Gasoline and diesel usage and pricing

Gasoline and diesel usage and pricing

:"For information on the price of oil, see price of petroleum."The usage and pricing of gasoline (petrol) results from factors as crude oil prices, processing and distribution costs, local demand, the strength of local currencies, and the availability of local sources of gasoline (supply). Since fuels are traded worldwide the trade prices are similar, the price paid by consumers largely reflects national pricing policy: some regions, such as Europe and Japan, impose high taxes on gasoline; others, such as Saudi Arabia and Venezuela, subsidise the cost. [cite web|title=International Fuel Prices 2007|author=Deutsche Gesellschaft für Technische Zusammenarbeit|url=] Western countries have among the highest usage rates of gasoline per person. The largest consumer of gasoline is the United States, which used an average of 386 million US gallons (1.46 gigalitres) of gasoline each day in 2005. [cite news|author=Rong-Gong Lin II and James F. Peltz, Don Lee|title=Drivers Keep On Pumping, Paying|publisher=Los Angeles Times|date=2005-03-28|url=|accessdate=2008-09-18]

Gas price modifiers

Strong and increasing worldwide demand for petroleum has caused gasoline prices to fluctuate. [ [ EIA primer on gasoline prices] ] Weather has also affected the available supply of gasoline. Hurricanes Katrina and Rita reduced the supply of refined oil in the US in 2005.

Seasonal demands affect gasoline prices. For example in the past, many families in the US have chosen to take vacation drives in the summertime, thus gas prices have usually increased 5% in these months. [ EIA Primer on Gasoline Prices] ]

OPEC countries also have significant control on pricing of petroleum. Its members control 40% of the crude oil production around the world and have two-thirds of the world crude oil reserves. OPEC sets production levels for its member countries in order to keep oil prices at a target level. However, some peak oil analysts doubtFact|date=July 2008 OPEC still has the spare production capacity to significantly reduce petroleum prices (although it still has the ability to increase prices).

In a June 2008 OP-ED article responding to US Congressional hearings on the practice of oil speculators, Jon Birger wrote that oil "speculators" are not raising the price of oil. He attributes the current oil prices to actions of Congress. [ [ Fortune Magazine "Don't blame the oil 'speculators'" By Jon Birger June 27, 2008] ]

Gasoline usage and pricing in the United States

Despite high demand in the country and despite rising fuel costs, gasoline prices are low in the United States when compared with most other Western countries. As of August 10, 2008, the United States average price of self-serve regular unleaded gasoline was $3.85/gal. [cite web
title=Average gasoline prices slip to $3.85/gal: survey
] Finished motor gasoline amounts to 44% of the total US consumption of petroleum products. [cite web|title=US Product Supplied for Crude Oil and Petroleum Products.|author=US Energy Information Administration| accessed=May 25 2007|url=] This corresponds to 18.5 Exajoules per year. According to national figures from the US Department of Energy, in March 2007 52% of the cost of gasoline went to pay for crude oil, 24% for refining, 15% to taxes, and 9% for distribution and marketing. By April 2008, these had changed to 72.7% for crude oil, 10% for refining, 11% to taxes, and 6% for distribution and marketing. [cite web|author=Energy Information Administration |title=Gasoline and Diesel Fuel Update |url=]

In 2008, a report by Cambridge Energy Research Associates stated that 2007 had been the year of peak gasoline usage in the United States, and that record energy prices would cause an "enduring shift" in energy consumption practices. [cite news
title=Prices Curtail U.S. Gasoline Use
publisher=Wall Street Journal
date=June 20, 2008
author=Ana Campoy
] According to the report, in April gas consumption had been lower than a year before for the sixth straight month, suggesting 2008 would be the first year US gasoline usage declined in 17 years. The total miles driven in the US began declining in 2006. [cite news
title=Driving Less, Americans Finally React to Sting of Gas Prices, a Study Says
publisher=New York Times
date=June 19, 2008
author=Clifford Krauss

