Gas Prices Skyrocket for Most, Stay Low for Some

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In the United States, the average gas price has surpassed $4 a gallon; but in Norway, the cost is more than double that price. Meanwhile, Venezuela consumers are paying just pennies at the pump. Lasse Fridstrom, the managing director of the Institute of Transport Economics in Olso and Miguel Octavia, an economic blogger in Venezuela, discuss the impact of some of the world's highest and lowest gas prices.


I'm Michel Martin, and this is Tell Me More from NPR News. Still to come, our money coach Alvin Hall will tell us how to keep a cool head about our investments when the financial news is all crazy.

But first, if you drive at all you cannot help but notice that gas prices have now inched past $4 a gallon. But that made us wonder, what was going on with gas prices around the world. So we called Norway, where the price at the pump is more than $9 a gallon, and Venezuela where it's somewhere between seven and 14 cents a gallon.

As far as we know the highest and lowest gas prices in the world. Both are oil producing countries, by the way. A couple of days ago I caught up with Miguel Octavio, he's a blogger in Venezuela who writes about the economy and politics. And Lasse Fridstrom, he's the managing director of the Institute of Transport Economics in Oslo. Fridstrom says a walk around the neighborhood keeps him in touch with gas prices.

Mr. LASSE FRIDSTROM (Blogger,Managing Director, Oslo Transport Economics Institute): My next door neighbor happens to be a gas station, and I checked their price last night, and as reckoned in U.S. units it was 9.87 cents and that's a fairly high price on a global level.

But it's not drastically higher than in most European countries, because most European countries put a tax on gasoline and that's around $5 a gallon. And that's a conscious policy that has lasted now for decades.

MARTIN: Do Norwegians mind? Do they have a problem with that?

Mr. FRIDSTROM: There is public debate on this, but nothing like the public outcry that you see in U.S., I think.

MARTIN: Why do you think that is?

Mr. FRIDSTROM: Well, people realize that the gasoline tax has good purposes. First it brings revenue to the government that they can use for public service, like roads and schools and hospitals, and so on. And then there is congestion which is also limited through this tax.

And lastly it's a matter of national energy security, because I think, the U.S. is now in a rather a difficult situation because we are a long time with cheap gasoline that has failed to give the incentives towards energy in the economy. And this problem is going to accelerate since oil is a depletable resource.

MARTIN: OK. Lasse if you'd stay with us, I want to turn to Miguel for a minute. You're in Miami right now, but write about the economy and politics in Venezuela.

Mr. MIGUEL OCTAVIO (Writer, Blogger, Economy and Politics): That is right.

MARTIN: Why is gas so cheap there?

Mr. OCTAVIO: We've had a string of populist governments that have faced very bad economic situations and these governments wanted to be popular - they, every time they devalued they held the gasoline price cheap, because they did not want to make unpopular decisions.

MARTIN: So, it's subsidized, it's heavily subsidized?

Mr. OCTAVIO: Oh, it's terribly subsidized.

(Soundbite of laughter)

MARTIN: Why do they charge anything, why don't you just give it away?

(Soundbite of laughter)

MARTIN: Eight cents a gallon.

Mr. OCTAVIO: Actually, I think it would be more practical if they just gave it away.

MARTIN: There have been attempts as I understand it to raise the price of gas, but isn't there public kind of resistance. As I recall in 1989 there was a - some discussion of raising gas prices and there were protests, right? I mean is it that people just…

Mr. OCTAVIO: Well, people…

MARTIN: it that gas is considered as an entitlement now?

Mr. OCTAVIO: They've got used to the government giving them a lot and in 1989 indeed, President Carlos Andres Perez came into power and 15 days later he raised the price of gas to the export price. And there were riots, but I think he was a - there were many things - reasons why these riots took place in among other things, because a lot of political groups instigated them.

People forget that in 1997 President Rafael Caldera, who was highly unpopular, also raised prices, gradually. Within a year he brought the price of gas to the export price.

MARTIN: And I should mention your blog is decidedly antigovernment, very critical of President Hugo Chavez.

Mr. OCTAVIO: Absolutely.

Mr. OCTAVIO: The title of your blog is the Devil's Excrement. Could you explain? What does that mean?

Mr. OCTAVIO: Well, the founder of OPEC was a Venezuelan called, Juan Pablo Perez Alfonso, referred to oil, I think he made it popular because he said, you know, all the oil is the devil's excrement because easy wealth is bad for countries because the tough decisions necessary to develop the country are not made.

And I think that Venezuela is a typical basket case, you may say of that, you know, we don't pay the tough decisions such as increase - the gasoline price subsidy is now at $12 billion subsidy in Venezuela.

