For those who have been invested in oil for decades, can you explain in a simple way, why the US has relativelyvlower retail gasoline prices than so many other countries?
On the surface, it woild sedm that there may be (guess) US subsides at work here?
Just wondering :^|
can you explain in a simple way, why the US has relativelyvlower retail gasoline prices than so many other countries?
On the surface, it woild sedm that there may be (guess) US subsides at work here?
In a word, taxes. Most countries tax gasoline heavily, as a way of financing road infrastructure and now, as a way of reducing fossil fuel consumption. The US does this too, but the taxes are not as high.
For instance the US and Canada are both big fuel producers, but gasoline prices in Canada are much higher in Canada, and about half of the difference is taxes: 50c (USD) in the US and $1.20 (USD) in Canada. Average gasoline cost is about US$4.30 in the US, and US$5.90 in Canada.
Even Canada is an outlier, along with the US, with much less taxation of gasoline: https://www.theatlantic.com/business/archive/2011/05/gas-pri…
For instance the US and Canada are both big fuel producers, but gasoline prices in Canada are much higher in Canada…
Remember, though that, unless things have changed, an Imperial gallon contains 5 US quarts so the price per gallon could appear 25% higher because of that. And if it is sold in liters now, a liter is somewhat larger than a US quart.
Even Canada is an outlier, along with the US, with much less taxation of gasoline
Indeed–the rich world norm is high taxes on liquid vehicle fuels.
Not just to pay for the road system, but also to explicitly discourage fuel use.
The car I own that’s used the most has a 989cc three cylinder engine.
The US is the big outlier, and Canada tends to be between that and the rest of the pack.
Taxes tend to be a bit lower for diesel than for gasoline in a lot of places because truckers have a lot of lobbying (and road blocking) power.
Sample data point:
I just filled my car an hour ago. Don’t you hate it when that danged little red light comes on?
It cost me €154.71 for a whisker under 65 litres of premium at €2.38 per litre.
Converting for the US readers, it cost (USD) $172 at $10.03 per US gallon for 17.13 gallons.
Jim
< Converting for the US readers, it cost (USD) $172 at $10.03 per US gallon for 17.13 gallons.>
A Tesla would make lots of sense.
Converting for the US readers, it cost (USD) $172 at $10.03 per US gallon for 17.13 gallons.
How do European electricity prices compare to the US (let’s say, to CA, one of the most expensive markets at ca. $0.25-$0.42/kWh depending on your usage and billing plan)? No reason to put a weak motor in an EV just to save on fuel.
For instance the US and Canada are both big fuel producers, but gasoline prices in Canada are much higher in Canada…
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Remember, though that, unless things have changed, an Imperial gallon contains 5 US quarts so the price per gallon could appear 25% higher because of that. And if it is sold in liters now, a liter is somewhat larger than a US quart.
There are no Imperial gallons involved here, and that is not why the price seems higher in Canada. There is a US gallon (3.8 litres; we never use gallons any more, neither US gallons nor Imperial gallons), and there is a US:Canadian exchange rate (with the USD being worth about CA$1.25, or inversely, one C$1 is worth almost exactly US$0.80. So to convert the Canadian price to the US price, you have to do 2 calculations: take the Canadian price per litre and convert it to the price per US gallon, by multiplying by 3.8, and then convert to US dollars by multiplying by the CAD:USD exchange ratio.
So the average price in Canada today, according to the CAA, is C$1.72/litre, meaning about C$6.54/US gallon, which is US$5.23/gallon. The AAA says that today’s average price in the US is US$4.22, so there’s a difference of about US$1.01. US taxes are higher in Canada, by about US$0.70/US gallon, so a little over two thirds of the price difference is just the different tax level.
Funnily enough, despite higher gas prices in Europe and Japan, their gasoline prices excluding taxes are even lower than they are in Canada and the USA, don’t ask me why: https://www.canadianfuels.ca/our-industry/gasoline-prices/. Their higher pump prices in most countries are because taxes are much higher there. Why Canadians, and especially Americans, are so resistant to higher taxes requires a sociological or political explanation that is beyond my ken, but my guess is that our societies are built around individual car ownership (and not walking, using bicycles, subways, tramcars and trains), so there is less popular support for increasing the cost of automobile use.
dtb
"Why Canadians, and especially Americans, are so resistant to higher taxes requires a sociological or political explanation that is beyond my ken…
Hint: People prefer to keep their money. In other words pay less.
If that isn’t enough, think about what governments do with our tax dollars for further insights.
Why Canadians, and especially Americans, are so resistant to higher taxes requires a sociological or political explanation that is beyond my ken…
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Hint: People prefer to keep their money. In other words pay less.
If that isn’t enough, think about what governments do with our tax dollars for further insights.
OK, but Europeans (especially Scandinavians) and Japanese and Australians are people too, aren’t they? I suppose I should have said it is not obvious why Canadians and Americans are more resistant to higher gasoline taxes than people seem to be elsewhere.
Looking at places where gasoline is cheapest, another possible explanation is that people living in countries that are big net producers of carbon-based fuels don’t want to pay high prices for them, whereas government in non-producing states probably want to discourage people from importing so much of it.
Low cost (in order of USD/litre): https://statisticstimes.com/economy/countries-by-petrol-pric…
Less than $0.50/litre:
Venezuela $0.03!
Libya $0.03!
Iran $0.05!
