Fuel Hunger Europe Vs.Usa

FUEL HUNGER: EUROPE VS USA

BY M G CENAN

Look at the news and you will hear about how a gallon of gasoline may reach 4$,

This indeed is cause for concern knowing that the average American consumes 3 times more gasoline than the average European. How is this going to affect the American population, what may the elasticity of demand result in!

What is happening in reality is that the rise of gasoline prices in USA is not as alarming as the population and media tend to think, what is worrying though is how sensitive the american population are to a rising fuel price, since socio-economic behaviours were structured around a relatively low fuel cost which explains the demand of fuel in USA. For example, large and heavy fuel consuming cars, living in relatively large homes in suburban areas that are long distances away from main cities which means heavy commuting and independence from public transport networks . OPEC does not intend to reduce oil prices and as stated by Chakib Khelil president of OPEC a 200 $ US price tag on a barrel of oil is not unlikely and this is attributed to the falling value of the US dollar.

Europe is also suffering from high fuel prices, the reasons differ from USA as the high prices are not exclusively oil supply related but prices of fuel in Europe are largely controlled by governmental policies. In USA a gallon of gasolione has a 12% tax rate, while in places like the U.K , France or Germany the tax rate is on average 62%. This results in high fuel prices in Europe which is leading to a public outrage many fishermen and truckers who cannot sustain their businesses due to such high rates which are double the rates in USA. In a recent survey conducted by CNN, USA ranked 108 on the 155 countries surveyed from the most expensive to cheapest gallon price of gasoline. Meanwhile, The United Kingdom, France, Netherlands and Germany (not shown on table and graph) are on the top eight most expensive gasoline prices.

Ranking Country Price/Gallon

1 Eritrea $9.58

2 Norway $8.73

3 U.K. $8.38

4 Netherlands $8.37

5 Monaco $8.31

6 Iceland $8.28

7 Belgium $8.22

8 France $8.07

108 U.S.A. $3.45

Note that the prices are not adjusted for price of living and currency exchange rates.

Demand and Elasticity in practice:

For Europe now the role is for the government to reduce taxes in order to stabilize the economy, yet still some like British prime minister Gordon Brown