Rising energy prices are causing headaches for several European nations.

In Germany, the government of Chancellor Gerhard Schroeder faces growing dissent over the nation's "ecology" taxes.

In Germany, the government of Chancellor Gerhard Schroeder faces growing dissent over the nation's "ecology" taxes.

The taxes were imposed on fuels in two stages last year to fulfill a promise to the Green Party in Schroeder's ruling coalition. The funds are used to finance welfare and retirement programs.

But motorists, hit with sharply higher gasoline and diesel prices this year, are rebelling at paying the ecology taxes, too.

Opposition politicians are clamoring against the taxes, and some local leaders of Schroeder's Social Democrat Party have deserted him on the issue.

The German automotive industry, a major employer, has protested that the ecology taxes are hurting domestic car sales.

The government has been urged to exempt motorists from the taxes or delay a 3% increase planned for Jan. 1. So far, Schroeder has resisted those demands.


The Spanish government is continuing its drive to increase energy competition.

For some time, the government has been unhappy with the lack of competition in the gasoline market, dominated by large companies.

This year, its dissatisfaction was fanned by consumer protests over higher gasoline prices, although world oil prices also were higher.

The government recently announced measures to facilitate the efforts of independent marketers to open new gasoline stations, obtain supply contracts with refiners, and build tankage.

The government also wants to boost competition in the natural gas market, the fastest-growing one in Europe. Spain's gas demand has grown 11.3%/year recently vs. 4.4% for the rest of the continent. It is expected to continue growing by at least 7%/year for the next few years.

The government persuaded Gas Natural SDG SA, which controls more than 90% of the market, to announce last month that it would sell part of its ownership in the Enagas distribution network.


MOL Rt. remains at odds with the Hungarian government over regulated natural gas prices. The integrated oil and gas company has been largely privatized but still maintains a de facto monopoly over the country's natural gas sector.

The government has controlled gas prices as part of its program to restrain inflation. It plans to allow gradual increases, so that prices are at free market levels when Hungary joins the European Union sometime in the next few years.

But MOL, in which the government still owns a 25% stake, protests that the policy is costing it money. It has claimed losses every year in recent years (except 1998), because imported gas costs more than the retail prices allowed by regulators.

The government is expected to announce soon the price ceiling for the next 12 months. It has pledged not to allow more than a 12% increase.

Intensifying the pressure on the politicians, MOL recently threatened to sell its natural gas operations if prices aren't raised substantially. The government responded that it would be interested in purchasing them.

MOL also has urged Hungarian regulators to open the domestic gas market to foreign competition as soon as possible, hoping that would ensure that decontrol isn't further delayed.

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