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The Honolulu Advertiser
Posted on: Sunday, July 13, 2008

Most of the world pays more for gas than U.S. drivers do

By Marla Dickerson
Los Angeles Times

Hawaii news photo - The Honolulu Advertiser

A truck driver in Irun, Spain, near the border with France, handed out leaflets last week that protested high fuel prices.

MARKEL REDONDO | Bloomberg News Service

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Honked off by American pump prices? Cheer up. You could be commuting in Oslo, Norway, where gasoline costs $9.85 a gallon and filling up a Mini Cooper would set you back $130.

That's the priciest petrol on a list of world gas prices released last week by Associates for International Research Inc., a Massachusetts-based relocation consulting firm that tracks the cost of living in dozens of countries.

In fact, at just more than four bucks a gallon on average, U.S. gas is still cheap compared with much of the world.

"It's small consolation, I know," said Michael Shore, a senior manager at the consulting firm. But "the prices that (Americans) are paying now, Europeans have been paying for a long time."

And it's not just Europe. People all over the world are shelling out more for gas than Americans who are considerably wealthier. That includes drivers in the East African nation of Eritrea ($9.46 a gallon), Kenya ($5.94), Nicaragua ($5.07), India ($4.94), Chile ($4.85) and El Salvador ($4.70).

In a more extensive study completed by the firm in March, consumers in nearly three-quarters of approximately 150 nations surveyed paid more for fuel than Americans do.There also are motorists who pay considerably less than American drivers. The world's lowest-priced gasoline can be found in oil-rich Venezuela, where, at 12 cents a gallon, you can fill a Hummer for the less than the price of a Big Mac hamburger.

So why the big price differences around the world? Experts say retail gas prices are influenced by a variety of factors, including the cost of refining, distribution and marketing. But the biggest single variable is government policy: Some countries tax gasoline heavily; others subsidize it to make it cheap.

Many countries chose the former. In the United States, state and local taxes account for about 19 percent of the average price of a gallon of gas, according to the Energy Information Administration. In England, where London drivers are paying nearly $9 a gallon, taxes account for a whopping 81.5 percent of the pump price.

European countries have long relied on hefty fuel levies to fund road work and social programs, and to encourage conservation. The same is true for some Asian nations, including South Korea ($7.33 a gallon) and Japan ($6.30) both of which import 100 percent of their crude.

The philosophy is different in oil-rich countries that subsidize fuel as a way to share the wealth and keep citizens happy. Drivers pay less than 50 cents a gallon when they fill up in Saudi Arabia and Iran.

Gas is cheaper than milk in Venezuela, which spends an estimated $11 billion subsidizing gasoline.

But whether it is individuals or governments picking up the tab, the fallout from exploding crude prices is being felt around the globe.

Some consumers in Europe are screaming at their legislators to lower fuel taxes. Truckers in Britain have staged three protests this year in response to the soaring cost of diesel, which is nearing $10 a gallon. Angry fishermen in France, Spain, Italy, Portugal and Belgium have staged similar demonstrations.

While many Americans may go a few miles out of their way to find the cheapest fill-up, Dutch trucker Patrick Leenders, 39, heads to another country. Diesel in his hometown is around $9.24 a gallon. His route often takes him out of the Netherlands. So he keeps enough fuel in the tank to reache Luxembourg, 155 miles away, where diesel is $7.57 a gallon.

Leenders is a salaried driver, so high fuel costs are his boss' headache. But many independent truckers he knows are in big trouble.

"A lot of them tell me they'll be bankrupt by the end of the year," he said.

The pain is especially cruel in the developing world, where people like Gorette Odaga, 33, a Kenyan woman who has never owned a car, are still getting slammed by rising fuel costs.

A beautician in Nairobi, Odaga has been the sole breadwinner for her three children since her husband died in 2003. Daily round-trip bus fare for the kids to get to school has nearly tripled over the past year to $1.54 an impossible increase on top of rising costs for food and cooking fuel.

It's much the same in Mogadishu, Somalia, where diesel fuel now tops $5 a gallon, a small fortune in that impoverished country. Jitney drivers sometimes charge one price in the morning and a higher price in the afternoon to cover the climbing cost of fill-ups.

Consumers have it somewhat easier in nations where fuel is heavily subsidized. But the international price of crude has ballooned so fast that some governments are paring back assistance.