COLOGNE, Germany – At a gas station near the airport in Cologne, Germany, Bernd Mueller watches the numbers climb rapidly on the pump: 22 euros ($23), 23 euros, 24 euros. The numbers indicating the amount of gasoline it consumes also increase. But much more slowly. Painfully slowly.
“I get rid of my car in October, November,” said Mueller, 80. “I’m retired, and then there’s gas and all that. At some point, you have to cut back.”
Around the world, drivers like Mueller are rethinking their habits and personal finances amid soaring gasoline and diesel prices, fueled by Russia’s war in Ukraine and the global rebound from the COVID-19 pandemic. 19. Energy prices are a key driver of inflation which is rising worldwide and making the cost of living more expensive.
A motorbike taxi driver in Vietnam turns off his ride-sharing app rather than burning precious fuel during rush hour. A French family revises its ambitions for a holiday in August. A Californian graphic designer factors the price of gas into the bill for a party. A mother in Rome, calculating the cost of driving her son to camp, mentally crosses out a pizza night.
The decisions made in the global economy are as varied as the consumers and countries themselves: walk more. Dust off that bike. Take the metro, train or bus. Use a lighter touch on the accelerator pedal to save fuel. Review this road trip – is it worth it? Or maybe even go without a car.
For the millions of people who don’t have access to adequate public transport or can’t give up their car, the solution is to grit your teeth and pay while cutting costs elsewhere.
Nguyen Trong Tuyen, a motorbike taxi driver working for online ride service Grab in Hanoi, Vietnam, said he simply turned off the app during rush hour.
“If I’m stuck in a traffic jam, the ride fee won’t cover the cost of gas for the trip,” he said.
Many drivers have discontinued their services like Tuyen, making it difficult for customers to book rides.
In Manila, Ronald Sibeyee used to burn 900 pesos ($16.83) worth of diesel a day to run his jeepney, a brightly decorated vehicle popular for public transport in the Philippines that evolved from military jeeps Americans left after World War II. Now it’s up to 2,200 pesos ($41.40).
“That should have been our income already. Now there’s nothing, or all that’s left,” he said. Its revenues have fallen by around 40% due to rising fuel prices.
Gasoline and diesel prices are a complex equation of the cost of crude oil, taxes, the purchasing power and wealth of individual countries, government subsidies where they exist, and the discount taken by intermediaries such as refineries. The price of oil is in dollars, so if a country is an energy importer, the exchange rate plays a role – the recently weaker euro has helped push up petrol prices in Europe.
And there are often geopolitical factors, like the war in Ukraine. Buyers avoiding Russian barrels and Western plans to ban oil from the country have rattled energy markets already facing tight supplies due to the rapid rebound from the pandemic.
There is a world price for oil – about $110 a barrel – but no world price at the pump due to taxes and other factors. In Hong Kong and Norway, you can pay over $10 a gallon. In Germany it can cost around $7.50 per gallon and in France around $8. While lower fuel taxes mean the US average for a gallon of gasoline is a little cheaper at $5, it’s still the first time the price has been this high.
People in poorer countries quickly feel the stress of higher energy prices, but Europeans and Americans are also in a hurry. Americans have less access to public transport, and even European public transport networks do not reach everyone, especially those in the countryside.
Charles Dupont, manager of a clothing store in Essonne south of Paris, simply has to use his car to get to work.
“I practice eco-driving, that is to say driving more slowly and avoiding sudden braking,” he said.
Others do what they can to reduce their consumption. Letizia Cecinelli, refueling her car at a petrol station in Rome, said she was cycling and trying to reduce car journeys “as much as possible”.
“But if I have a kid and I have to take him to camp? I have to do it by cutting an extra pizza,” she said.
Pump prices can be political dynamite. US President Joe Biden has pushed Saudi Arabia to pump more oil to help lower gas prices, deciding to visit the kingdom next month after the Saudi-led OPEC+ alliance decided to increase production. The United States and other countries have also released oil from their strategic reserves, which helps but is not decisive.
Several countries have fuel price caps, including Hungary, where the discount does not apply to foreign license plates. In Germany, the government reduced taxes by 35 euro cents per liter on petrol and 17 cents on diesel, but prices soon started to rise again.
Germany has also introduced a discounted €9 monthly ticket for public transport, leading to crowded stations and trains on a recent holiday weekend. But the program only lasts three months and is of no use to rural dwellers if there is no train station nearby.
In fact, people are pumping as much gasoline as before the pandemic, according to the German Petrol Station Association.
“People are filling up as much as before – they’re grumbling but they’re accepting it,” band spokesman Herbert Rabl said.
Is there relief in sight? Much depends on how the war in Ukraine affects world oil markets. Analysts say some Russian oil is almost certain to be lost to markets as the European Union, Russia’s biggest and closest customer, has pledged to end most purchases in Moscow within six months.
Meanwhile, India and China are buying more Russian oil. Europe will have to source its supplies elsewhere, like exporters in the Middle East. But OPEC+, which includes Russia, fell short of its production targets.
For many, spending on things like nights out and, in Europe, the quasi-religious devotion to extended late summer vacations, is on the cutting table.
Isabelle Bruno, a teacher in the Paris suburbs, now takes the bus to the station instead of the 10-minute journey.
“My husband and I are really worried about the holidays because we used to drive our car very often to visit our family in the south of France,” she said. “We will now pay attention to train tickets and only use our car for short trips.”
Leo Theus, a graphic designer from the town of Hayward in the San Francisco Bay Area, has to be ‘strategic’ about budgeting for gas when he goes to meet clients – he may not fill in the reservoir to the end. Gas prices in California are the highest in the United States, reaching nearly $7 per gallon in some parts of the state.
When it comes to going to a club or a bar after work, “you have to think about gas now, you have to decide, is it really worth going or not?” said Theus.
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