April 20, 2020
When I moved to the US from the U.K. almost twenty years ago I could not help but notice how much cheaper gas was. The cost of filling my dad’s sedan in England was about twice that of filling my mom’s minivan in the U.S. The other day I passed a station selling gas for just $1.58 per gallon. After this morning’s 40% oil crash I expect prices will fall even lower. The falling price of gas made me wonder how other countries’ prices stack up in comparison. The prices below are taken from a website which tracks fuel prices across 150 countries (www.globalpetrolprices.com). While the information has already aged (it relates to April 13th) it should provide a good comparison of the extremes in gas price across the world.
Generally, richer countries have higher prices while poorer countries, and the countries that produce and export oil, have significantly lower prices. The notable exception is the US, which manages to combine being an economically advanced country which produces oil, while still maintaining low gas prices. All countries have access to the same international petroleum markets and, typically, transportation costs are a relatively small part of the price structure of gas. As a result, price differences across countries are mainly due to local taxes and subsidies for gasoline.
Venezuela has the world’s cheapest gas by far, costing a driver less than $.01 per gallon. The reason is no longer that Venezuela sits on top of the world’s largest oil reserves. Instead the chaos and corruption of the government has generated hyperinflation and has made Venezuela’s currency, the bolivar, hard to find and almost worthless. Moreover, the government is in no position to lift the gas subsidies it has long had in place. Without cash in Venezuelans’ wallets, it is not unusual for gas station attendants to be given a candy bar or a cigarette in exchange for a full tank of gas.
On the other end of the spectrum, Norway’s gasoline price is $5.49 per gallon despite being one of the world’s largest oil producers. This high cost for gasoline reflects both the country’s drive to eliminate fossil-fuel burning through high taxes, and its high cost of living. Barbados’ cost of gas is even higher at $6.74 per gallon, but for different reasons. It maintains small crude reserves and has no refining capacity. It is also one of the wealthiest and best-developed countries in the Caribbean. The most expensive gasoline in the world is to be found in Hong Kong, where a gallon of gas costs $8.17. Filling up a fifteen-gallon tank SUV would cost you $123, and that is cheap in comparison to past prices!
During this difficult time in the world, we should not take for granted living in a country where the price of gas is very affordable. This gives us more money in our pocket to spend on other goods and services to help strengthen our economy.