Blog
The silly price of petrol – how high can it get?
7th April 2011
While looking at fiscal policy with my AS Economists, we looked at the role of duties particularly fuel duties after the 1 penny reduction on fuel in March’s budget. What´s interesting is comparing how much different countries pay in tax on fuel and it´s surprising to see that we in Europe pay significantly more than consumers in the US (see chart below).
Clearly, taxing fuel is a great revenue raiser for governments and the graph below really highlights the low Ped of fuel as consumption has barely changed over the years as the price has risen. In light of this, the Chancellor’s penny reduction was regarded by many as insignificant - if it was passed on at all.
In addition, people are complaining about how higher fuel costs are eroding standards of living including this US based blogger who noticed the price of a gallon had risen to as much as $4.00 in some parts, up from $1.71 in 2001. Incidentally, taxes make up only 13% of the price of petrol in the US (see graphic below), small fry when compared to the 70+% in some European countries. I’ll certainly be quizzing my students for reasons they may have as to why in Europe taxes are so much higher than in the States.
So as the price of petrol continues to rise and with the political unrest in the Middle East unlikely to stop sometime soon, maybe it won’t be long before we see blockades at refineries and go-slow convoys on the motorway again.
Video resources:
Energy Policy: How Gas Stations Price Gas
Petrol prices - where does the money go