Some media outlets have published gas prices in nations outside the U.S. to show the contrast to American prices, which are near record highs. A glance at these lists shows how much worse off many residents of Europe are compared to U.S. consumers, who have already started to strain under the weight of $3.80 per gallon of regular gas. And much of Europe is already in recession, which is not the case in America. Gas prices will cause the recessions throughout Europe to worsen.
Most data from national government agencies in European countries, as well as data from the European Union, show that Greece, Spain, Italy, Portugal, Ireland and several other nations are in the midst of GDP contraction. Numbers from Germany show that it is on the verge of recession. Only France seems to have avoided economic problems for now. One of the hallmarks of recession in European nations is that unemployment in these countries is already into double digits. In Spain, the figure is more than 21%. It may be obvious, but people looking for work are poor job candidates if they cannot afford to commute, even short distances.
Some of Europe’s most economically desperate nations are also those with the highest gas prices. A recent CNN analysis shows that the price of a gallon of regular in Spain is $4.55. In Italy, it is $5.96. In Portugal, the number is $5.35, and in Ireland it is $4.78. All of these prices probably rise by the day as they do in the U.S.
Most European nations lack measures that the U.S. might take. One is that the federal government could make the extraordinary step of lowering the tax on gas. It would increase the deficit, but it might help save the economy. Another extraordinary step, which the Obama administration says it will not take, is to release part of the Strategic Petroleum Reserve. At some point, Obama may see his chance for reelection slide because of gas prices. And he did release some of the reserve about a year ago.
The U.S. economy remains under great pressure because of gas prices, but the government has some options to help. Among the weakest nations in Europe, the gas price problem is greater, and they have no alternatives to bring it down.
Douglas A. McIntyre