Why Gas in the U.S. Is So Cheap

http://finance.yahoo.com/family-home/article/104996/Why-Gas-in-the-U.S.-Is-So-Cheap

by michjeanty • 18 years ago

10 18 18 years ago

finance.yahoo.com

ojbyrne3• 18 years ago

Sometimes I'm amazed by the innumeracy (or perhaps it's just being US-centric) of people who seem to be in positions of importance.

"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."

From some random cruising around wikipedia, there's an obvious flaw with that logic. Most fuel taxes around the world are sales taxes, and either based on a percent of the underlying price, or if they are an absolute price per gallon, they are adjusted periodically based on inflation.

So any price increase is going to be magnified by the increase in taxes - people in countries with higher taxes will see the same proportional increase, and a larger absolute increase.

In addition, in that quote above, he seems to have meant to say "relative" where he said "absolute."

r7000• 18 years ago

I got the impression that the main point was that higher prices in various non-US countries has led to societies that are structured less around the availability of cheap gasoline: denser cities, a greater variety of transportation options and so forth. Thus paying more for gasoline isn't as big of a "lifestyle" hit whether it is "absolute" or "relative".

ojbyrne3• 18 years ago

I just found the part of the article I highlighted to be kind of stupid, especially coming from a Berkeley "visiting scholar." Though I'm not quite sure how important that title is (random guess - not very), it's important enough to be mentioned in the article.

kingkongrevenge2• 18 years ago

The US was the largest oil producer in the world for half a century. Things evolved under the assumption of readily available oil, and that's why policy is what it is. The rest of the industrialized world historically had no good sources of domestic oil and always remained wary of becoming too dependent on imports. The North Sea fields largely didn't come online in Europe until the early 90s.

Prrometheus2• 18 years ago

Should be "Why gas everywhere but the US is so expensive". The base price is set organically in the market, the price including tax is a result of external government meddling.

mynameishere• 18 years ago

The gas tax bothers me less than any other tax. The roads are inevitably paid through taxes--I doubt a libertarian scheme exists that could actually privatize them. In addition, there's a non-trivial chance that the natural price of gas will be very, very high in the future. Taxing it now heads off any serious disruptions caused by that.

Prrometheus2• 18 years ago

>I doubt a libertarian scheme exists that could actually privatize them.

Private highways have been successful over the last several hundred years. The earliest highways in the United States were built without tax dollars. If you can't conceive of how roads could be privatized, I would say you lack imagination.

I agree that the gas tax bothers me less than other taxes, since it tends to be paying for use of the roads. However, if we were to tax it as much as other countries I would be offended.

wumi2• 18 years ago

and Europeans have better public transport -- in the 200 miles it would take me to get a major city from where I live, even driving a 20 mpg car by myself, it'd be cheaper than public transport by a few dollars.

and with myself + n, it becomes increasingly cheaper to drive than public transportation, where n equals traveling companions

for another example, for thanksgiving I traveled to Chicago in a group of four. for about $180 of gasoline in said horrible gas-guzzling vehicle. price per train ticket was $150, and the train takes 6 hours longer.

with public transport being so horrible, and this country being so spread apart (obviously great masses of people live on both coasts, but even then north/south travel is a long ways) it would take a lot more $/gallon for it to make more economical sense to take bus/train vs. car.

Xichekolas2• 18 years ago

Public transport is a chicken and egg problem in the US. Since everything we have is so spread out, we need a very comprehensive system before anyone could use it for anything. A train or bus system is worthless if it doesn't get you within a few blocks of where you need to go. In the US we seem to think that public transportation means a train from the airport to the stadium, stopping at a mall in between.

So you won't get any riders until the system goes everywhere decently frequently. And you won't make any money without any riders. Since no one wants to fund a public transport system that isn't self-sustaining, nothing ever gets built, or worse, a 'trial system' gets built to 'test demand' ... and of course since it only goes from the airport to the stadium with a stop at the mall, it's a dismal failure.

The only way it's going to happen is a massive federal/state cooperative infrastructure program like the Interstate Highway System built under Eisenhower. And even then, with suburban lifestyle, it'd be too hard to cover all that area.

wumi2• 18 years ago

which is why we'll keep driving cars in the US until it makes sense not to, which will be several more dollars/ gallon.

kingkongrevenge2• 18 years ago

Public transport is simply not viable at the densities common in American suburbia. Can't be done. So it's not quite chicken and egg.

More likely that a whole lot of suburbia is going to become ghetto cheap and people will crowd into existing, older areas.

> The only way it's going to happen is a massive federal/state cooperative infrastructure program like the Interstate Highway System built under Eisenhower.

Totally unnecessary. The whole problem is from government in the first place. Sell the highways off to the states and privatize AMTRAK. Within three years the highways will be crumbling potholed messes and private investment will be pouring into rail. The amount of money the government dumps into the highway system is massive. It is hugely inefficient compared to rail. That's why highways were fairly limited before the feds misallocated resources to them.

petercooper• 18 years ago

Public transport is, however, very expensive, even in Europe.

I can drive the 300 round trip to London and back from my house in England FAR cheaper than the train (£40 of gas versus £50 train ticket - if two of us go, that's £40 of gas versus £100 in tickets - not even counting the cost of getting to a train station). Sure, I could take the coach which would be marginally cheaper than driving (not by much), but it takes 7 hours to get there rather than the 3.5 in the car.

thomasswift• 18 years ago

People don't realize it is cheap here, mainly because it was SUPER cheap before. I remember in high school paying a dollar or something for a gallon. 107 octane race gas was $3.50 a gallon and we thought that was outrageous. Now we are paying more then that for 87 octane crap.

also, where is the rest of the list? I know by me gas is 3.75 a gallon now. I know the US is 111 on the list but I'd like to see what a 30 cent increase makes it.

jules• 18 years ago

It's about $9.43 per gallon in the Netherlands, and it's still cheaper than public transport (unless you are a student, then it's free).

sabat• 18 years ago

Let's put this in straight, un-spun English: gas in other countries is taxed heavily, and it is not in the US. Therefore, the US deserves for the multi-national oil conglomerates to artificially jack up prices.

Yeah, that's logical.

Why Gas in the U.S. Is So Cheap

Related Stories