Even at $4/gallon, American drivers still getting off easy
American drivers getting angry when the gas pump automatically shuts off $50-75 into filling their cars might want to stop whining. In Norway, it can cost upwards of $130 to fill the !3.2 gallon tank of a MINI at $9.85/gallon. A new survey indicates that even at above $4/gallon, American prices are still among the cheapest in the world, in large part due to low taxation. Only 19 percent of the pump price of fuel in the US is attributable to taxes. Pretty much the only countries in the world with cheaper gas than the US are major exporters of oil that essentially give gas away. In the UK, more than 81 percent of the current 9$ price of a gallon of fuel goes to taxes. At the $4.15 that gas runs where I am right now, even eliminating the tax entirely would still bring the price to only about $3.40. Americans who really want to save at the pump are now following the path of drivers elsewhere and just migrating to smaller, more efficient vehicles, driving less and changing their driving styles. Europeans, on the other hand now actually have a reason to complain about high fuel taxes. Truck drivers, fisherman and farmers are all feeling the pain and pushing for some relief. The taxes in Europe made sense from a public policy perspective in the past to encourage efficiency, but with the price of crude so high now, it may be time to back off.
[Source: Detroit News]
Reader Comments (Page 1 of 1)
Dinosaurus 12:35PM (7/11/2008)
My step-dad continues to commute 40 miles total a day using an '05 5.4L Extended cab F-150. I have tried to convince him to get a Focus, he's paying more in gas than a payment would be for a brand new Focus and they're nice cars. Stubborn stubborn stubborn.
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radhoo 12:46PM (7/11/2008)
What ?! 4$ per gallon is not that expensive. Here in Romania is 7 $ a gallon....now that's expensive
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tankd0g 12:57PM (7/11/2008)
"Pretty much the only countries in the world with cheaper gas than the US are major exporters of oil that essentially give gas away."
Canada would be one of them if our idiots in power at the time hadn't dismantled Petro-canada. Canda belongs to central banks and oil companies, just like a real grown up democracy now.
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Jimmy 1:03PM (7/11/2008)
Fuel subsidies are still common in Asia -- although they are being slowly reduced. Gasoline was US$2.60 a gallon in China as of June 2008 LA Times report (the most recent figure I could find with a quick google search).
I'm in favor of fuel taxes funding roads and infrastructure, and it's very likely that US fuel taxes are too low; but it seems the greatest injustice is in countries with fuel subsidies.
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Chad 2:35PM (7/11/2008)
Sorry, but your numbers don't add up.
British gas: 100% - 81% (taxes) = 19% (gasoline before taxes)
19% * $9.00 = $1.71
U.S. gas: 100% - 19% (taxes) = 81% (gasoline before taxes)
81% * $4.15 = $3.36
So why is the price of gas before taxes in the U.K. half what it is in the U.S?
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MikeW 3:47PM (7/11/2008)
The USD $ is imploding.
Matthijs 2:47PM (7/11/2008)
In Holland there is a 65% tax on fuel with inflation correction! Also when the oil prize is rising the tax income thus raises.
The first of July the government added 3 eurocent extra and July 1 2009 1 more cent is added on Diesel fuel.
Gas is left alone for now. And CNG is getting 1,5 cent more tax on 7/1/2009 and 7/1/2010 1 more cent.
Also in 1991 they added 0.11 eurocent tax to close the budget deficit but never gave it back.
I really want out and go electric.
Matthijs
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MikeW 3:42PM (7/11/2008)
And the US has what kind of installed base? Gas guzzlers
And the US has what kind of vehicles for sale? still gas guzzlers.
When will the next prius have lithium based batteries?
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Baron 3:19PM (7/11/2008)
I can't speak for all European countries, but I do believe that a large number of them, at least those that are on the Euro and the UK on the pound, have a currency valued higher than ours... Not all of them, but a good many of them also have a higher base wage than we do here. Finally, the amount of driving (due to higher prices partly I'm sure, but I think it is really due to the public transit) they do is considerably lower. Add that up, and their gas prices are still high (esp. when you consider most of them are also paying high income tax to cover things such as universal health care), but they aren't quite as high as they first seem.
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Rick 7:00PM (7/11/2008)
Yea, OK, so I guess we've been privaledged and now we are jsut tasting the whine everyone else is drinking? No. It's still expensive. It's expensive because of the cars we own and drive! It's expensive because it's been one price for decades and then quaddruples in like 3 years!
