Gas Prices Around the World: Relative to Income, U.S. Has Some of the Cheapest Gas in the World
A few weeks ago Bloomberg featured the "Highest & Cheapest Gas Prices by Country, where they ranked 60 countries by the average retail gas price at the pump and by the "pain at the pump," which is measured by the percentage of average daily income needed to buy a gallon of gas. Here are some of the findings:
1. Based on both the retail price of gas and "pain at the pump," Venezuela has the cheapest gas in the world at $0.09 cents per gallon, cheaper even than bottled water.
2. The world's highest retail gas price is found in Norway, where it would cost almost $400 to fill up the 39-gallon tank of a Chevy Suburban at $10.12 per gallon. Turkey has the second-highest retail gas price at $9.41, followed by Israel at $9.28 and Hong Kong at $8.61.
3. For "pain at the pump," India has the most expensive gas in the world relative to income, even though the retail price there of $5.44 per gallon is about 50% less than the prices in Norway, Turkey and Israel.
At $5.44, one gallon of gas in India is 1.43 times more expensive than its $3.81 in per-capita daily income, based on annual per-capita nominal GDP of $1,389 according to the IMF for 2011. Filling up a Chevy Suburban in India would be equivalent to about two months of income, based again on per-capita GDP.
If gas was that expensive in the U.S., it would cost us about $189 per gallon (based on annual per-capita GDP of $48,387). So even at $3.81 per gallon, gasoline here is a real bargain.
4. For "pain at the pump," the U.S. ranks No. 55 out of 60 countries in the latest Bloomberg ranking (where No. 1 is the most expensive/painful and No. 60 is the most affordable/least painful). Relative to our income, Americans have some of the cheapest gas in the world.
Update: Another way to express the "pain an the pump" concept of the relative cost of gas around the world is to consider the "time cost of gasoline," measured in the number of minutes, hours, or days of work necessary to earn enough income to purchase one gallon of gasoline at the retail price in various countries.
Using per-capita GDP as an approximation for income, a typical Indian would have to work about 12.5 hours (or more than a day and-a-half) to earn enough income to buy a gallon of gas at $5.44. In America, the typical worker would have to work less (fewer?) than 10 minutes (9.45 minutes) to purchase a gallon of gas at $3.81.
Bottom Line: Measured in time, gasoline in the U.S. is almost 80 times cheaper than in India, and for that we should be thankful.