US & World Gas Prices

Bloomberg on May 12, 2012 published an article in which they checked out the price per gallon of premium gas (PPGPG) in 55 countries and assigned a pain at the pump ranking (PATPR) based on the average daily income of the people and the share of a day’s wages to buy a gallon of gas. The highest price of gas was in Norway at $9.69 however they were #48 out of the 55 in PATPR because their share of a day’s wages needed to buy a gallon of gas is 3.6%. On the other hand, India came in at #37 PPGPG with $6.06 but because the average person makes only $4.50 a day it takes 135% of a day’s wages of buy gas so it is #1 in PATPR. According to the Institute for Energy Research, a Washington-based group that opposes government intervention in energy markets, India’s consumption subsidies (10% of its budget and rising) isn't an efficient way to alleviate energy poverty because they encourage wasteful energy use and ultimately increase the price of fuel.

The Unites States came in at #44 PPGPG with $4.19 a gallon with a PATPR of #50. The US’ price per gallon is among the world's lowest and Americans' average income ($134 day) insulates them compared with poorer countries (daily wages needed to buy a gallon of gas is 3.1 percent). Only 5 nations hurt less at the pump than Americans do – 3 of them are members of the Organization of Petroleum Exporting Countries (OPEC). The US paid about $4.2 billion in 2010 to subsidize oil production and consumption. Gasoline taxes account for just 11 percent of the retail price of the fuel, compared with 60 percent in Britain. The cost of a barrel of crude, at around $100 a barrel, may seem painful but is less than half the $213 cost of a barrel in January 1981 during Iranian shipment disruptions, adjusted for real growth in disposable income. 

Luxembourg - #26 in PPGPG with gas $7.24 has a PATPR of #51. Luxembourg's 500,000 inhabitants enjoy the highest per capita income in the world ($345 a day), making its moderate gas prices one the most affordable (the share of a day's wages needed to buy a gallon of gas is 2.1%). Saudi Arabia - #54 in PPGPG with gas $0.61 has a PATPR of #52. Saudi Arabia holds one-fifth of the world's oil reserves and is pursuing wind, solar and nuclear power to help cut in half the crude and natural gas it burns to generate its electricity. The country wants to generate a third of its electricity from alternate energy sources within 2 decades, according to government officials. Persian Gulf oil producers are seeking new ways to generate power because they prefer selling their expensive crude to gas-hungry countries rather than burning it. Saudi Arabia is OPEC's biggest producer and heavily subsidizes the price of gasoline. The average daily income is $55. The share of a day's wages needed to buy a gallon of gas is 1.1 percent. The United Arab Emirates (UAE) placed #51 in PPGPG with gas $1.89 and PATPR #53. Since the discovery of oil in the UAE in the 1960s it has evolved from a poor region of principalities to a wealthy, modern state with a high standard of living and diverse markets, especially in Dubai and Abu Dhabi. Economic diversification efforts in recent years have reduced the portion of oil and gas on the economy to 25%. The UAE is the 8^th biggest oil producer in the world, drawing about 2.81 billion barrels of oil a day, and the 10th-biggest consumer of gasoline. The average daily income is $186. The country subsidized about 68 percent of the cost of gasoline as of 2010 and the share of a day's wages needed to buy a gallon of gas is 1 percent. Kuwait - #53 in PPGPG (gas $0.88) has a PATPR of #54. Petroleum accounts for almost half of Kuwait's gross domestic product and 95% of its exports and government income. In 2010, the country approved a plan to spend $130 billion over 5 years to diversify the economy. Rising global gasoline prices have boosted government income and spending, including wage increases for public-sector employees. The average daily income in Kuwait is $128. The share of a day's wages needed to buy a gallon of gas is 0.7%. Venezuela - #55 PPGPG ($0.09) has a PATPR of #55. Even with a relatively low daily income of $28, the share of a day's wages needed to buy a gallon of gas is the lowest anywhere at 0.3 percent. President Hugo Chavez has called in the past for the country to reduce its rising gas consumption but with fuel this cheap there's little incentive. After decades of inexpensive gas many Venezuelans consider it part of the social contract. The last time the country tried to cut subsidies, in 1989, the country was torn by riots that killed hundreds of people. The cost of filling up the 39-gallon tank of a Chevrolet Suburban at 9 cents per gallon in Venezuela is $3.51, compared with $163.41 in the US.

The US’ 2 largest importers: Canada the world's 6^th biggest oil producer comes out higher in all categories than the US (gas $5.75 making it #38 in PPGPG, income $144 a day, and a PATPR of #46 because their share of a day’s wage is 4%). Only Americans and Kuwaitis use more gas per capita than Canadians. Canada’s land mass makes for long transportation routes with additional costs that trickle through their economy and their government paid $2.19 billion to subsidize oil consumption in 2010. Mexico the world's 7^th biggest oil producer has a lower the price of gas (#48 PPGPG-($3.20) because of subsidies and favorable foreign exchange rates. However they have a higher PATPR (#27); average daily income is $31 and their share of a day's wages to buy a gallon of gas is 10%. Mexico relies on the US to refine its oil into gasoline. This information validates the Slate.com and United Press International articles. I’ll also give you a Congressional Report and May 10 Oilprice.com articles that further substantiate claims that more oil does not reduce gas prices.