The rest of the world can stop whining about us whining, we have a reason to. Look at what it's doing to our economy, it's obvisouly affecting us in a negative way so I don't want to hear about other countries as I wonder what I'm going to do now and in a future with these prices if not higher.
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1985 Gripen 4:06PM (7/11/2008)
Norway is a HUGE oil exporter. The people of Norway have a VERY high average salary and are the envy of much of Scandinavia. The price of gasoline there is offset by their higher overall wealth and the fact that the taxes on the fuel pay for benefits the United States government doesn't provide its citizens. Americans must pay for those things out of their own pocket as the government doesn't pay for them through taxation.
Also, here's a map of worldwide gasoline prices I found today coincidentally at the Los Angeles Times website:
http://www.latimes.com/business/la-071008-fi-gas-g,0,5094314.graphic
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1985 Gripen 4:10PM (7/11/2008)
Sorry, another point: people adapt locally to high petroleum prices. Look at that map I linked to in my comment above. Look at the price of gasoline in Brazil. As a result almost ALL cars in Brazil run on ethanol, which is made locally from sugarcane, as it's much cheaper than gasoline.
I was in Japan in 1997 and even back then all the taxis ran on propane. There's a huge propane tank in the trunk of all the taxis. Propane is cheaper than gasoline there.
People adapt to whatever is available cheapest in their area. If gasoline/diesel prices get high enough in the U.S. I have no doubt we'll start seeing more CNG/LPG conversions and/or cars running on ethanol (assuming the price doesn't increase along with gasoline).
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Cactus 8:12PM (7/11/2008)
When the nationwide average went above $2, in came all the stories about the $5/gal they pay in Britain, $4+ in Germany, etc...
Not to mention all those comparisons between the price of a gallon of gas, vs. cola, milk, orange juice, etc.
I expect that when gas here hits $8 a gallon, I'll be told to be thankful I don't live in Liechtenstein or what not, where gas will inevitably be $19 a gallon.
Unless the tax schemes end up changing drastically, the US price will always be cheaper than Europe. Constantly pointing out that "it could be worse" is asinine and pointless. Stop it.
Besides, if I lived in Switzerland, sure I'd have to pay $9 or so -- but whereas here I NEED to drive to work (no real public transit), the Swiss have a train system that runs on hydroelectricity and is so well-run that it's like having a nationwide subway.
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brn 12:28AM (7/12/2008)
"American drivers still getting off easy"
Let's say I believed the math. If so, that doesn't mean anyone is getting off easy. Just because some are getting screwed more, doesn't mean you're not getting screwed.
Ok, now let's do the math.
According to gasbuddy.com, the average today in the US for a gallon of gas is $4.10. $0.65 of that is tax (on average, varies by state), bringing the true cost to $3.71 per gallon.
According to petrolprices.com, the average today in the UK for a liter of gas is 119p. 66p of that is tax, bringing it to 53p per liter. Adjust for liter vs gallon and the exchange rate (xe.com), you get $4.01 (US) per gallon (US) of gas.
The true cost of gas in the US is a whopping 7% less than it is in the UK.
Do the same math with Canadian prices and it comes to $3.62 (US) per gallon (US). The true cost of gas in Canada is (slightly) LESS than it is in the US.
Can we just admit that we're all getting screwed?
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brn 12:35AM (7/12/2008)
It looks like Chad and I disagree on the amount of tax taken out in the UK. Chad, I'm very interested in where you pulled your numbers from. Mine is an approximation from a very unscientific search of UK web sites. If someone has a more reliable source, I'm interested.
Chad, sorry I didn't see your post before I posted. Either set of numbers you believe, debunks the lazy "article" that started this. I am extremely sick and tired of people taking a very short sighted look at the prices and presenting it as fact, especially in publications. ABG might want to use the "blog" title to excuse itself from being called a publication, but I still consider it irresponsible for ABG to contribute to the deception.
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Chad 2:17PM (7/14/2008)
I got my numbers from the above article. It states 81% of the price of gas in Britain is taxes and 19% of the price of gas in the U.S. is taxes. I was attempting to show that those numbers must be wrong by using said numbers to calculate the base price of crude in each country.
In other words I don't believe that 81% of the price of gas in Britain is taxes.
david burgdorff 3:44PM (7/12/2008)
I'm pleased that Europeans haven't reduced their gas tax. If they did they might consume more and help increase the world price of oil. We should increase our gas tax in U.S.A.
Actually I favor an oil import tax instead to help increase domestic production.
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brn 5:01PM (7/14/2008)
"I got my numbers from the above article"
I'm an idiot.
Thanks. :)
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