, had the cheapest gasoline prices of the 27 industrial countries measured by the International Energy Agency in its most recent analysis of fuel prices. Taxes accounted on average for just 20 percent of the price of gasoline in the United States, the agency said.

Even amid Norway's bluster on gasoline prices, however, environmentalists suggest the nation could do more to achieve greater energy efficiency. One sore point is the consumption of electricity, traditionally generated by hydropower but soon to depend more on a fossil fuel, natural gas.

Producing oil for export in Norway requires large amounts of electricity, and homes in the country, with much of its territory above the Arctic Circle, use electricity for heating, creating much higher electricity consumption levels than elsewhere in Europe. It is not uncommon to drive on well-lighted roads even in remote areas.

"There are areas in which we have done O.K.," said Dag Nagoda, a coordinator in the Oslo office of the WWF, formerly known as the World Wildlife Fund. "And there are areas in which we can do better."


TOPICS: Business/Economy
KEYWORDS: energy; energyprices; gas; gasprices; norway
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To: pjsbro

$6.66, hey no problem? Now we know how they came to be called square heads.


21 posted on 04/30/2005 7:48:43 AM PDT by Ursus arctos horribilis ("It is better to die on your feet than to live on your knees!" Emiliano Zapata 1879-1919)
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To: pjsbro
$6.66-a-gallon solution?

Friggin Euro-wienies!

22 posted on 04/30/2005 7:49:58 AM PDT by JOE6PAK ("Artificial intelligence is no match for natural stupidity.")
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To: BobL
If you do the numbers, you'll see that we are paying pretty much exactly the same to drive on our new toll roads.

Except that Oslo has toll roads too...

23 posted on 04/30/2005 7:51:26 AM PDT by JohnPreston
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To: pjsbro
Strangely, there does not seem to be a direct relation between price and usage. The US of course has the highest GDP per capita and we tend to be more suburbanized so we commute further. Our oil usage will not drastically change even with a large price increase. The main theory of the article is not supported by the facts the presented.
24 posted on 04/30/2005 7:51:36 AM PDT by Always Right
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To: pjsbro
These policies have resulted in Norwegians consuming much less oil per capita than Americans - 1.9 gallons a day versus almost 3 gallons a day in the United States- and low car ownership rates.

Give me a break! Norway home to 4.6 million people, has slightly more people than Alabama living in an area slightly larger than New Mexico. Its economy is less than two percent of ours. It should be not at all surprising or worthy of comment that Norway's per capita gas consumption is two-thirds of ours. Is the NYT so stupid as to not understand the impact of a country's size, population, and economic output on its petroleum use?
25 posted on 04/30/2005 7:56:59 AM PDT by The Great Yazoo ("Happy is the boy who discovers the bent of his life-work during childhood." Sven Hedin)
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To: cripplecreek

Basically just a city state....The US is lagging far behind....time to catch up!!! :)


26 posted on 04/30/2005 7:57:37 AM PDT by xp38
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To: cripplecreek

Read the fine print at the bottom of the chart.


27 posted on 04/30/2005 8:00:00 AM PDT by Mears ("The Killer Queen,caviar and cigarettes")
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To: pjsbro
Socialism is expensive.

Last year alone, oil export revenue surged 19 percent, to $38 billion.

With a GDP of $124 billion, that works out to 30%. Without that, they'd be lost.

28 posted on 04/30/2005 8:04:30 AM PDT by robertpaulsen
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To: JohnPreston
" Except that Oslo has toll roads too..."

True, and Italy and France are full of them also.

I'm just making the point that the Republicans and many of the FReepers are accomplishing what the Sierra Club and the Dems could only dream of - that being to stop people from driving.
29 posted on 04/30/2005 8:11:13 AM PDT by BobL
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To: BobL

Everyone that suggests we follow the gasoline tax policy of Europe seems to forget two things. We are a country in which many have to drive long distances to work. And we're not a cradle to grave socialist nation.


30 posted on 04/30/2005 8:13:05 AM PDT by meatloaf
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To: FreedomFarmer

Right on the mark. Typical NYT "news story" which is really an editorial.


31 posted on 04/30/2005 8:15:02 AM PDT by yerright
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To: meatloaf

"Everyone that suggests we follow the gasoline tax policy of Europe seems to forget two things. We are a country in which many have to drive long distances to work. And we're not a cradle to grave socialist nation."

While that's true, the people pushing for toll roads are, in effect, doing the same thing here - considering that the gas tax can get just as much accomplished at one tenth of the cost per mile.


32 posted on 04/30/2005 8:16:05 AM PDT by BobL
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To: pjsbro

What was it Hillary said: We may have to take your money away from you for the common good? Sounds like she is Norwegian.


33 posted on 04/30/2005 8:19:30 AM PDT by sgtbono2002
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To: robertpaulsen

Thank God for foreign oil. I appreciate the standard of living it gives us.


34 posted on 04/30/2005 8:19:53 AM PDT by ClaireSolt (.)
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To: pjsbro

I have a friend who works for the CIA and travels a whole lot. He say's Oslow has the best looking chicks.


35 posted on 04/30/2005 8:27:16 AM PDT by Blackirish (Death to Tyrants)
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To: pjsbro
The government created the Petroleum Fund more than a decade ago as a repository for most of the royalties it receives from oil production. The $165 billion fund, overseen by the central bank, is intended for the day when oil resources in the North Sea start to dry up.

Criticise as much as you want, but compare their $165 Billion, in real money, saved against a rainy day, with our completely fraudulent Social Security "Trust Fund", and think about who is going to have the last laugh.

36 posted on 04/30/2005 8:50:02 AM PDT by CurlyDave
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To: BobL

"While that's true, the people pushing for toll roads are, in effect, doing the same thing here - considering that the gas tax can get just as much accomplished at one tenth of the cost per mile."

do you have a source for your claim that a gas tax paid for road only costs 1/10th the cost of a toll road?? I find that hard to believe.




37 posted on 04/30/2005 8:52:00 AM PDT by jimbergin
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To: pjsbro

"At a pub in Oslo, for instance, a pint of beer might cost the equivalent of $12 and an individual frozen pizza $16."

So beer in Oslo is $96 per gallon and gas is $6 a gallon....


38 posted on 04/30/2005 8:53:28 AM PDT by pjsbro
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To: pjsbro

What happened to the descendants of the Vikings to turn them into such scared sheep?


39 posted on 04/30/2005 8:55:54 AM PDT by Turbopilot (Viva la Reagan Revolucion!)
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To: ClaireSolt
"Thank God for foreign oil. I appreciate the standard of living it gives us."

Foregin oil gives exporting countries like Norway and those in the Middle East their standard of living.

Democracy and capitalism gives us ours.

40 posted on 04/30/2005 8:59:45 AM PDT by robertpaulsen
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