Gas Prices

Gas prices are among the most publicly scrutinized prices in the United States and many other countries. Consumers spend large amounts of money on gasoline and hence fluctuation of the gas price has a significant influence on disposable incomes. The retail price of gasoline is influenced by various factors, the most important ones being the price of crude oil and the local tax regime.

In the United States the retail price of gas can be broken down as follows: 63 percent crude oil; 14 percent refining, 12 percent distribution and marketing and 11 percent taxes. In most European countries, where taxation on gasoline is much higher, taxes add up to more than half the retail price of gas. In Germany for example, the price of gas is about twice as high as it is in the U.S. and taxes make up 63 percent of the retail gas price.

The price of gas in the United States has been rising steeply since 2002. In October 2011, the retail price for one gallon of regular gasoline was $3.46, up from just $1.35 in 2002. As mentioned above, this price increase can largely be attributed to changes in the oil price, which rose from $23 to $103 per barrel between 2002 and October 2011. The price of diesel has also increased sharply over the last decade and is currently around $3.80 per gallon.

Although the price of diesel and gasoline in the United States are still below those in other developed countries, the U.S. gas price has seen the sharpest price increase within the last year. Between September 2010 and September 2011, the gas price rose 33.6 percent in the U.S., 17.8 percent in the United Kingdom and only 11.4 percent in Germany. This is not overly surprising however, since the crude oil price has more influence on fuel prices in the U.S. than it has in countries such as Germany and the UK, where taxes make up the lion’s share of retail gas prices.
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