Americans consider cheap gas a birthright. No wonder we blame Congress when the price of petro creeps toward $4. But compared to most of the developed world, the only thing amazing about $4 gas is that we think $4 gas is amazing.

In most of Europe, four dollars is what you pay for half a gallon of gas or less. Denmark is flirting with $10/gallon thanks to high taxes and expensive fuel transportation. Meanwhile in Venezuela, gas is said to be cheaper than water. To see how the price of gas varies dramatically around the world, click through this gallery (all figures $/gallon):


To see the gallery above in a single picture, this chart compares gas prices in U.S. dollars/gallon (Y-axis) in Europe and North America. Gas prices are in red and total taxes* (both excise and consumption levies) are in blue. As you can see, almost every European country surveyed charges more in fuel taxes alone than we pay for a gallon of gasoline.



gasbreakdown.pngWhen we think about what goes into the price of gasoline around the globe, it's helpful to start with this chart to the right (via EIA). A barrel of crude oil, which is refined to produce gasoline, has a global price determined by the global market. The difference between gas prices in Richmond, Rochester, Rome and Riyadh comes down to local factors: taxes and profit margins:

Taxes: Fuel taxes and sales taxes raise the price of gas, while subsidies (essentially, negative taxes) make gasoline cheaper. Tax burdens vary tremendously. In the U.S., taxes account for about a sixth of the price of gasoline. In Canada, they account for a third. In Europe, where taxes can make up 60 percent of the final price, taxes alone account for more than $4 a gallon.

Profit margins: You can't fill up your car with crude oil. It needs to be refined, shipped, loaded into trucks and purchased for resale. Costs incurred throughout the process contribute one-fifth of the price of gas in the U.S. In other countries, refining and shipping can be more expensive but often makes up a smaller share of the total price.


It does nothing to ease the pain of higher gas prices to say "there's nothing we can do right now, and we certainly can't drill our way to cheap gas" but the fact is ... there's nothing we can do right now, and we certainly can't drill our way to cheap gas.

Even if Obama opens up ANWR and offshore sites tomorrow morning, it could take more than a decade to see returns, according to the Energy Information Administration. Even increasing production by one million barrels a day in a decade -- an optimistic scenario -- would have only a modest impact on a global market producing 72.26 million daily barrels of oil. The upshot is that there are really only one ways for gas to fall back to $3 a gallon, and that's a global recession that devastates demand for oil.


*In the slideshow, "Gas Tax" refers to both excise taxes and consumption taxes levied on gasoline. Stats from All prices effective May 2, 2011, except for subsidized countries including Venezuela and Saudi Arabia, whose prices come from March 2011 report by AIRINC.

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