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Norwegian drivers pay high price for taking to streets

gas station
Norway is the second-largest oil producer in the world, after Saudi Arabia  

March 16, 2000
Web posted at: 12:25 PM EST (1725 GMT)


In this story:

Over two-thirds of the gas price is tax

'It is a kind of robbery'

Taxes impact pattern of motoring

RELATED STORIES, SITES



OSLO, Norway (CNN) -- As U.S. consumers and politicians react with shock and outrage to paying $2 or more for a gallon of gasoline, the price at the pump in Norway heads toward $5 per gallon, the highest in the world.

What makes that price all the more remarkable is that Norway is the world's second-largest oil exporter behind Saudi Arabia.

  ALSO
 

And the cost of gas is just part of the equation of the high price of driving in Norway. In addition to the high gas prices, Norwegians pay $250 a year for vehicle registration, and Oslo charges its residents an additional $125 per year if they drive on studded tires. Norwegians also pay $800 million a year for using toll roads.

Tax makes up over 60 percent of the sales price of a new car, adding $19,000 to the price of an $11,000 VW Golf.

Over two-thirds of the gas price is tax

More than two-thirds of the price of gas in Norway goes for taxes. Of the current price of 10.50 kroner per liter (about $4.75 per gallon), 4.34 kroner is fuel tax, 2 kroner is Value Added Tax, 0.95 kroner is Carbon dioxide duty -- leaving 3 kroner to be shared between the oil company and the gas station.

Knut Sandberg, a senior economist at Norway's Institute of Transport Economics, says politicians long ago stopped trying to justify the high price of gas by using environmental arguments.

"The government needs money and gets it from the consumers. The money invested in roads and car safety projects are less than half the income from car and gasoline taxes," he says.

The Norwegian government raises $2 billion a year from gasoline taxes, $500 for every Norwegian, and $2.5 billion from car sales taxes.

Norway's oil production and export royalties are projected to produce a surplus of $20 billion this year.

'It is a kind of robbery'

Egil Otter of the Norwegian Automobile Association says consumers have never managed to effectively put pressure on the government to reduce gas prices.

"When the oil price soars, gasoline prices follow. When oil prices fall, gasoline prices stay high," Otter says.

"It is a kind of robbery. Especially families with kids are punished by the high taxes, because they pay for the car and the gasoline themselves."

Taxes impact pattern of motoring

gas station
Gas prices in Norway have soared to $5 a gallon, the highest in the world  

The high cost of driving has impacted the pattern of car ownership and usage in Norway.

A small car and some free gasoline are common parts of the compensation package for middle management in private companies.

About 60 percent of new car sales in Oslo last year were for company cars, says Otter.

The high cost of vehicles has left Norway with an elderly car stock. The average car on the road is between 8 and 9 years old.

While none match Norway's combined cost of car ownership and use, other Scandinavian countries tax the motorist heavily. In Denmark, the price of gas is about 10 percent lower, but the car tax is higher. Sweden has the same gas prices as Denmark but charges only Value Added Tax -- the European Union-wide sales tax -- on new car sales.



RELATED STORIES:
How did gas get to be $2 a gallon?
March 15, 2000
Gas prices surging, but still below record levels
March 14, 2000
Norwegian drivers pay high price for taking to streets
March 13, 2000

RELATED SITES:
Ministry of Petroleum and Energy (in Norwegian and English)
Olje- og energidepartementet - hovedside
Kvarner
IEP - Oil and Gas, Norway
Norway : Oil and gas - A part of Randburg
North Sea


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