Friday, May 16, 2008

U.S. Gasoline is Still Dirt-Cheap

American gasoline is also dirt-cheap compared with gas in other countries. British motorists are currently paying about $8.38 per gallon for gasoline. In Norway, a major oil exporter, drivers are paying $8.73.

In 2007, out of the 32 industrialized countries
surveyed by the International Energy Agency (see p. 42 of the report) only one (Mexico) had cheaper gasoline than the United States

(MP: And it't not just gasoline, consumer prices for electricity and natural gas in the U.S. are among the lowest of the 32 countries, about half the prices in the U.K. for example, see p. 43).

Last year, drivers in Turkey were paying three times as much for their gasoline as Americans were. The IEA data also show that in India—where the
per capita GDP is about $2,700 (about 6 percent of the per capita GDP in the United States)—drivers have been paying more for their diesel fuel and gasoline than their American counterparts.

Gasoline is also cheap compared with other essential fuels. A Starbucks venti latte costs the equivalent of $23 per gallon while Budweiser beer runs $11 per gallon.

The simple truth is that Americans are going to have to get used to more expensive gasoline. And while they may continue grumbling at the pump, they need to accept the fact that even at $3.50 or $4 per gallon, the fuel they are buying is still a bargain.

From "Gasoline is Cheap" in
Slate.com.

13 Comments:

At 5/16/2008 10:55 AM, Blogger Walt G. said...

If you look at the rate of increase in gasoline prices, you'll see why people are so upset. How does the rate of increase in the U.S. compare to other countries over the last few years? Even astute people who budget their money well will have problems with such skyrocketing expenses. Get used to the price of gasoline? Maybe. Like it? Never.

 
At 5/16/2008 11:14 AM, Blogger David said...

The comparison with beer and coffee prices is silly, because the quantities involved are very different, and because (especially in the case of the Starbucks coffee) lower-cost alternatives are readily available.

 
At 5/16/2008 12:25 PM, Blogger Walt G. said...

A lot of other countries invested in mass transit instead of roads. Accordingly, viable transportation substitutes exist to almost anywhere you want or need to go. Most places that I need to go do not have private vehicle substitutes—I do love my 40-miles-per-gallon motorcycle lately. In addition to the lack of mass transit, we’ve built our residences away from our places of employment.

Given time, people will adjust, they always do, but it will be financially difficult in the short run. Anyone who does not understand people’s apprehension about current gasoline prices probably does not live in the real world.

 
At 5/16/2008 12:47 PM, Anonymous Anonymous said...

Look for these 200 mpg+ cars soon at a dealer near you.

VW will sell a 200-mpg car in 2010 and another company will be selling a
300+ mpg car.

 
At 5/16/2008 2:06 PM, Anonymous Kevin said...

Cheap energy -- especially cheap gasoline -- has been a cornerstone of our lifestyle. Cheap energy is also an integral part of our economy.

Yes, gasoline is still cheap by comparison to other first-world economies, but those places have already adjusted to higher energy costs. They live closer together. They drive smaller cars (if they drive). They have robust mass transit systems.

If fuel costs remain high, the United States is going to take a real hit to our economy as we are forced to convert an infrastructure dependent on cheap fuel to one which functions well with more expensive fuel costs. That's a long term drag because you can't rebuild infrastructure in a short time (large, widely-spaced houses in exurbs with freeway commute systems don't go away overnight).

While changes to infrastructure are occurring we must continue to live with the infrastructure that we have now. That means consumers have less disposable income which in turn hurts the economy.

Falling house prices represent a hit to our economy (we can't have a negative savings rate any more). Rising energy prices, though, may be even worse for us.

The one-two punch of housing plus energy is making a deep consumer slowdown look awfully likely.

 
At 5/16/2008 2:57 PM, Blogger Paul said...

This is from Robert Bryce, the guy who wrote pipedreams, gusher of lies, and writes for energy tribune?

 
At 5/16/2008 4:56 PM, Anonymous The Masked Millionaire said...

Don't spend your time in LaLa land. Energy (gas) prices are expensive. The average person is having a hard time affording the rise in prices.

What to do about it is another question all together.

Live From Las Vegas
(We don't live in LaLa land here)
The Masked Millionaire

 
At 5/16/2008 5:36 PM, Blogger OBloodyHell said...

a) How much of this difference is TAXES?

b) "Look how much others are paying!" is a recipe for inflating prices. The same crap excuse has college tuition in FL up by a factor of *8* since the late 70s, contrast with inflation over the same time period -- what, 2.5x, 3x? Nationwide, I gather, it's much the same. State A notes how low it is in comparison, so they ratchet their tuition up. Then another state is at the bottom, and THEY ratchet their tuition up... and so on, and so on, and endless jacking of tuition unrelated to school operating expenses or required cost of needed education.

 
At 5/16/2008 5:48 PM, Blogger OBloodyHell said...

> A lot of other countries invested in mass transit instead of roads. Accordingly, viable transportation substitutes exist to almost anywhere you want or need to go.

A lot of other countries have much higher population densities, and are smaller, as well, so the density across the nation is higher than in the USA.

Mass transit does not pay outside of a NYC, Boston, or other similar very high-density area. The amount of human time wasted is phenomenal, and, as such, represents a major step BACKWARD.

