Gas Prices (US vs. Europe/Japan)

I was talking to a Republican buddy of mine (well, he's more of a free-market libertarian), and he pointed out that Brent Sea crude oil was cheaper per barrel than US (or maybe it was mideast) crude. European gas prices are much higher than US prices, even though they have cheap oil "in their backyard". So, the question became: exactly what it is the reason that gas prices in the U.S. are so low compared to the rest of the world (Europe and Japan in particular, since that what we were familiar with)?

- Do Europe and Japan factor in other "hidden costs" into the price of gasoline and the U.S. does not?
- Does the U.S. government effectively subsidize gas prices in the US? (This I suppose would be a variant of the first reason.)
- Do Europe and Japan have a much higher tax rate on gasoline? If so, is the tax money used specifically for transportation-related expenses (e.g., roads, alternative transporation, etc.)? Or is the tax money used for general-purpose government expenses?
- Are Europe and Japan engaging in a form of "social engineering" by keeping gas prices (or just gas taxes?) artificially inflated in order to discourage high consumption?
- Are the high prices a result of low consumption? That is, do the oil companies jack up the prices there because consumption is too low for them to make a significant profit otherwise? (Sort of the opposite of the "social engineering" reason offered above.)
- Conversely, is it the high US consumption that keeps the price low (since it's easier to make a large profit of the US that way)?
- For that matter, are US prices kept artifically low simply to encourage US consumption? (Another form of "social engineering", I suppose.)
- As for the Brent Sea issue, is it simply that the output from that area is too small a percentage of total oil consumption to make much of a dent in the overall price of gasoline?
- Is there some other weird reason we didn't think of?

I haven't found a suitable answer on-line yet (but I haven't looked very hard yet, either). Thought I'd throw this out there and see if anyone had any insight into this.

Thanks.

smog creating, traffic jamming, global warming creating, M.E. dependence and to encourage public transportation, ..

Its a damn good idea.

Wish it had a snowball's chance to happen here.

If you increase the gas tax, who does it affect the most? Could it be the poor? Prices go up everywhere and for everything. Old cars that are not fuel efficent have to be replaced just to keep up, but then you have to buy one. Oh, higher gas taxes will promote alternate power for cars. How much do electric cars cost now? What is the production run to get the cost down? Hydrogen? Natural Gas?

Sounds like typical trickle down crap. Yes this affects those with less money first, however it also encourages the use of public transportation (which is a lot cheaper than a car...my girl uses it every day and as a result we only need one car...I'd use it every day too if my job was serviced by public transportation. There are a million ways around this. The automobile industry has been fighting this for decades, the oil industry for even longer, and where do you think those tax dollars go? Why is it that people against taxes fail to realize that taxes are what provides things like roads, affordable health care, national defense? All that tax money goes right back into the economy and through the "multiplier effect" this actually has a larger economic impact than normal consumer spending.

have great pubtrans (i havent experienced new york's to accurately comment). despite the fact that my job is here, im reluctant to move to any city that pretty much requires me to have a car.

ive been for the most part carless for 7 months and love it!!

Just remember to factor in the cost of the military to steal the oil to make the "cheap gas"

That thinking is leading us down a deep dark hole, which the Europeans are wisely avoiding.

In Europe, if you can't afford a car, you take public transport, which is quite nice.

It's a tax issue rather than a market issue, but it's partly for a social engineering reason (I hate that term, but it's the only one I can think of) -- to discourage consumption and encourage public transportation -- and partly to account for "hidden costs" of consumption (environmental impacts, for instance).

That's sort of the way I view it, too. Of course, I still wonder if the tax money brought in from the gas tax is used solely for environmental and public transportation costs, or is it general-fund money?

It would ONLY affect poor ppl.

Taxes account for 70-80% of the cost of gas (and diesel fuel and other hydrocarbon fuels). Some of that tax income--a very small portion of it--is specifically earmarked for development of alternative energies and technologies. Liquid propane, on the other hand is only taxed at about 30%. BTW, we pay about $3.60-$4.00 a gallon for gas. Of course, in general, our vehicles get much better gas mileage than you do in the US.

Oh, certain trades--such as taxi drivers and road transporters--can claim an exemption on some of the tax, which does not encourage the use of cleaner, alternative transport such as rail.

the average state & federal tax on gasoline is around 80 cents in America?

