If you thought gasoline was high in the United States for much of the summer, you can be thankful you weren’t living in Europe where gas prices dwarf the U.S. prices. Throughout Europe many consumers recently said “Enough” and engaged in protests and civil disobedience to urge governments across the continent to do something.
And in Europe government is definitely the source of the problem. 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 to consumers is a whopping $4.71. The case is similar in the other European nations. Italians pay $2.53/gallon in taxes, and Germany $2.56/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.
German Chancellor Gerhard Schroeder had to be helicopter in to an event in the city of Schwerin after protesters blockaded the land routes with trucks and tractors. Schroeder wanted protesters to “drop this dangerous game because it could threaten the growth and employment prospects we currently have.” If the German state blocks growth with confiscatory gas taxes, that’s okay with Schroeder. Let the consumers who bear the brunt of idiotic tax policies dare to protest, however, and they become a threat to the entire nation’s economic prospects.
European governments in general seem to view end consumers of goods as annoying pests who don’t understand the joy of government intervention in the market. Germany, for example, recently took the bizarre act of ordering Wal-Mart and several other large grocers to raise their prices in that nation. The German Cartel Office complained that Wal-Mart as well as grocers Aldi and Lidl were selling some products such as milk, butter, flour and cooking oil below cost which is illegal in Germany (in the United States such actions are legal or illegal depending on the prevailing winds of antitrust politics, with the U.S. going after Microsoft for allegedly under pricing while simultaneously going after record companies for overpricing the cost of goods).
The Germans apparently think the grocers are lowering prices to drive smaller concerns out of business, after which they will raise prices, but I have yet to see any concrete example of this happening in the real world. Much more likely is that the sort of economies of scale enjoyed by advances companies such as Wal-Mart have made in inventory management allows them to offer some basic goods that have mature pricing schemes at a slight loss since they more than make up the small loss on the wide range of other products such huge mega-markets sell.
The sheep weren’t buying the justification, with one man telling the Associated Press that, “Life in Germany is expensive enough as it is. When the likes of Wal-Mart come along and force the others to pull down their prices, that’s a good thing.”
Leave it to Europe’s pseudo-socialist governments to enter the new millenium championing the fine art of screwing the consumer with high prices.
World ‘faces oil crisis’. The BBC, September 12, 2000.
Fuel crisis grips Europe. The BBC, September 12, 2000.
European leaders remain defiant over fuel protests. CNN, September 13, 2000.
Germany targets Wal-Mart. Stephen Graham, The Associated Press, September 9, 2000.