NEW YORK (CNNMoney.com) -- Despite daily headlines bemoaning record gas prices, the U.S. is actually one of the cheaper places to fill up in the world.
Out of 155 countries surveyed, U.S. gas prices were the 45th cheapest, according to a recent study from AIRINC, a research firm that tracks cost of living data.
The difference is staggering. As of late March, U.S. gas prices averaged $3.45 a gallon. That compares to over $8 a gallon across much of Europe, $12.03 in Aruba and $18.42 in Sierra Leone.
The U.S. has always fought to keep gas prices low, and the current debate among presidential candidates on how to keep them that way has been fierce.
But those cheap gas prices - which Americans have gotten used to - mean they feel price spikes like the ones we're experiencing now more acutely than citizens from other nations which have had historically more expensive fuel.
Cheap gas prices have also lulled Americans into a cycle of buying bigger cars and bigger houses further away from their work - leaving them more exposed to rising prices, some experts say.
Price comparisons are not all created equal. Comparing gas prices across nations is always difficult. For starters, the AIRINC numbers don't take into account different salaries in different countries, or the different exchange rates. The dollar has lost considerable ground to the euro recently. Because oil is priced in dollars, rising oil prices aren't as hard on people paying with currencies which are stronger than the dollar, as they can essentially buy more oil with their money as the dollar falls in value.
And then there's the varying distances people drive, the public transportation options available, and the different services people get in exchange for high gas prices. For example, Europe's stronger social safety net, including cheaper health care and higher education, is paid for partly through gas taxes.
Gas price: It's all about government policy. Gasoline costs roughly the same to make no matter where in the world it's produced, according to John Felmy, chief economist for the American Petroleum Institute. The difference in retail costs, he said, is that some governments subsidize gas while others tax it heavily.
In many oil producing nations gas is absurdly cheap. In Venezuela it's 12 cents a gallon. In Saudi Arabia it's 45.
The governments there forego the money from selling that oil on the open market - instead using the money to make their people happy and encourage their nations' development.
Subsidies, many analysts say, are encouraging rampant demand in these countries, pushing up the price of oil worldwide.
In the U.S., the federal tax on gas is about 18 cents a gallon, pretty low by international standards.
But those relatively low gas taxes make it hard now for Americans to deal with gas prices that have risen from around $1 to over $3 a gallon in the last seven years.
"Everybody pays more, but the U.S. pays more in absolute terms," said Lee Shipper, a visiting scholar at the University of California Berkeley's Transportation Center. If you're already paying $4 in taxes, said Schipper, then an extra $2 a gallon isn't that big of a deal.
Revenues from Europe's high gas taxes are used to fund a variety of things. One thing they have built is better public transportation, said Peter Tertzakian, chief energy economist at ARC Financial, a Calgary-based private equity firm.
They gave people an alternative to driving, something we don't have in North America," said Tertzakian.
Low fuel taxes and prices sprung out of a national love for mobility going back generations, said Robert Lang, director of the urban planning think tank Metropolitan Institute at Virginia Tech.
In fact, the U.S. could not have had the western expansion it did without the cheap mobility railroads and horse carriages afforded long before it became an auto-obsessed culture, said Lang.
"You couldn't have Manifest Destiny unless you could move," he said.
The automobile, and its promise of personal mobility, only deepened the nation's love affair with travel.
"Nobody sang 'She'll have fun fun fun until her daddy takes the tokens away,'" said Lang. 'It's totally romanticized."
Gas consumption Europe vs. U.S. There is some evidence Europe's high gas taxes have capped its oil consumption.
Oil use in the United Kingdom has basically stayed flat from 1980 to now, while in France it's dropped 17%, according to figures from the Energy Information Administration.
In the U.S., meanwhile, oil use is up 21% over the same period, although the country has added more people and seen its economy grow slightly faster.
Americans have taken advantage of cheap gas prices to do other things - like buy bigger cars and bigger houses further away from city centers, said Schipper.
On a per capita basis, Americans use three times more oil than Europeans, he said. That means Americans are more exposed to rising gas prices than their counterparts across the Atlantic.
"Five-thousand square feet in the suburbs, that's much rarer in Europe," said Schipper, referring to big homes. "We dug our hole."
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Just a little perspective...and an explanation. Gas prices can't stay low forever, and lowering the federal gas tax isn't going to fix a damn thing. And look were gas is the cheapest. I wonder how many Americans would trade the right to vote for gas that cost less than a dollar....hmmm. And all this makes me wonder what the Hell we are all going to do when gas here is the same price it is now in Belgium.
4 comments:
I don't think the problem is necessarily the high cost of gas. I think that the issue many in the US are having is the steep and rapid increase in the price of gas. Had this been a gradual increase over a number of years, I don't think the economy would be hit so hard.
Couple the oil hike with the housing bubble and the credit crunch, add the rising cost of food and the falling dollar and you get the cesspool of wonder we are in today.
True. The rising cost of food is linked to the rising cost of fuel. And interestingly, this has been a major popularity boost for the buy local movement (e.g. buying food stuffs from local producers at farmer's markets and such). Imported foods have usually been cheaper since the cost of labor in countries like Brazil, Argentina, Indonesia, and the Philippines has been so low. The increase in transportation costs, however, have made these goods much more costly so things start balancing a little bit. Incidentally, the increasing realization (took fucking long enough) that burning fossil fuels causes global warning has helped as well as people being to see how even the choice of what produce they buy may affect the environment. So the solution is to change practices, not change the gas tax.
I agree, Pope. When the average family budget allocates n percent to gas, it can, like any budget, naturally adjust to changing conditions if those changes are gradual enough.
But when the price increases so sharply, outpacing inflation and other goods and services by such a wide margin, it really begins to hurt.
And I agree with Reed that the "Gas Tax Holiday" will amount to very little. And a holiday + windfall profits tax would more than likely be disasterous.
But what to do? Maybe doing nothing is better for our long term goals.
Given the fact that the vast majority of Americans are too dispersed spatially for mass transit to be really viable answer to the problem, I think the single best thing we can do is finally become so fed up with being at the mercy of foreign oil that we put serious effort into alternative, cleaner energy sources for our automobiles.
Aside from being an eye sore, no one will give a shit that you're driving an H2 if you replace that 38 gallon tank with a bank of hydrogen fuel cells. :P
The technology is there. It just needs maturation and development to be commercially viable. We need to make it a national priority for reasons that are legion.
I know the squeeze is hurting families (including mine)... And while I would absolutely reject any actions that would make it worse, maybe a little bit of pressure is exactly what we need to get our act together.
The squeeze isn't just hurting families - it's hurting a lot of people. I'm definitely feeling it in a huge way - and yes, while seeing what other people are paying for gas (though other parts of THIS country are already getting close to the $8 mark and most of it is well above that $3 mark including where I live) does put things a bit into prospective - it doesn't make the crunch that I am feeling hurt any less. It's the position I always end up in when someone says "sure you're having a hard time - but look how much worse Joe has it". Great - kudos to Joe for having a shittier string of luck than I did. Still doesn't make my daily life any easier.
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