Professor Mark J. Perry's Blog for Economics and Finance
Posted 7:12 PM Post Link
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I agree with the current gasoline prices that you posted, but I don't see how a direct comparison can be made to US gasoline prices: Ceteris paribus.Since the price of crude oil and refining costs are globally near the same, any difference in price is at the retail and not wholesale level. And, since many companies operate globally at the same price markup, most of the difference between US prices and the rest of the world is in the governments taxation of gasoline.Whereas current public policy in the US favor automobiles, current public policy overseas favor public transportation. Therefore, the US government subsidizes automobiles by a lower gasoline taxation rate while oversea (mostly Western Europe)governments heavily tax gasoline to favor public transportation.There are many reasons for the different political agendas; decentralization of US cities, the political power of US Oil companies, price-per-mile traveled, the automobile industry, unions, motels, food establishments. . . . Let's just say the US is decisively different: I think we all know, and can agree, to that.If the US citizens demand quality country-wide public transportation, then, a way to pay for it must be found. Consequently, that way may be a higher tax on gasoline. Until that time, however, any attempt to compare US gasoline prices to others' gasoline prices is like trying to compare apples to oranges.
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Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.
Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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