Algeria $0.32
Kuwait
Russia $0.37
Kazakhstan
Nigeria
Less than $1/litre:
Saudi Arabia $0.62
Argentina
$1.00-1.24
USA: $1.18
Ukraine
$1.25-$1.49
Brazil
India
Australia
China
Japan
Canada $1.48
$1.50-1.74
small countries
$1.75 and up
Pretty much all of Europe (except Ukraine and Russia)
New Zealand
Israel $2.21
Finland
Sweden
Denmark $2.40
Norway $2.69
Hong Kong $2.83
Taxes on gasoline are surely influenced by all sorts of cultural and historical considerations, but there is definitely an association where non-producing countries add on a lot more tax.
Converting for the US readers, it cost (USD) $172 at $10.03 per US gallon for 17.13 gallons.
On the paid Tesla board it was recently calculated that, at average electricity rates in Europe, even at an eye-watering E2.09/liter, the range-equivalent electric charge cost was 75% lower (25% of the cost of gas).
Wow.
On the paid Tesla board it was recently calculated that, at average electricity rates in Europe, even at an eye-watering E2.09/liter, the range-equivalent electric charge cost was 75% lower (25% of the cost of gas).
As noted higher in the thread, a lot of the cost of transport fuel is the tax, and a lot of the
destination of that tax revenue is maintaining the road network and related services like lighting and plowing.
Since there is no road use tax on electricity yet, to a large extent this gap is not an inherent price
advantage of electrical power but one measure of the current subsidy to electrically powered vehicles.
Not that there is anything wrong with that, but the situation will have to change eventually.
If at some point we succeed at getting nearly all the internal combustion engines off the road, somebody still has to pay for the road.
Electronic tolls would likely work better than taxing the electricity.
If you charge at home with a solar panel but use the roads a lot, you shouldn’t be able to be a free rider.
As a close analogy, a lot of people in the UK like to fill their diesel vehicles with commercial vegetable oil.
This is unlawful, so they get fined.
But it’s forbidden not because it doesn’t work or pollutes more, but because the vegetable oil hasn’t had the road use tax paid.
The reason the same fine isn’t applied to electricity “diverted” from household to vehicular use is the current EV subsidy policy stance, not because the tax dodging logic doesn’t hold.
Again, nothing wrong with that–there is probably a good case to be made for EV subsidies. But it’s not a free lunch.
The electricity is cheaper than gasoline to a large degree because EV users are largely free riders on the road network. For now.
There will likely be a taxation tipping point. If half of road miles are from EVs, the road use tax per mile of fuel-using vehicle will have to double.
If 2/3 are EVs, the road use tax on fuel has to triple. That is unlikely to continue to the point that the last gas guzzler pays for the whole country.
Jim
Not that there is anything wrong with that, but the situation will have to change eventually.
If at some point we succeed at getting nearly all the internal combustion engines off the road, somebody still has to pay for the road.
Electronic tolls would likely work better than taxing the electricity.
There are already increased annual vehicle license fees for EVs in some US states, and that’s a plausible point to add higher road taxes - or perhaps smog tests could be replaced with EV mileage reporting / invoices. N.b. with average yearly mileage / MPG of 15000 / 25, even the highest US state / federal gas taxes amount to less than $500/year - much less in most states (though given the terrible condition of California highways, higher taxes are a good idea).
I gather European gas taxes are much higher, but am unsure what that additional money goes for - general fund? mass transit? carbon tax?
There are already increased annual vehicle license fees for EVs in some US states…
Yup.
$200 extra for our EV in Ohio.
Gas tax is 38.5c per gallon.
519 gallons of gas equivalent.
At 30mpg that’s 15.5k miles per year break even.
Ohio is doing alright by letting us drive our small EV.
The feds aren’t getting their 18.4c per gallon, though.
…there is no road use tax on electricity yet…
I have an EV and live in Georgia, USA. About 4 years ago they started implimenting an annual fee for EVs when we pay for our car tags each year. It’s about $220 if I recall correctly. I’m all for paying my fair share, but kind of irks me for a couple reasons. 1) was implemented after we purchased our car. I felt is should be grandfathered in. 2) It’s more than we’d pay for gas tax. We don’t drive much, would purchase 200 gal of gas per year (assuming 30 mi/gal, which is less than any car we’ve owned). I believe taxes are about $0.50/gal, so would be $100 for us.
John
There will likely be a taxation tipping point.
Oh, absolutely. Maybe the most logical way would be to transfer the whole thing to the registration fees (at least in the US). Regardless of propulsion mechanism, one would pay a road use tax by vehicle weight class - a per-ton charge. No “oh but I only use the car 4000 miles a year” optout.
Another way would be to add the road use tax to the charging networks, proportionately (which, although it’s 5th grade math, isn’t hard even for politicians to figure out). But then you’d have to give the utilities another excuse to add another fee for home charging…
I’m confident they’ll screw it up somehow.
Another way would be to add the road use tax to the charging networks, proportionately (which, although it’s 5th grade math, isn’t hard even for politicians to figure out).
I bet it is too hard for some politicians to figure out. But one of their un-named office assistants with a high-school diploma could certainly do it, if asked.
Another way would be to add the road use tax to the charging networks, proportionately
But a number of the EV proponents are continually telling us that a MAJOR benefit is that you plug in your car at home and avoid public charging networks altogether.
I Recall WEB relating that some politicians wanted to change the value of pi because it was an irrational number. Unreal! 
Currently there’s tax credit up to $7500 for EV that would offset any extra tax.
“Currently there’s tax credit up to $7500 for EV that would offset any extra tax.”
For some EVs. Tesla and GM cars no longer qualify. Ours didn’t, but no matter.