Mullings: An American Cyber-column By Rich Galen

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It's the Taxes, Stupid

Rich Galen

Wednesday June 22, 2005

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From Charles de Gaulle Airport
Paris, France

With crude oil prices at or near $60 per barrel, the oil companies have turned up their public relations machines. It is almost impossible to read a story about gasoline prices without being told, as we were in a piece by the Greenville News' political editor, Chuck Raasch on Sunday, "In 1980, gas cost the equivalent of about $3 in today's money."

Rassch's data is based upon a Government Accountability Office study breezily entitled, "Motor Fuels: Understanding the Factors that Influence the Retail Price of Gasoline."

According to the GAO, taxes account for about a quarter of the price of gasoline at the pump. Compare that with, as Dean Calbreath writes in his Copley News Service piece, "England, the Netherlands and Scandinavia, [where] taxes on gas are more than twice as much as the underlying cost of the fuel."

That helps us understand why gas in France is about $5.51 per gallon and about $6.36 in the Netherlands.

While the Europeans complain that we don't tax ourselves enough, a Agence France-Presse piece in yesterday's International Herald Tribune led: "The current spike in oil prices � is siphoning off growth in the global economy, especially in Europe, economists said Monday."

Again from Calbreath: "For decades, European countries have imposed high taxes on fuel to encourage conservation and fuel-efficient technologies while funding public transportation."

Help me understand this: The Europeans have been over-taxing gasoline so people won't drive so much. The US does not make gasoline prohibitively expensive via taxes so we drive a lot. But, high gasoline prices - fed by high taxes as well as high crude prices - are harming the economies of Europe more than it is harming the economy of the United States.

If we are driving like crazy, why don't high gas prices hurt the US economy more?

The AFP says, the high price of gas in Europe "dampens consumer spending at a time when the European economy is facing a slowdown in manufacturing."

Deep in that piece the unnamed writer is forced to admit (and we know how much this had to hurt the trifecta of Mullfaves: a French wire service piece published in the International Herald Tribune which is based in Paris and is owned by the NY Times):

"It appears the economy in the United States can weather the changing winds of energy costs because of sustained industrial output and consumer spending along with low inflation."

See? This is what happens when America goes it alone. Again:

We unilateral Americans are burning about a gillion gallons of gasoline a day to fuel our cars so we can get to the stores and spend our money which is available to us because of low inflation which, in turn, is kept in check by all that "sustained industrial output" not to mention low (as compared to Europe) taxes.

And this is wrong because �?

The European papers are still in a projectile sweat over the rough seas in which the European Union finds itself. No constitution. No budget. Open carping among the heavy hitters.

In an IHT piece by Judy Dempsey, Germany's Foreign minister weighed in on Monday saying, "Europe could descend into a 'conflict-ridden' bloc, unable to compete in the global market-place if the member states do not work together."

This isn't that hard. The EU is a bureaucratic swamp which will do nothing to enhance Europe's ability to produce and market its goods and services because it removes, not adds, value. Nearly a century of central planning and social engineering have led to an entire continent being in imminent danger of becoming irrelevant in the global economy.

Memo to Europe: As a starting point, just drop the level of taxes on gasoline and help rev up your stalled economic engines.

On the Secret Decoder Ring page today: Links to all manner of documents and stories listed above; a Mullfoto from Charles de Gaulle Airport and a Catchy Caption of the Day.

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