Gasoline_feature_05-2014

Gasoline prices around the world

How much do Americans pay for gasoline, and how does that compare to what consumers around the world pay for their fuel?

Lucas Davis, a researcher at the University of California at Berkeley, tackled that question in a paper last December looking into the economic cost of global fuel subsidies. The chart below comes from his study, and is instructive in several ways.

Gas_price_chart_05-2014

Davis notes that the graph “reveals an enormous amount of variation in gasoline prices. Gasoline prices average $5.26 per gallon, but range from $.09 per gallon in Venezuela to above $9.00 in Turkey and Norway.”

What’s clear is that the prices American consumers pay for gasoline fall roughly in the middle of what many others around the world pay, and quite a bit less than the global average.

What accounts for this variety? Government policies.

The high prices seen in parts of Europe are driven largely by high fuel taxes – more than $4 per gallon in Germany and the Netherlands.

The low pump prices in countries like Venezuela and Iran are the result of government subsidies for gasoline and diesel consumption.

In fact, as economist Timothy Taylor notes in his Conversable Economist blog, about 90 percent of the $110 billion spent annually on fuel subsidies goes to residents of just 10 countries.

At between $3 and $4 per gallon, the average price of gasoline in the United States is considerably less than the global average of $5.26. The prices U.S. consumers pay are less distorted by subsidies or taxes than the prices paid in many other countries, better reflecting market dynamics.

The price of crude oil makes up two-thirds of the price American consumers pay at the pump, according to the Energy Information Administration. Meanwhile, gasoline taxes in the United States vary from state to state, but overall they average around 49 cents per gallon.

By contrast, in 2013 ExxonMobil earned about 6 cents for every gallon of gasoline and other products we refined, shipped, and sold in the U.S.

Just something to consider next time you hear someone talking about what American drivers pay to fill up.

 


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