The relatively recent high price of oil is causing all sorts of problems and consternation around the world, though much of it the result of political and economic issues rather than resource issues.
In Europe, protests have sprouted in France, Germany, Belgium, Great Britain, Poland, Italy, Spain and Ireland over high gasoline prices, with truck drivers and farmers leading the way. Ironically the high gas prices in European nations are almost exclusively the result of high government tax policies. In Great Britain, for example, the market price of a gallon of gasoline isn’t that much different from the United States — currently about $1.31. But the UK government then tacks on almost $3.40 per gallon in taxes, so the cost per gallon is a whopping $4.71.
The case is similar in the other countries. Italians pay $2.53/gallon in taxes, Germany $2.56/gallon, and Japan $2.07/gallon. Fuel taxes in the United States are too high, but in Europe they’re downright exorbitant.
And the response of European governments boils down to a simple sentence: live with it. French truck drivers won a temporary 15% cut in the fuel tax, but other countries are holding the line. Both the UK and German governments have said they will not be lowering fuel taxes.
Meanwhile, at an OPEC meeting on oil prices, Venezuelan oil minister Ali Rodriguez questioned whether or not the capacity existed to increase oil production to the levels required to bring it from its $35/barrel price back to the $25/barrel price OPEC says it wants to stabilize oil at. The problem isn’t a shortage of oil, but rather a wide range of external difficulties in bringing oil to markets. Along with the extremely high taxes in many parts of the world, restrictions and taxation on oil refineries, oil transportation, and other parts of the business have led to a diminished investment around the world in capacity in the oil industry.
Rodriguez suggests that “we are approaching a crisis of great proportions because oil production capacity is reaching its limit.” Only Saudi Arabia, Rodriguez argued, has enough unused capacity to make a dent in the world oil supply sufficient to move toward lower prices.
Sources:
World ‘faces oil crisis’. The BBC, September 12, 2000.
Fuel crisis grips Europe. The BBC, September 12, 2000.