MARTIN: If you are just joining us you're listening to Tell Me More from NPR News and we're talking about the world-wide variation in gas prices. With Miguel Octavio, he's a blogger in Venezuela where gas is about eight cents a gallon. And Lasse Fridstrom he's managing director of the Institute of Transport Economics in Norway where gas in running about - almost $10 a gallon.

Lasse we were talking earlier, and you were saying that you think that it makes a big difference that there are no car manufacturers in Norway. Plus there's no car lobby, and that makes a really big difference in contrast to say Sweden, which of course is known for cars. What difference do you think that makes?

Mr. FRIDSTROM: The gas price is about the same in Norway and Sweden, but the car price is very much lower in Sweden, because in Norway not only do we tax the gasoline, about 100 percent on top of the world market price, we also tax the vehicles at about the same rate.

So, vehicles are typically almost twice as expensive in Norway as they are in Sweden. And this I think has to do with the fact that there is no car manufacturing lobby in Norway, and neither is there one in Denmark. And these two countries are about the only two countries with these high vehicle taxes.

MARTIN: Do you have a car?

Mr. FRIDSTROM: Oh yes, sure. Almost everybody does.

MARTIN: Everybody has one they just don't have, like three.

Mr. FRIDSTROM: That's right, although, two-car households are becoming more common.

MARTIN: Miguel, in Venezuela with gas prices so low is car ownership widespread?

Mr. OCTAVIO: Not because Venezuela is really a poor country, you know, income per capita is about $5,000 a year. So, I would say about 30-35 percent of the population can afford a car. But anybody that has savings in the last three years has bought a car because inflation is running at 20 percent, and car prices are also subsidized in the sense that we have exchange controls. And car imports are priced at the official rate of exchange. The government subsidizes also the price of the cars. So, last year in Venezuela, a country of 24-25 million people, a half a million cars were sold. So, traffic is really getting unbearable in Venezuela.

MARTIN: Well, give me a sense of how unbearable? Like for example, how long is your commute?

Mr. OCTAVIO: I live about three miles away from my office and sometimes it takes me an hour to get home. And sometimes I just give up, and walk home.

(Soundbite of laughter)

MARTIN: Stop it.

(Soundbite of laughter)

Mr. OCTAVIO: It's terrible.

Mr. FRIDSTROM: Could I comment?


Mr. FRIDSTROM: On the Venezuelan situation.

MARTIN: Please.

Mr. FRIDSTROM: I think what Venezuela is doing is actually wasting its national oil fortune by using it on something that really creates more problems than resolving them through congestion, and annoyance on account of the traffic situation.

MARTIN: Miguel, what about that? In this country one finds that the high gas prices are in fact sparking more discussion about conservation, about alternative energy, and about public transportation in ways that - really hasn't been very vigorous for quite some time. What about that in Venezuela, even though price is not the instigator of a debate, is there - all the congestion, is there any conversation about - like, Lasse is mentioning?

Mr. OCTAVIO: Absolutely not. The government has no interest in conservation. We are currently using up 800,000 barrels a day of our own oil in a country that possess 2.4 billion barrels of oil. So, we really only exporting about 1.6, and this is increasing because people are using the free gas, and the government doesn't make an issue of this. And traffic is not even an issue, some mayors of Caracas have tried to use solutions for traffic. That they did things like if your license plate ends in zero and one, you cannot drive on Monday, if it's two and three, on Tuesday. And the government actually went to court and banned it.

MARTIN: Interesting. So, finally I wanted to ask each of you if you have any advice from your respective vantage points for Americans who are so upset about high gas prices. Lasse, if you could start.

Mr. FRIDSTROM: It has struck me the few times that I have been in the U.S. discussing this issue that it is regrettable how the most efficient measure for energy economy has become almost a taboo word in the U.S., namely tax. And you would be able to achieve a whole lot in terms of energy efficiency, and energy security, and greenhouse gas abatement through even a modest tax on gasoline.

MARTIN: You won't be invited back.

(Soundbite of laughter)

MARTIN: Miguel, what about you? Any thoughts for Americans other than move to Venezuela?

Mr. OCTAVIO: When I go to certain cities in the U.S. how, you know, people drive you know, one mile just in the car, four times a day to the supermarket. And when everything has to be done with a car, it seems like just a waste. We are more wasteful than you are because…

(Soundbite of laughter)

Mr. OCTAVIO: We have the cheap gas, but it just seems that there should be more government policy also towards improving transportation in many cities, where it practically doesn't exist.

MARTIN: Miguel Octavio is a blogger in Venezuela - he writes about the economy and politics he joined us from Miami. Lasse Fridstrom is the managing director of the Institute of Transport Economics, he joined us from Oslow in Norway. I thank you both so much for speaking with us.

Mr. OCTAVIO: Thank you very much.

Mr. FRIDSTROM: Thank you very much.

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