If you can't catch transport within any 15 minute segment, any time of day, then you are forced to match YOUR schedule to THEIR schedule, which is not a positive thing. It arbitrarily limits what you can do, where you can go, and when you can do it. Further, the need for "transfers", often involving waits as long as the initial wait, can double, triple, and even quadruple the travel time for a round-trip from point A to B and back. Outside of a major metro area, for example, the typical travel time is probably on the order of 10-20 mins each way. Using the bus may well make it take an hour from leaving your door to arriving at the door of your destination (don't forget extra walking time!). That is not a cost-effective deal.

Further, it's not like you can just "let the driver drive" and do your thing while waiting to get there -- you have to pay constant attention to where you are so that you know when your stop is approaching in order to get off at the right moment -- fail and you have wasted still more large amounts of your time.

Security, esp. for women, can be a major issue, too -- getting to your car only exposes you for a brief time, and is inherently somewhat unpredictable. A bus stop is a fixed, immobile place, often with easy approach in the dark, and is akin to a "watering hole" or a salt-lick as far as "predator-prey" relationships are concerned.

On the whole, Mass Transit may be necessary -- it is never a good thing, something to strive towards.

It is dehumanizing and treats peoples' travel needs as though they were cattle, to be picked up and dropped off with all the other cattle along a certain heavily travelled route.

Cars are uniquely American. They represent, in many ways, the psyche of individualism in this country: "I'll go where I want, when I want, and the hell with you if you try to tell me I can't!"

 
At 5/16/2008 6:00 PM, Blogger OBloodyHell said...

Ah, one other point -- Mass Transit makes it time-expensive to combine functions. Having to wait, all over again, for a bus if you stop on the way home at the supermarket is yet another example of how mass transit wastes time. It also makes packages into a major nuisance, and Ghu forbid you should forget one!! You'll likely never see it again.

All these things add up, quite a bit, to the point where I'd argue that gas costs would have to triple or quadruple before the downsides outweigh the upsides.

The real solution is fully automated cars -- a computer can not only time things much more efficiently (allowing traffic to proceed in a much more laminar flow), and can also attain economies of scale by allowing cars to drive so close that they can "draft" one another (air resistance/drag being the chief inefficiency of cars after internal combustion), which would substantially increase fuel efficiency... AND it can take you right to your destination and then take itself out of the way while you carry on with your business.

Unfortunately, the people who would make these things have chased after the Holy Grail of visual recognition, instead of realizing that they don't need to recognize things, as much as they need to NOT HIT OTHER THINGS, which is a much, much simpler problem, by many orders of magnitude.

 
At 5/16/2008 6:39 PM, Blogger David said...

"A lot of other countries invested in mass transit instead of roads"...however, many of these same countries have freight rail systems which are considerably inferior to that in the US, and are therefore even more dependent on trucking than we are. Trucking is about 3X less fuel efficient than is freight rail.

 
At 5/16/2008 10:21 PM, Blogger juandos said...

"If you look at the rate of increase in gasoline prices, you'll see why people are so upset'...

Hmmm, from Jan. of '01 to Oct. of '06 the price of a gallon of gas rose a bit over 80 cents...

Since Nov. of '06 the price per gallon has risen $1.23...

U.S. All Grades All Formulations Retail Gasoline Prices (Cents per Gallon)...

Coincidence? Personally I think not walt g....

"The comparison with beer and coffee prices is silly, because the quantities involved are very different, and because (especially in the case of the Starbucks coffee) lower-cost alternatives are readily available"...

Maybe for you they are David but I know that I consume more gallons of coffee and beer per day than gasoline...

The lower cost alternative to gasoline is called walking... Thanks but no thanks...

"How much of this difference is TAXES?" asks OBloodyHell

Good point!

Consider the following info from the Tax Foundation: State Sales, Gasoline, Cigarette, and Alcohol Tax Rates by State, 2000-2008

California as might be expected leads the pack in taxation...

I wonder how many people spend in excess of $50/month for cable television and internet service?

Bundled pakages seem to be in the $90+ range...

How much gas would that buy?

 
At 5/19/2008 6:31 AM, Blogger OBloodyHell said...

> Consider the following info from the Tax Foundation

Yees, but the comparisons are international ones -- while the state X state numbrs are of interest, I'd like to see what they are for Europe -- when people say we "aren't paying as much as people in 'xxx'" they are implying an apples-to-apples comparison. Taxes have the magical property of changing apples into lemons for the purpose of comparison -- how much of any price is a measure of the socialism (and/or 'greeny-ness') of a nation (or a state).

I'd be interested in someone doing an overlay of the county-by-county map in the successor article from CD onto a red/blue map of the counties that went for Gore/Kerry vs. Bush. My bet is that there is a very strong correlation between the blue counties and the "red" prices.

Florida, btw, is a likely outlier in that -- Florida uses gas taxes as an additional "soak" for its high levels of tourism -- they come to Fla, and leave behind their dollars...

This would be one reason Florida, while pretty much even in the left/right distribution (hence the 2000 vote), has fairly high gas taxes, unlike most of the other states which do and are notably "blue" states.

 

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