Iceland: Stunning natural beauty, great fish three times a day, plus no need to tip

I was served a gorgeous piece of oven-baked wild Atlantic Cod on a bed of barley and vegetables at Snjofell Restaurant in the town of Arnarstapi, on Iceland's Snaefellsjokell Peninsula.

At Snaps Bistro in Reykjavik, an appetizer of melt-in-your-mouth Langoustine Tails prepared in garlic butter was one of the most memorable dishes my wife and I had on a one-week vacation in Iceland (langoustine is French for crayfish).

A tourist finds sticker shock everywhere

By VICTOR E. SASSON
EDITOR

REYKJAVIK, Iceland -- The first thing tourists realize after they learn to spell the name of this cool capital city is how expensive Iceland is.

Icelanders like to call their island nation the biggest small country in the world, but with a population of only 344,000, Iceland welcomes immigration.

Sticker shock is everywhere:

In restaurants, hotels, spas and taxis; at gas stations, if you rent a car; and on guided tours of the ruggedly beautiful main island's volcanoes, glaciers, waterfalls, fjords, farms and other natural wonders.

One saving grace is that Iceland, unlike other European countries, doesn't have a tipping system, and you won't even find a gratuity added automatically to your check.

Blame it on taxes

Of course, you're inclined not to tip when a two-course dinner for two in a fine-dining restaurant costs $120 or more; or you're charged $9 for a bottle of beer in a casual restaurant; or a taxi ride of just over a mile runs more than $20, and the Icelanders who serve you won't act hurt or disappointed.

The explanation for the high prices are high government taxes all residents and businesses pay.

In return, Icelanders receive free health care and education, and enjoy some of the lowest electric and heating bills in the world, thanks to energy from water, wind and geothermal sources.

The tax on hotel rooms, and restaurant meals and drinks is 11%.

Though prices are high, fine-dining restaurants in Iceland serve topnotch ingredients:

Iceland lands an unusually wide variety of wild fish and other seafood (many of which I was familiar with from occasional visits to The Fish Dock, an Icelandic fish market in Closter, N.J.).

And the lamb and beef served in restaurants come from free-roaming, grass-fed animals raised without harmful antibiotics and growth hormones. Vegetables often are organic.

On a rainy and overcast Saturday, we watched drivers lining up to enter the Costco Wholesale gas station in a Reykjavik suburb that was selling gasoline for 167.9 Icelandic kronas per liter or about $6.25 per gallon, compared to about $7.50 a gallon at most competing stations.

The Costco effect

Most gas stations in and around Reykjavik sell gasoline for 199.9 Icelandic kronas per liter or around $7.50 a gallon, but the May opening of a Costco Wholesale warehouse store and gas station sent a shock wave through the country. 

Costco's lower prices for gasoline (and diesel) fueled speculation among drivers that multinational companies colluded to keep prices artificially high in Iceland, which imports all of its oil.

One tour guide referred to foreign oil companies as "the Mafia."

Me and my wife visited the warehouse on Saturday, when I spoke to the manager, who said Costco has about 84,000 members in Iceland, representing 70% of the households in the entire country.

On Friday, the English-language Reykjavik Grapevine newspaper quoted the CEO of Icelandair as saying the airline has increased cargo flights 40% since July, largely to meet the demand for imported Costco products.

Iceland's strawberry growers say their high-quality fruit can't compete with the low Costco price tag, and they've lowered their prices or stopped picking the fruit in the summer.

The sale of Icelandic tomatoes also had dropped significantly, the newspaper reported. 

The Sunset-brand tomatoes I saw in the Costco outside Reykjavik were hothouse grown in Holland.

And Papco, Iceland's only toilet paper manufacturer, told the newspaper sales have dropped 20% to 30%, forcing the company to lay off six employees.

Papco Assistant CEO Alexander Karason claims Costco is selling its Kirkland Signature toilet paper "below [our] production cost."

The problem may not be Costco's low price, but the small, rough, low-quality toilet paper we encountered at two Reykjavik hotels.

Quoting Arion Bank's research division, The Reykjavik Grapevine also reported food and drink prices fell "by a whopping 1.2% in the first month after the warehouse opened [in May]."

On a guided tour of the Snaefellsjokell Peninsula and National Park, we drove through one of Iceland's many lava fields, evidence of an explosive volcanic past.

We also hiked down to a black sand volcanic beach, above and below.

On another tour two days earlier, we got a teasing glimpse of one of Iceland's glaciers. The country claims to have the largest glacier in Europe.

Iceland also boasts that the Gullfoss Waterfall, above and below, outdoes Niagara Falls in the United States "in wildness and fury."

Coming soon: 

Green cars are scarce in Iceland
Dining out in Reykjavik

Hotels and tours