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May 19, 2008 11:06 pm US/Central
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Good Question: What Are World Gas Prices Like?
(WCCO)
In the Twin Cities, a gallon of unleaded gasoline is costing nearly $3.70 as of Monday night. But compared to prices around the world, what we pay is a bargain.
An analysis of gas prices conducted by AIRIC, a research firm that tracks cost-of-living data, put the United States at 45th cheapest out of 155 countries surveyed.
AIRIC's research is already out of date, as it was conducted in late March. But the research firm found the highest prices in the African nation of Eritrea, where a gallon of unleaded costs $9.58.
In Norway, it costs $8.73/gallon and in the United Kingdom gasoline cost $8.38/gallon. Other nations near the top of the list: France at $8.07/gallon, Germany at $7.86/gallon, and Portugal at $7.84.
"Governments in many oil exporting nations currently subsidize gasoline for their citizens," said Mike McIlhon, economics professor at Century College.
AIRIC put the price of a gallon of gasoline in Venezuela at $0.12/gallon, in Iran its $0.40/gallon and in Saudi Arabia its $0.45/gallon.
"The big story is the very low 'foreign exchange' value of the dollar," said McIlhon. The professor said that prices of gasoline are rising faster in the United States than in other countries, because of the weak dollar.
Oil is generally traded in dollars, and so European nations are coming out ahead on the currency exchange. One Euro buys $1.55 in dollars right now. One year ago, one Euro only bought $1.35.
"When U.S. buyers (who have dollars) buy a barrel of oil, its price is around $125; however, when Europeans buy a barrel of $125 oil, they first buy dollars which are currently very cheap to them, and then they buy the oil, which is accordingly cheaper," said McIlhon.
The other driver in foreign fuel prices is the gasoline tax structure in those countries.
In Minnesota, the state government charges $0.22/gallon in tax and the federal government adds an $0.18 excise tax. The total is $0.40 in taxes per gallon.
Much of the rest of the world taxes gasoline by using a percentage, the same way we calculate sales taxes. So in Germany right now, the tax is approximately $5.35/gallon, in the U.K. its $5.33/gallon and in the Netherlands its $5.09/gallon.
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