COLOGNE, Germany — At a gas station near Cologne Airport in Germany, Bernd Mueller watched the numbers quickly climb: 22 euros ($23), 23 euros, 24 euros. The numbers also show his gas consumption. But much slower. Painfully and slowly.
“I’m going to throw away my car in October, November this year,” said Mueller, 80. “I’m retired, and then there’s gas and so on. At some point, you have to downsize.”
Globally, drivers like Mueller are rethinking their habits and personal finances as gasoline and diesel prices skyrocket due to Russia’s war in Ukraine and the global rebound from the COVID-19 pandemic. Energy prices are a major driver of global inflation, which makes living more expensive.
A motorcycle taxi driver in Vietnam shut down his ride-hailing app instead of burning precious fuel while backing up at rush hour. A French family has scaled back ambitions for the August holiday. A graphic designer in California added gas prices to the bill for a night out. A mom in Rome mentally crossed off a pizza night when calculating the cost of driving her son to camp.
Decisions in the world economy are as varied as consumers and countries themselves: get more. Dust off that bike. Take the subway, train or bus. Lightly press the gas pedal to save fuel. Looking back on that road trip – was it worth it? Or even car-free.
For the millions of people who can’t get enough public transportation or can’t give up their cars, the solution is to bite the bullet while cutting costs elsewhere.
Nguyen Trong Tuyen, a motorcycle taxi driver who works for Grab’s online ride-hailing service in Hanoi, Vietnam, said he only turned off the app during rush hour.
“If I’m stuck in traffic, the ride will not be able to pay for gas on the trip,” he said.
Many drivers have stopped their services like Tuyen, making it difficult for customers to book rides.
In Manila, Ronald Sibeyee burns 900 pesos ($16.83) worth of diesel a day to drive his jeepney, a colorfully decorated vehicle popular in the Philippines from a U.S. military jeep left after World War II evolved. Now, it’s a whopping 2,200 pesos ($41.40).
“That should have been our income. Now there is nothing, or nothing,” he said. His income has dropped by about 40% due to higher fuel prices.
Gasoline and diesel prices are a complex equation of crude oil costs, taxes, the purchasing power and wealth of individual countries, government subsidies that exist, and cuts by middlemen such as refineries. Oil is denominated in dollars, so if a country is an energy importer, the exchange rate comes into play – a weaker euro recently pushed up gasoline prices in Europe.
And often there are geopolitical factors, like the war in Ukraine. Buyers shunning Russian barrels and a Western plan to ban the country’s oil have rattled energy markets, which are already facing a tight supply from the rapid rebound from the virus.
There is a global oil price — about $110 a barrel — but no global oil price because of taxes and other factors. In Hong Kong and Norway, you can pay over $10 per gallon. In Germany, it’s about $7.50 a gallon, and in France, it’s about $8. While the lower fuel tax means the average U.S. price for a gallon of gasoline is just under $5, it’s still the first time that price has been this high.
People in poorer countries were quick to feel the pinch from rising energy prices, but Europeans and Americans were also squeezed. Americans have less access to public transportation, and even European transportation networks don’t reach everyone, especially those in rural areas.
Charles Dupont, the manager of a clothing store in the Essonne region south of Paris, simply uses his car to commute to work.
“I practice eco-driving, which means driving slower and avoiding sudden braking,” he said.
Others are doing what they can to cut spending. Letizia Cecinelli, who refueled her car at a petrol station in Rome, said she was cycling and trying to reduce car travel “as much as possible”.
“But if I have a kid, I have to take him to camp? I have to do that by cutting out an extra pizza,” she said.
Retail prices can be political explosives. U.S. President Joe Biden has pushed Saudi Arabia to increase oil production to help lower natural gas prices and decided to travel to the country next month after the Saudi-led OPEC+ alliance decided to boost output. The United States and other countries have also released oil from their strategic reserves, which is helpful, but not conclusive.
Several countries have caps on fuel prices, including Hungary, and discounts do not apply to foreign license plates. In Germany, the government cut taxes by 35 cents per liter on petrol and 17 cents on diesel, but prices soon began to rise again.
Germany also introduced a €9 discount on monthly public transport passes, which led to crowded stations and trains on a recent holiday weekend. But the scheme lasts only three months and is of little use to rural people if there is no train station nearby.
In fact, people are pumping as much gasoline as they did before the pandemic, according to the German Gas Station Association.
“People are filling up as before – they’re complaining, but they’re taking it,” said Herbert Rabl, a spokesman for the group.
Are there any signs of relief? Much depends on how the Ukraine war affects global oil markets. With the European Union, Russia’s largest and closest customer, having pledged to stop buying most of its oil from Moscow within six months, some Russian oil is almost certain to slip into the market, analysts said.
Meanwhile, India and China are buying more Russian oil. Europe will have to get supplies from elsewhere, such as Middle Eastern exporters. But OPEC+, which includes Russia, has been falling short of its production targets.
For many, spending on things like night tours and, in Europe, the near-religious devotion to extended late-summer vacations, is on the cutting table.
Isabelle Bruno, a teacher on the outskirts of Paris, now takes a bus to the train station instead of a 10-minute drive.
“My husband and I were really worried about the holidays because we used to drive to the south of France to visit our family,” she said. “We will now pay attention to train tickets and only use our cars for short trips.”
Leo Theus, a graphic designer from Hayward in the San Francisco Bay Area, has to budget “strategically” for gas when he travels to meet with clients — he may not fill the tank all the way. Gasoline prices in California are among the highest in the country, approaching $7 a gallon in some parts of the state.
When it comes to going to a club or bar after get off work, “you have to think about gas now, you have to decide, is it really worth going there?” Hughes said.
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