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US and EU Enegy Bills Compared

By Edited Feb 13, 2016 0 1

While US consumers have been consistently whining about the rising fuel prices, the average American barely shells out around $4.50 per gallon of petrol at an average. Prices in the EU have always been considerably higher, and for the first time in history, there were many countries in Europe that had to pay more than $10 a gallon, with Italy being particularly hard hit.

Whether it is the US strong hold on the Middle East, the higher taxes levied on fuels in EU (Norway charges more than 60% taxes on fuel and gas), or the limited supply and excessive demand situation that the EU is battling, Europe remains one of the hardest-hit areas in the fuel inflation crisis that the world has been grappling with for the past decade. This is a strange situation when the excessive fuel rich Middle East lies just a few hundred miles away from Europe.

The Debt Crisis in Europe

One of the biggest reasons why the prices in EU are rising crazily is the debt crisis that it has faced over the past few years. The public debt in Italy is supposedly, the fourth highest in the world, and hence, the prices there are sky high. An average Italian spends more money on his fuel than food, and at $9.81 a gallon, we wonder if having a cycle is a bad idea after all. There are countries that have fared well, for instance France and UK, but the rest of Europe (Greece, Denmark, and Poland) is crisis-hit.

The USA, on the other hand, handled inflation and recession really well. The President, Barrack Obama, introduced a lot of reforms and made sure the US debt crisis does not touch merchandise and utilities.

The Dearth of Local Oil in Europe

Since 2002, the amount of oil produced in Europe has been meagre. On the contrary, the US and Canada have been fairly steady in their oil production making them less dependent on imports from the Middle East.

Europe’s fuel production has primarily stalled on company drawing boards due to non-availability of skilled labour and the high industry taxes levied. Thus, when the EU largely has to rely on imports for oil, there are going to be significant price rises.

Norway and UK extract oil from their local deposits in the North Sea and have fewer import hassles than other countries in the EU.

Taxes Do Make a Difference

Turkey and Norway have a huge tax list that they impose on merchandise, especially goods that are imported. The reason why countries like Venezuela (with no significant oil refineries at all) charge $0.08 a gallon and countries like Turkey charge $9.73 a gallon is the excessive taxation that the Government charges on fuel. While America remains voter-friendly and lowers taxes on fuels, most countries in EU keep increasing the taxes on fuel.

Sweden, France, Norway, Turkey, and Greece impose fuel tax, VAT, and import excise duties on fuel which accounts to around $4.50 a gallon, more than half of what people here pay for a gallon of fuel; if the government were to reduce the taxes they impose then European fuel prices would fall.

Other Problems

There are few other reasons why EU has fuel price rise problems. The common currency makes it very difficult for individual countries to benefit with higher or lower values of currency when they indulge in mutual import and export. Countries like France, Switzerland, and others have nuclear production facilities, and have very low import needs so they fare better; other countries like Greece and Poland have to import every gallon of oil they need.

As it battles all these issues, EU definitely has a huge fuel price rise problem it needs to come to terms with, at least from the voter’s point of view. For the foreseeable future the annual utility bill facing the average European consumer is only going to go up.



Nov 27, 2012 8:56am
Phew...you've been an article churning machine, as of late, Phil...well done :)
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