50% at today's prices

AS you may know, Japan has almost no petroleum reserves of its own-- 98% of the oil consumed here (Japan) is imported.

The current price of regular (unleaded) gasoline at full-service stations in my part of Japan is currently 91-95 yen per liter, plus 5% sales tax. This translates to roughly $3.10 per gallon, give or take a few cents. Gas is a little cheaper at the few self-serve stations.

Anyway, of this amount, 30% or so is fuel tax levied by the Japanese government for the purpose of road maintenance, etc. (There is also an annual vehicle tax that is based on engine displacement, and a biannual tax based on vehicle weight). I don't know if this high price reduces consumption, but it might. Japanese drive a lot less than Americans, with an average of less than 6000 miles per year per car (and my average is less than that). There is a rigorous inspection system every two years which practically guarantees that gas-guzzling klunkers will not be allowed on the road. There are also fewer SUVs on the roads here, and many more subcompacts which get 40 miles per gallon or better.

Going back to the price of gasoline, 10 years ago it was about 30% more expensive than it is now. I don't know what is responsible for this price drop, since the average exchange rate was only 10% lower then, and the price of crude was a little lower. It has been relatively stable the past few years, with about 30 cents per gallon being the greatest fluctuation over a period of several months. Even the effect of the Iraq war was minimal, with prices rising from 91 to 98 yen/liter (about 21 cents a gallon), before easing back down to 91-95 yen/liter now.



On edit: Forgot to say that Japan has a very well-developed, safe and efficient public transportation system that greatly reduces the need for personal vehicle transportation in urban areas.

In Europe, most cities are designed with retail commercial establishments on the ground floor and people living in the 4 or 5 stories above. You just don't see vast enclaves of suburban homes extending to the horizon, each with a green lawn, interrupted by occasional strip malls. You don't see gigantic empty streets in the few suburban areas that do exist where you could probably fit five or six cars across as you do in the U.S. In Europe, people who drive 20 kilometers to work think they are going to the moon. In Europe, putting 8,000 miles a year on a vehicle is probably normal and nothing like the 30,000 to 40,000 miles a year I put on my car living in Southern California, with 3 hours a day of freeway driving. I know people who drive daily from San Bernardino into downtown L.A. and back every day, which is probably about the same thing as driving across England every day. Because of the different lay-out of habitation across Europe compared to the U.S., the higher gas prices must be considered along with the smaller trips people take.

Up to 100km /150 km aren't uncommon. Especially the Rhein-Main Area is notorious for long commuting distances.
And France: I've met people driving from Burgundy to Paris every day (using the excellent TGV network).

It might be worse in US (I know that it is), but this doesn't make this arguent sound.


Edit
OK I have to concede one point: commuters can set off an ammount against tax liability.

Of course there are exceptions and SOME individuals commute great distances in Europe. But as someone who has lived in Germany
and France and also extensively traveled in Spain, Italy, and Britain, I can't help notice that the structure of European modes of living
is quite different. You didn't respond to my point about the vast areas of suburbia in the U.S., that you don't find in Europe. Also, very few people in the U.S. live in the city. In Europe, more people live either in cities or very near to them. The average commute in
Europe is much shorter, in terms of both time and distance, than it is in the United States. At the same time, the use of public transportation is much more widespread in Europe. In some U.S. cities, public transportation encounters enormous challenges because of the vast suburban areas it must service. This problem is not nearly so pronounced in Europe because of the compact structure of living arrangements.

-"hidden costs" : all prices are with all taxes; I don't know about US gas-prices.

- "tax": Yes, there are lots of taxes on gas (Eco-tax, east-Germany reconstruction tax,...). The "Eco-tax" is used for the pensions at the moment.

-"discourage high consumption": yes, that's the point. And cars not meeting the efficiency regulations are taxed extra.

-"social engineering" : yes and no (hen/egg problem). The latest development increased the sells of the 3-liter car class (75MPG cars)

-Oil is traded in $, making the price less stable in Europe. While the price is raised when the crude-Oil price rises; the Gas price is seldom lowered, even if the crude price falls.

-One reason you didn't think of: in Europe other types of gas are used. The cheapest Gas here is Diesel fuel; non-diesel cars usually need 95 or 98 octane gas. There are less taxes on Diesel fuel made from plants.