The Price we Pay for Gas in the US

Since the price of oils is a commodity it is fixed everywhere around the world, so the difference people worldwide pay at the pump is based primarily upon the taxes imposed by each state or nation.  One can get the different prices of gasoline by country from The Statistics Portal in April 2014 though similar data is available elsewhere.

In general the more wealthy the people are of a nation the higher are the taxes imposed upon fuel.  The single most conspicuous exception is the United States where we have by far the lowest tax rate on gasoline of all the developed and most developing nations.  For example (see The Statistics Portal in April 2014) the price of gas is $9.79/gal in Norway, $9.34/gal. in Italy, and $8.50/gal. in Germany, yet in the United States it is only $3.69/gal.  Currently the United States federal tax for gasoline is $.0184 per gallon vs. for example Germany where the gas tax is around $3.50 per gallon or about 20 time higher per gallon than the U.S.

So why the disparity in prices and what are the consequences.  Fuel is considered a luxury everywhere except the United States where it is considered a necessity.  So low tax is an attitude, a culturally handed down value.  In all other developed nation the tax rate is a large part of the price of fuel even thought the need for it is as important.  So our expectation is for it to be low as is the expectation of most other countries for it to be high.

High fuel prices result in the behavior of people to buy smaller economical cars with high gas mileage.  They walk more, ride bike more, and take public transportation more.  There is far more tax money available for building and maintaining transportation infrastructure such as better roads, bridges, railway systems such as high-speed rail and subway systems, local bus transportation, bike lanes, pedestrian walkways, etc.

Yet we in the United States persist in paying little tax for our gasoline.  So we will continue to pay the price for our gas in the U.S.  This results in people purchasing more cars and larger SUVs with low gas mileage instead of buying small European and Asian size cars with high gas mileage.  Thus people take far fewer transportation alternatives such as public transportation which means that our roadways get more worn and congested.  Less tax money means less money for maintaining road infrastructures.  The U.S. is the only major developed nation that does not yet have a high-speed rail system.  With a substantial gas tax closer to that of the rest of the developed nations we could have an extensive high-speed rail system similar to other developed and developing nations as will as much improved public transportation everywhere.  This would reduce traffic congestion, our overall usage of fuel, pollution, and overall cost to everyone in terms of fuel, insurance, expansive cars, accident and safety expenses, breakdowns and maintenance, parking, etc.

America’s love-affair with large luxurious gas guzzling vehicles is very costly and incumbered with many other hidden expenses.  We accept these cost because it is part of our standard of living.  Yes, there are a few superficial advantages of gas guzzling car ownership but the rest of the world has learned to do without those luxuries.  We forget about all the inconveniences we endure in traffic jams and finding a parking space or looking for the cheapest public parking lot or gas station or having to fill up our tank or taking our car into service or repairs or towed away or involvement in an accident, etc.

Owning a car requires almost as much cost and effort as raising a child if you stop to think of all things you do to fuel it and take care of it.  Insurance for many may be as much as $200-300 per month and gas the same.  Car payments may be $300 per month or more and maintenance an average of $300 per month, and the list goes on.  That means the typical car owner spends more than $1000 a month for the preventable of owning a car not withstanding all the inconveniences mentioned earlier.  That is over $12,000 per year.

Implementing significantly higher gasoline taxes would force most to buy smaller, less expensive and more economical cars which we would use less often reducing every aspect of car ownership.  It would provide more tax dollars for developing an efficient and effective transit system with improved infrastructure and significantly reduced air pollution.  As a bonus doing a little more walking and biking is good for the health.  Yet owning a small economical car would still offer the option of convenience when needed.

In spite of all the logical arguments I have given for raising gasoline taxes closer to the rest of the world, we Americans are like spoiled children with their big toys.  We are unwilling to give them up at almost any price.  It symbolizes our illusion of wealth and we are very big on symbolisms but getting smaller each year on wealth.  So the U.S. will continue to pay the price for low gas prices.  But one day soon our sins will catch up with us.

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