Gasoline is a commodity and its price is subject to supply and demand and of course perceptions.  The perception is that a big majority of supply is from the OPEC states. In some of these OPEC states there could be disruption of the supply of oil due to political unrest. This is particularly true in Libya which is only exporting, according to the Energy Information Agency, only about 25%of what they use to export  at about 400,000 barrels per day.  This means that there is a possibility that Oil the major component of gasoline’s cost will be in short supply and the price reflects this uncertainty.

The EIA has information about the price of gasoline in the past two years by regions in the United States and also the components of the costs at the following URL: http://www.eia.gov/petroleum/gasdiesel/

 

More information about the dynamics of the pricing of oil and further to the pricing of gasoline is in an article in Bloomberg Business Week at this URL:

 

http://www.businessweek.com/news/2012-04-25/oil-trades-near-one-week-high-goldman-sees-demand-gain

 

The average price of gasoline in the United States for 2011 is $3.90 per US gallon, according to the EIA.  Because fluctuations in currency exchange and prices it is difficult to determine an exact price of gasoline for other countries.  However most of the developed countries pay much more for gasoline, particularly Europe, then we pay in the United States.  The range in Europe is from $6.00 per gallon to $10.00 per gallon.  The highest price for gasoline in any major country is England (UK) at $10 per gallon.  Denmark comes close at $9.01 and maybe more for today, this was a 2008 price and exchange rate.  The lowest price for gasoline is Venezuela at about $0.18 per gallon, but of course this is very politicly motivated.  Some politics are always involved in the supply of fuel.  Most countries of the world put a tax on gasoline.  In the United States it is about $0.40 per gallon or about 11% of the cost, in the UK and some parts of Europe the tax can be as high as $8.0 per gallon.  Most major industrialized countries have a higher tax on gasoline then the United States.  For complete details about taxes on gasoline refer to this URL:

 

http://en.wikipedia.org/wiki/Fuel_tax#Asia

 

The price of gasoline is on everyone’s mind because on any major roadway the price is displayed at almost every service station.  However, the average driver in the United States probably drives about 10,000 miles per year with an average gasoline consumption of 20 miles per gallon.  This results in a yearly cost for gasoline at $4.00 per gallon of $2,000, about what one probably spends on his or her cell phone and internet usage.

 

As the price of gasoline is set by supply and demand plus some perception factored in it is very difficult to control the price.  Although price increases can be politically damaging (it has been reported that the consummate politician, President Bill Clinton, watched the price of gasoline like a hawk because he knew that any price increase in this commodity would be damaging in getting votes).  It is very difficult to accuse elected officials, like the President of the United States, to be responsible for the price of gasoline.  Actually I do take the stand that we probably should pay more for gasoline as the Secretary of Energy, Dr. Stephan Chu has unpopularity stated.  This could be in the form of a carbon tax which Sweden already does.  However there could be restrictions on gaining access to domestic oil that can influence the supply and therefore the price.

 

Share This Post

Leave a Reply

Your email address will not be published. Required fields are marked *