NCPA - National Center for Policy Analysis

SAVORING BARGAINS AT THE AMERICAN PUMP

July 2, 2008

Gasoline in the United States is cheap.  Not as cheap as American drivers would like, of course.  And not as cheap as it is in Venezuela and other major oil-producing countries, where it is heavily subsidized.  Compared to prices in most other industrialized nations, however, the American national average of $4 a gallon is a bargain, says the New York Times.

The chief reason for the disparity with the high-priced nations is taxation.  Take away the taxes and the remaining gas price is similar from place to place, according to the Lundberg Survey released last week: 

  • Americans pay, on average, 49 cents per gallon in gasoline taxes; this includes federal, state and local charges.
  • Canadians pay more than double that amount, $1.26 per gallon.
  • The Dutch are among the most taxed, paying $5.57 per gallon this month, for a total pump price of $10.05 per gallon.

Gas taxes are used to encourage conservation, to finance roads and transit, and to fill other government coffers, says the Times.  Higher rates tend to insulate drivers from price spikes.  Consider:

  • On a percentage basis, Europeans have had to absorb far smaller increases in gas costs than Americans in recent years.
  • Europeans are used to paying double what Americans do -- or more -- and they live accordingly.

On Friday, the price of oil traded above $142, a new record, suggesting that more increases at the pump are coming, says the Times.

Source: Bill Marsh, "Savoring Bargains at the American Pump," New York Times, June 29, 2008.

For text:

http://www.nytimes.com/2008/06/29/weekinreview/29marsh.html 

 

Browse more articles on Tax and Spending Issues