Gas prices too high? Try Europe.

The US authorities, however, "are unwilling to use resource price as part of their strategy" to conserve oil, says Lee Schipper, head of transportation research at the Washington-based World Resources Institute, an environmental think tank.

"The biggest hole in our policy today is fuel taxation," he adds. "Tax increases are something Americans should do but don't know how to do, and I wonder if they will ever be able to.

"Consumers want muscle cars, manufacturers say they make what the consumer wants, and the government panders to both constituencies," Mr. Schipper continues. "It's a vicious cycle."

Europeans may drive smaller cars, but there are few signs that the current record gas prices are making them drive less.

Germans who live close to the Czech Republic can drive across the border to take advantage of the lowest prices in Europe, but most people "cannot react to [the prices] because they still need to drive a lot," says Jürgen Albrecht, an official with Germany's largest auto club, the ADAC. "I can't say I'm not going to drive the 50 kilometers [31 miles] to work because of the high gas prices. It doesn't work that way."

"Most people have no alternative, particularly those who live in rural areas," says Paul Hodgson of the RAC, the British motoring association. "A lot of motorists tell us that if there was a decent and affordable public transport system they would use that ... but we are still a long way from having an alternative."

Prices vary widely across Europe. The Greeks, for example, are getting off comparatively lightly, with just $4.32 a gallon. But they're not exactly celebrating.

On the Greek isles, where almost everything comes in by boat, residents are hit even harder by rising fuel prices. "Whatever you do, it all comes back to gasoline," huffs Dimitra Vogiatzi, who sells produce on the far-flung island of Patmos, as she slams closed her massive ledger.

Ms. Vogiatzi has been obliged to raise her prices, and more and more of her customers are buying on credit, she complains. "Imagine if we need a doctor, or someone has to have a baby," she adds. "All the boat fares, coming and going - isn't that gasoline?"

Though shipping costs in the Aegean may remain high, European Union regulations are forcing vehicle manufacturers to make their products even more efficient than they already are.

Though their primary motivation is to reduce CO2 emissions, in line with targets set by the Kyoto Protocol, bio-fuel and hybrid cars are still so rare that increased fuel efficiency is the fastest route to lower emissions, says Dolf Gielen, an expert at the IEA.

CO2 emissions from new European cars fell by 12 percent from 1995 to 2003, according to Mr. Gielen, and manufacturers have voluntarily pledged to reduce them by a further 14 per cent by 2008, he adds.

European governments are proposing tax breaks to encourage motorists to take advantage of these possibilities. Belgian drivers who buy a low-emissions vehicle get a 15 percent price rebate; Spain cuts $865 from the cost of registering a car if it replaces a car using leaded gas more than 10 years old; Hungary waives registration tax for hybrid cars.

Though US vehicles' fuel efficiency has improved greatly over the past 30 years, overall consumption has risen in the past decade because consumers and manufacturers have used the leeway offered by the new technology to buy and build bigger and more powerful vehicles, experts say.

Environmentalists wonder whether the current price spike in gas prices might lead to a lasting change in US behavior. "The exciting thing now is that we are almost at the real high point of prices in 1981," says Mr. Schipper. "We'll see if American manufacturers, authorities, and drivers realize that these prices may now be locked in."

"Sales of big SUVs have been dropping in the last few months," points out Fulton. "We are now at the point where people believe this is real and they are reacting. The longer it goes on, the more they will react."

• Mark Rice-Oxley in London, Andreas Tzortzis in Berlin, and John Thorne in Patmos contributed to this article.

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