Gasoline usage and pricing in Europe

Most European countries have high fuel taxes. The prices have traditionally been three to four times the price in the United States, with prices during 2000-2005 of €1/litre (about US$1.54/l or $5.82/gal) while the US had prices around $1.50/gal or $0.40/l. In 2007-2008, the market price before taxes has risen, raising the price of gasoline everywhere. However, the price of gas in Europe is still more than double the US price. Russia and some neighboring countries have a much smaller tax, with gasoline prices similar to the US. Fact|date=May 2008

Countries with subsidised gasoline

A number of countries subsidise the cost of gasoline and other petroleum products. Subsidies make transport of people and goods cheaper, but discourage fuel efficiency. In some countries, the soaring cost of crude oil since 2003 has led to these subsidies being cut, causing inflation and political unrest.

Fuel subsidies are common in oil-rich countries. Venezuela, which has vast oil reserves, maintains a price of Bs.F 0.097 per litre (around US$0.05), and has done so since 1998. [ [ Venezuela: Land of 12-Cent Gas ] ] Other countries with subsidised fuel include Iran, Saudi Arabia, Egypt, Burma, Malaysia, Kuwait, China, Taiwan, South Korea, Trinidad and Tobago, Brunei and Nigeria. The Australian state of Queensland also subsidises fuel at the rate of A$0.08354 per litre. [ [ Scheme overview - Background information ] ]


In China, where the state oil companies are restricted from passing on new crude costs to their consumers, auto sales were predicted to grow by up to 15-20% in 2008. This is in part a result of economic growth rates of over 10% for five years in a row.cite news
title=Gas guzzlers a hit in China, where car sales are booming
publisher=Associated Press
author=Joe Mcdonald
date=April 21, 2008


In March 2005, Indonesia increased the price of gasoline and diesel by 29%, causing widespread protests. The price of gasoline was raised from Rp 1800 (US$0.20) per litre to Rp 2400 (US$0.25) per litre, while diesel rose from Rp 1650 (US$0.18) to Rp 2100 (US$0.23). Prices were increased again in October to Rp 4500 (US$0.48) a litre, an 87.5% rise, for gasoline, while diesel was increased to Rp 4300 (US$0.46), and kerosene, used for cooking, increased from Rp 700 (US$0.08) to Rp 2000 (US$0.22) per litre. The price increases came as oil prices threatened to increase the government's oil subsidy to US$14 billion per year, and caused further protests.

With oil reaching over US$130 a barrel, Indonesia further increased prices on May 24 2008 to Rp 6000 (approx. US$0.65) per litre, and diesel to Rp 5500 (approx. US$0.60) per litre, while kerosene was raised to Rp 2500 (approx. US$0.28), moves which caused widespread protests. [ [ AFP: Indonesian police, protesters clash over fuel price hike: reports ] ] In addition, it was suggested that private car owners, who are wealthy in Indonesian terms, would eventually be excluded from subsidies entirely, with the cheap fuel limited to public transport and motorcycles.

People have been encouraged to switch to LPG for cooking, as Indonesia is the world's largest exporter, whereas its oil industry is in decline, and it is now a net importer.


Malaysia spends US$14 billion subsidising gasoline, diesel and gas each year. [cite news |Author=AP |title=Malaysia to lift fuel price controls |date=2008-06-03| url= | work=Associated Press For Petrol price : old price = rm$1.92/litre (US$0.59/litre or US$2.22/Gallon) increase to new price rm$2.70/litre (US$0.83/litre = US$3.12/Gallon, base on US$1 = RM$3.27);For Diesel price : old price = RM$1.58/litre (US$0.48/litre or US$1.83/Gallon) increase to new price RM$2.58/litre (US$0.79/litre = US$2.98/Gallon, base on US$1 =RM$3.27); |accessdate=2008-07-20] Effective 5 June, 2008 gasoline prices increased by 40% to RM2.70/litre (US$3.30 a gallon), from RM1.92/litre (US$2.32 a gallon). Diesel prices rose by RM1.00/litre to RM2.58 (US$3.04 per gallon), a 67% increase. It was announced that price increases were planned to bring fuel prices in line with global market cost, suggesting that it may hit US$3.80 per gallon by August. The Malaysian government has also announced a yearly cash rebate of RM625 per year to Malaysian citizens who own cars with an engine capacity of 3,000 cc or less and RM200 tax rebate to cars with an engine capacity of 3,000 cc and above to offset the increased costs. [cite news |Author=AP |title=Malaysia considers cash handouts as fuel hike looms |date=2008-06-04| url= | work=Associated Press |accessdate=2008-06-04] The government introduced a temporary ban on buying fuel within 50km of the country border, but the ban was suspended following a price increase on June 7, 2008 for petrol of 41% (to MYR2.70 a litre) and for diesel of 63% (to MYR2.58). [cite news |Author=Reuters |title=Malaysia lifts ban on fuel sales to foreigners |date=2008-06-05| url= | work=Reuters UK |accessdate=2008-06-05]

