How much is too much for gasoline?
Posted by Yankee on October 17, 2005 - 10:11am
Americans angrily grit their teeth as they pump $3-per-gallon gas. They think $2 is about right. In Britain, $3 sounds fanciful - people there pay about $6.40 a gallon and think $5 would be fair.Spaniards would like to see gasoline for just over $3 a gallon. People in France, Italy, Germany and South Korea put the fair market price $4 or a little more. Australians and Canadians would like to see it just under $3 a gallon.
In much of Europe and elsewhere, gas taxes account for two-thirds or more of the price of gasoline. People in those countries look for high-mileage cars. Public transportation is well-developed.In the U.S., taxes vary by state but amount to about 20 percent of gas prices. Fuel is cheaper in this country than in most parts of the world, investment in mass transit is minimal, gas-guzzling SUVs and trucks zoom along highways and politicians talk about increasing gas taxes - or any taxes - at their own risk.
"We do have a sense of entitlement here in the United States," said Steve Yetiv, a political scientist at Old Dominion University in Virginia who has studied the impact of energy prices.
Of course, the people polled don't necessarily see the reason for high gas prices. Interestingly, though, that sense of entitlement may not be uniquely American (except to the extent that we want gas at $2/gal while others would be content with $4/gal):
A majority of people in most of the nations polled said they think their government can act to limit increases in the price of gasoline. In many of those countries, unhappy consumers have been pushing for more government action.
Another article about the same poll focused on some of the other questions, namely, which concerns are most troubling right now? For the first time in a long time, domestic issues outweigh Iraq and terrorism:
Homegrown problems -- including worries about fuel costs and political leadership -- now rank about even with overseas concerns such as the terror threat and war. Public concerns about Iraq remain high.
People have said many times before on TOD that's it's going to take actual shortages before the American public really wakes up to the critical role of energy in their lives, but maybe here we're already seeing a trend toward awareness.
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Sometimes I catch myself thinking of Peak Oil as "Peak USA". This is the only country in the world which has not recognized yet that oil is depletable resource and that relying on it is equivelent to digging your own grave.
http://money.cnn.com/pf/features/lists/global_gasprices/price.html
IEA follows certain countries going back for years. Here's their graph:
http://www.eia.doe.gov/emeu/international/gas1.html
International Fuel Prices - 3rd edition (May 2003)
A more recent document is this one:
International Fuel Prices 2005, 4th Edition, Dr. Gerhard P. Metschies, GTZ, 2005
warning: big pdf files!
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I'm still trying to grasp the national policy advantage of keeping the price of transportation high.
ianqui - don't slander the PI or the article - it's an AP feed - and it also ran in the Houston Chronicle
But you're right, it's from the AP. I think I got thrown off because I saw various different articles on the same topic, so I thought it was a SPI article. I stand corrected.
http://www.usatoday.com/money/industries/energy/2005-10-16-oil-1a-cover-usat_x.htm
Debate brews: Has oil production peaked?
By David J. Lynch, USA TODAY
Almost since the dawn of the oil age, people have worried about the taps running dry. So far, the worrywarts have been wrong. Oil men from John D. Rockefeller to T. Boone Pickens always manage to find new gushers.
Interesting that the author chose Peak Oil Beliver, Boone Pickens, as an example in this context.
http://www.timesonline.co.uk/article/0,,2099-1813695_1,00.html
I wondered at the time how long it would take for that development to occur in the States. Even with the Simmons factor that's at work here, I figured on waiting months. Now, here it is in the States too - only a day later! (I had forgotten about the Pickens factor; he is one of the big boys, after all.)
it makes it pretty clear what's going on. Almost all the places with really cheap gas are oil exporting countries. The US is a former oil exporting country and the culture about gas use/prices was formed during that era of plentiful domestic oil, and resists easy change.
Most of these countries where petrol is expensive were never endowed with the abundance of natural resources that the US has/had. (Even the UK which was a significant exporter of oil for a while, never really got it ingrained in the national psyche that it was rich with oil - good thing too).
Many of them have experienced periods of sustained deprivation and the necessity of shared sacrifice (e.g. WWII and its aftermath in Europe and Japan). Gasoline is cheap in the US compared to other parts of the world because no one has presented a reasonable public case to the voters in the US as to why it should be expensive, and that it should be expensive by heavily taxing it. Though I am a personal supporter of that idea, without an almost crisis situation imminent, the American people are not going to start handing over an extra dollar to the federal government for every dollar of gas they buy.
This has led to huge expectations (for most). We have a perceived "sudden" need to act just a bit like our truly conservative anscestors, and be judicious in our habits. We don't like it.
Should gas taxes go up sharply? Sure. But expect to hear louder voices about how much tax is already being charged, and calls to lower gas taxes in order to control prices.
"They think $2 is about right."
Um, no, sorry, BZZZT! Try again. The price that the gasoline IS SELLING FOR RIGHT AT THIS MOMENT is what the collective market "thinks is about right."
Your price fantasies are utterly irrelevant. Have a nice day.
(Rant over now; thanks!)
In the article where is says "They think $2 is about right.", we are talking about the third situation.
What I take away from this article is that almost everywhere people think that gasoline should sell for something less than they are actually paying for it at the time. In the US $3.00/gallon seems exhorbitant because we are not used to it and we are used to a lifestyle that relies on 2.00/gallon gas. In the UK, people are used to paying much more, and their lifestyle is not as dependent on cheap gasoline. However, they would still like to have their gas cheaper.
Come to think of it, I feel that I should make $200/hr, because that "feels right." I work my ass off, why not?
I also feel that my apartment rental should be reduced to $50/month, because after all, $50/month "feels about right" to me, and I bet if I asked every apartment owner in my town, 100% of them would agree! Wow, make it so!
The way a market works is that there is ALWAYS a desire to pay less than something is selling for, so saying "We feel $2 is right" means nothing.
If instead you say "We budgeted $2/gal for gasoline," that is an entirely different statement, one we can discuss. I would say to that "Well, you better learn to budget with some flexibility!"
In contrast, if I budgeted $10/gal for gasoline, I could say "Hey, I'm doing pretty good, it's only $3/gal... look, I'm saving $7/gal!! I am brilliant!!!"
Either way, the reality is what the market price is, end of story. Everything else is just wasted bytes and hot air, much like my post right here. :)
Cheers!
Additionally, there is a lot of lack of information regarding the supplies of oil. If there were well by well production numbers for any country the US did business with, as well as independant analysis of reserves, that would greatly affect price. If it turns out that PO will be occuring before Yergin's 2020 (and especially if it's in the 2010 time frame) futures would shoot up, and that would affect the price today. Or alternately if it turns out that we are awash in oil, that could return us to $20/bbl oil.
i just paid 96pence a litre for diesel today, was not the most expensive place i could have bought from
4.5litres to the gallon is approx £4.30 a gallon if your dollar is $1.50 to the pound then ok $6.4 for the gallon.
i think you'll find we are closer to the $1.80 to the pound.
just so you know, our financial "experts" at the financial times recently compared our classes to yours, our lower working classes are much better off than yours.
no one else is.
our middle working classes upwards all pay more than you for everything and are payed less after tax.
god bless the usa
0.96 (quid/L)*1.75 (USD/quid)*3.8(L/gal) = 6.38 USD/gal
ah, math still works.
we in uk are up for a hard winter but lucky for us big business is looking after us...
http://news.scotsman.com/uk.cfm?id=2101272005
BRITISH companies were due to lobby the EU today to speed up deregulation of Europe's gas market as energy costs rocket.
The industry says the sharp rise in prices is partly due to gas imported from Europe being more expensive because of a lack of competition.