May 25, 2008

http://www.msnbc.msn.com/id/24896249/?GT1=43001

In Oslo this week working with a client, a large multinational engineering firm. At one point, I thought my eyes were fooling me, jetlag and all, but it was real. Gas prices at almost 13 NOK (Norwegian Kroner) per liter. At the current exchange of $5 dollars per Kroner, that’s almost $2.62 per liter. At 3.8 liters per gallon, you get… a gas price of almost $10 per gallon.

You thought $4 per gallon was painful? We ain’t seen nothing yet.

And Norway is an oil rich country – the third largest oil exporter after Russia and Saudi Arabia. As to gas prices, the truth is the Norwegian government taxes gasoline heavily, resulting in extraordinary energy consciousness and conservation in this country. Nobel Peace Prize recipient Al Gore is extremely popular in Norway. There was an all Electric Vehicle (EV) parade honoring the Nobel laureates at the awards ceremony last December. Increasingly, there are more of these electric cars parked on Oslo’s streets: the Buddy Car 🙂 Cute, eh?

They’re so small that you see them parked perpendicularly on the streets of Oslo, nose outward, like a motorcycle. It ranked 29th in sales by automotive brands in Norway (2006 data), ahead of Jaguar, Fiat, Smart and Porsche, and goes from 0-50 mph in 7 seconds. I fell in love from the moment I saw them, and I want one for life back in the U.S. Interestingly, the first thing one of my companions said was an expression of concern about how it might hold up in a fender bender with an SUV. I’m less worried about that. Besides, at $10/gallon, a typical SUV would cost $200 to fill your tank (once). In time, there will be NO SUVs on American roads, especially with oil now at $135 per barrel. A year ago it was $50. We’re heading toward $200. It will cost between $17,000 to $25,000 per year to DRIVE YOUR CAR!

At $200 per barrel, a May 21 2008 article by Thomas Friedman of Flat World fame cited recent congressional testimony by energy expert Gal Luft, who said OPEC could “potentially buy the Bank of America in one month’s worth of production, Apple Computer in a week and General Motors in just three days.” Friedman’s NY Times article talked about the enormous global economic power shift, with America’s influence declining as oil prices rise along with the decline of the dollar. This is on a macroeconomic level. As an American traveling in Europe, I can tell you it hits hard on a micro level. The dollar is virtually impotent against European currency. A few years ago it was $9.20 against the Norwegian Kroner, falling to the current levels of $5, almost half. Against the Euro, it’s at $1.57. (Last year it cost a fortune for me to give a lecture in Ireland.)

At current rates, a pizza costs $50 here in Oslo, and a Big Mac is $15. If Americans lived in Europe, they couldn’t afford to eat or drive. A new world order? Enough to make you think about buying a Buddy car? What might it take?

Update June 1 2008: Check out this interesting article about gas prices in other countries, from MSNBC.com
* Footnote on Norway, from Wikipedia. “Since World War II, Norway has experienced rapid economic growth, and is now amongst the wealthiest countries in the world, with a Scandinavian welfare system. Norway is the world’s third largest oil exporter after Russia and Saudi Arabia and the petroleum industry accounts for around a quarter of GDP. It has also rich resources of gas fields, hydropower, fish, forests, and minerals. Other main industries include food processing, shipbuilding, metals, chemicals, mining, fishing and pulp and paper products. Norway was ranked highest of all countries in human development from 2001 to 2006, and came second in 2007 (to fellow Nordic country Iceland). It also rated the most peaceful country in the world in a 2007 survey by Global Peace Index. It is a founding member of NATO.