On 22 June, 2008 the Malaysian government announced plans to set up separate pumps at its border petrol stations to sell fuel to foreigners at market rates so that only locals can benefit from subsidised petrol. The new pumps will target Singaporeans and Thais who make day trips across the border to fill their tanks with cheaper fuel here. About ,999934304-92-500 petrol stations within 50km (31 miles) of the country's northern border with Thailand and southern border with Singapore would be affected. [cite news |Author=Channel Newsasia |title=Malaysia to set up separate border petrol pumps for foreigners |date=2008-06-22| url= | work=Channel Newsasia |accessdate=2008-06-22] On 22 August, 2008 Malaysia will cut the petrol price by 5.6 percent to 2.55 ringgit (0.76 dollars) a litre due to a drop in global oil prices. The diesel price will also fall by 3.1 percent to 2.50 ringgit a litre with effect on the same day. The government's announcement comes just three days ahead of a crucial by-election contested by opposition figurehead Anwar Ibrahim in the northern Penang state. Anwar, who is bidding to return to parliament after a decade-long absence, has promised to cut fuel prices substantially if he wins the poll and later wrest power from the ruling coalition. [cite news |Author=AFP |title=Malaysia cuts fuel price by 5.6 percent |date=2008-08-23| url= | work=Yahoo! News Newsasia |accessdate=2008-08-23] Recently, the fuel price has dropped until MYR 2.45 and it has dropped for the second time.


Mexican president Calderon has been subsidizing gasoline. This serves to quell inflationary pressures in Mexico. Mexico buys much of its gasoline and diesel from the United States and resells it at US$98 per barrel. In the first quarter of 2008, it spent $18 Zillion ???to subsidize gasoline. [ [ Mexico Energy Statistics (in Spanish)] ] Many residents of US border communities cross the border to buy fuel in MexicoFact|date=September 2008, thereby enjoying a fuel subsidy at the expense of Mexican taxpayers. This has caused supply shortages for Mexican drivers, especially truck and bus drivers who use diesel. [ [ Wall Street Journal: "Fill 'er Up: Gas Is Cheap in Tijuana,So Californians Buy Big Fuel Tanks" By JOEL MILLMAN and ANA CAMPOY June 24, 2008; Page A1]

Average gasoline prices around the world

See fuel tax for tax information by country.

The German Technical Cooperation (GTZ) has published a list of worldwide gasoline prices by country every year since 1991. The results for 2007 can be seen on page 96 and 97 of [ this document]

For a recent updated list of gas prices from around the world, see interactive from [ Portfolio magazine]

ee also

* 2000s energy crisis
* Electricity tariff
* Gasoline price website
* Price of petroleum
* Zone pricing


* [ " - The World's Favorite Currency and Foreign Exchange Site"] .

External links

* [ Gas Prices Around the World] Interactive Gas Prices Around the World Conde Nast Portfolio
* [ Understanding Gasoline Prices] - 2005 report from the United States Government Accountability Office
* [ AAA's Daily Fuel Gauge Report]
* [ US EIA Gasoline and Diesel Fuel Report]
* [ GTZ International Fuel Prices 2007]
* [ EU Oil Bulletin] Fuel prices in EU countries updated weekly, includes information on taxes and VAT.
* [ GasBuddy]

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