Friday, September 16, 2005

Gas prices

This isn't your usual "oil prices are out of control post" so simmer down.

Thanks to my friend Brian here at RoviSys-NC, I have some new insight into the problem. The standard response to the "gas prices are too high!" complaint is, "you're actually lucky, they pay $7.13 in Amsterdam!" My personal favorite is when they something like, "You're complaining about $2.56/gal? Try Amsterdam, they pay $2.56 PER LITER!!!!!!!" They actually add that many exclamation points in added emphasis--it's as though a gallon is equivilent to 100000 liters (in case you don't know, 1 US gallon = 3.7854118 liters).

Anyway, the point of all this. The price of crude oil isn't that high. What really gets you is the tax. The article referenced indicates that for an average price of fuel in the US of $2.56/gal, the tax tacked on at the federal, state, and sometimes local level totals to about 40 cents. That is, without tax, that gallon of gasoline would be only $2.17, not $2.56.

Not a huge deal, but consider this. In Britain, the average cost of unleaded was $6.06/gal. If you cut the 75% that goes to the government in taxes, the price drops to a mere $1.97. Holly cow! That's right, Britain's fuel costs are overwhelmingly dominated by taxes.

It seems that a similar trend exists within some states in the US and most countries in Europe. These tactics appear to be part of an effort to encourage the use of other fuels and efficient vehicles. While I'm all for such outcomes, I wouldn't be happy about forking over so much in taxes--and I'm not even a smoker (roughly, a pack of cigarettes: $3.00 = $2.00 tax + $1.00 tar).

So the next time someone tries to stop your complaining by throwing in some (probably) made up number from Europe, remember that most of it may be in taxes.

Also keep in mind that I didn't thoroughly research this or fact-check anything.