Oil-rich Norway is taxing on cars
By Simon Romero The New York Times
SATURDAY, APRIL 30, 2005
OSLO Norway, the world's third-largest oil exporter, is home to perhaps
the world's most expensive gasoline.
But drivers here greet high pump prices of almost 11 kroner a liter, or
$6.60 a gallon, with little more than a shrug.
Yes, there was a protest from the Norwegian Automobile Association, which
said, "Enough is enough," And a rightist party in Parliament, the Progress
Party, once again called for a cut in gasoline taxes, which account for about
two-thirds of the price. But "those critics are but voices in the wilderness,"
said Torgald Sorli, a radio announcer with the Norwegian Broadcasting Corp. who
often discusses transportation issues. "We Norwegians are resigned to expensive
gasoline. There is no political will to change the system."
Norway, has been made wealthy by oil, trailing only Saudi Arabia and
Russia in exports. Last year alone, oil exports jumped 19 percent to $38.4
billion. But no other major oil exporter has attempted to reel in its own fuel
consumption with as much zeal as Norway. These policies have resulted in one of
the lowest car-ownership rates in Europe and fuel-efficient Volkswagens and
Peugeots far outnumber big sport utility vehicles on its roads.
Gasoline, of course, is not the only expensive commodity in Norway, a
traditionally frugal and highly taxed nation. At a pub in Oslo, for instance, a
pint of beer might cost the equivalent of $12 and an individual frozen pizza
$16. But expensive gasoline is rare among large oil-producing countries that
often subsidize fuel for their citizens. Gasoline prices in Norway have climbed
30 percent since 1998, outpacing a 15 percent increase in the consumer price
index over that period, the national statistics bureau said.
Having extremely high gasoline prices is just one anti-greenhouse gas
strategy in this redoubt of welfare capitalism and strict environmental laws.
Norwegians pay automobile taxes as high as $395 a year for each vehicle, and in
Oslo there is even a "studded-tire" fee of about $160 for vehicles with
all-terrain tires in the winter that tear up asphalt more quickly.
Then there are the taxes on new passenger vehicles that increase the
price of imported automobiles. Norway has no auto manufacturing industry aside
from an experiment to produce electric cars, and economists have suggested that
that has made it easier to limit automobile usage in Norway because there is no
domestic industry to lobby against such decisions as in neighboring Sweden,
home of Saab and Volvo.
Norway designed the tariffs to make large-engine sport utility vehicles
much costlier than compact cars.
Economists argue that gasoline prices and other auto taxes in Norway are
not so expensive when measured against the annual incomes of Norwegians, among
the world's highest at about $51,700 a person. The government frequently makes
such arguments when responding to criticism over high fuel prices.
Other European countries have also placed high taxes on gasoline, and
some, like Britain and the Netherlands, have gasoline prices that rival or at
times surpass Norway's.
In Oslo, there is ample public transportation that can be used as an
alternative to cars. Yet Norway, with a population of just 4.6 million, differs
from much of Europe in its breadth, with an extensive network of roads, tunnels
and bridges.
"Rural areas without good public transportation alternatives are hit a
little harder," said Knut Sandberg Eriksen, a senior research economist at the
Institute of Transport Economics in Oslo who estimates the government collects
about $2.4 billion in fuel taxes each year. Some of the revenue supports
Norway's social benefits.
"Our government has been grateful to use the automobile as a supreme tax
object," said Eriksen. "The car is its milking cow."
The government created the Petroleum Fund more than a decade ago, into
which it deposits most of the royalties it receives from oil production. The
$165 billion fund, overseen by the central bank, is intended for the day when
oil resources in the North Sea start to dry up.
Environmentalists suggest Norway could do more to achieve greater energy
efficiency. One sore point is the consumption of electricity, traditionally
generated by clean-burning hydropower but soon to depend more on natural gas.
Homes in the country, with much of its territory above the Arctic Circle, use
electricity to generate heat, creating much higher electricity consumption
levels than elsewhere in Europe. It is not uncommon to drive on well-lit roads
even in remote areas.
"There are areas in which we have done O.K.," said Dag Nagoda, a
coordinator in the Oslo office of the WWF, formerly known as the World Wildlife
Fund. "And there are areas in which we can do better."
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