European gas prices lead to lifestyle changes

LONDON — David Graham pulled up to the gas pump in his shiny black Jeep SUV with a "for sale" sign taped in the window.

Graham, 48, a London building contractor, pointed at the price on the pump — the equivalent of $6.62 a gallon, which means it costs him $125 to fill his tank. "That's why this is for sale," Graham said. "I can't afford it anymore. I have to walk everywhere. Things have gone mad."

As Americans contemplate the misery of a summer of $3-per-gallon gas, drivers in Britain and much of Europe look on with a resigned jealousy. Taxes and rising crude-oil prices have created some of the world's most expensive gasoline on this side of the Atlantic, where a family car is deemed more of a luxury than a necessity and many people rely instead on extensive public-transportation networks.

But even in Europe, where consumers have long been paying pump prices double — or more — than those paid by Americans, there is growing alarm over climbing fuel costs.

Many motorists are driving less and altering their daily habits for shopping, vacations and other routines, according to interviews and opinion polls. Many airlines, delivery services and other fuel-dependent businesses are passing increases on to consumers through higher prices or taking deep profit cuts.

Andris Piebalgs, the European Union's energy commissioner, warned last weekend that high oil prices were "destroying economic growth" in Europe.

Kate Gibbs of Britain's Road Haulage Association, which represents truckers and trucking companies, said the prices are driving many small trucking companies out of business. "They just can't take it anymore," Gibbs said.

Uncertainty about the West's growing confrontation with Iran, the world's fourth-largest oil supplier, instability in major producers such as Nigeria and Iraq, continued fallout from Hurricane Katrina, and growing demand for oil in China and India are among the reasons analysts cite for why pump prices have risen sharply worldwide.

Drivers in 11 European countries are now paying an average of more than $6 a gallon, according to Britain's AA Motoring Trust. European governments have long used gasoline taxes not only as an important source of revenue but as a policy tool to drive down oil consumption and reduce pollution.

David Williams of the trust, an independent research group that advocates for British motorists, said taxes account for about 66 percent of the pump price in Britain — so of this month's average price per gallon of $6.40, about $4.22 goes to the government.

U.S. drivers pay an average of about 46 cents per gallon in combined state, federal and local taxes, according to the Tax Foundation, an independent organization in Washington.

Six years ago, when government taxes were an even larger share of fuel costs, truckers, taxi drivers and other protesters blockaded Britain's oil refineries and storage depots to stop delivery to gas stations. The weeklong strike nearly paralyzed the country.

British government officials said that to lessen the pain to consumers, they have frozen the primary tax on gasoline since 2003. The average gasoline price in Britain has risen 19 percent since January 2005. Many stations are charging well above the $6.40 national average; at least one in London's chic Chelsea neighborhood was charging nearly $8 a gallon last weekend.

In the Netherlands, gas is selling for about $6.16 per gallon, which includes $3.10 in duty and 19 percent sales tax, said Jelle Wils, spokesman for the Ministry of Economic Affairs. Wils said the government has had "heavy discussions" about tax cuts or other relief measures for consumers but decided not to interfere with market forces.

"We cannot do anything about these prices because they are market prices," Wils said.

But consumer anger is clearly on the rise. "It's extortion, " said Alan Pirrie, 54, an industrial cleaner who lives near Coventry and drives 100 miles to London and 100 miles home six days a week — 1,200 miles a week.

Pirrie said it costs him almost $120 to fill the tank of his small Fiat van, and he has to fill up three times a week.

"Of course they should cut the tax, but there's no chance," said Pirrie, who said he and other drivers expect prices to continue rising. "It's life."