The Johan Sverdrup oil field in the North Sea. Europe’s search for alternatives to Russian oil and gas has dramatically increased demand – and prices – for Norwegian oil and gas. (AP)
While American drivers are frustrated by the price of gasoline reaching $5 a gallon, think for those driving in oil-rich Norway, where prices are at $10.
Gas stations in Oslo sold unleaded fuel for about 27 kroner a liter, or about $10.30 a gallon, on Friday. That makes it the most expensive European country to fill and second only to Hong Kong globally. According to the Norwegian Automobile Federation, almost half of the cost of pumping in the Nordic country is made up of road money, carbon and sales taxes.
Norway is Europe’s leading producer of petroleum, with an increase in oil and gas price due to the war in Ukraine has boosted its coffers. But its consumers – like those across the continent – have been hit by rising pump prices at a time when they are squeezed by higher energy and near-record food costs.
Although the Norwegian government has intervened to subsidize energy costs for households, it is not keen on doing so with gasoline. With inflation exceeding 5%, speculation is that the central bank will be forced to double the size of its rate hike plan next week. That may not leave much room to help raise gasoline prices.
However, higher fuel prices could help spur the shift to zero-emission vehicles in Norway, where 4 out of 5 new car sold so far this year is electric. Much of that is thanks to a series of incentives, including tax breaks on new purchases, part of a goal of phasing out sales of new gasoline-powered cars by 2025.