Gasoline Subsidies
Quick follow-up on a previous post about the price of gasoline in several countries around the world. There are two reasons why prices at the pump for this commodity vary so greatly around the world: taxes and subsidies.
In a post from January 2008, Pablo at www.triplepundit.com asks, What is the True Cost of Gasoline? The data from 2005 he looks at show that the US government subsidizes gasoline at the pump by over 100%; that is, the “true” price of gasoline in 2005 (not including costs to the environment) would have been over $5.00 a gallon without subsidies.
Other countries, including China, Venezuela and Saudia Arabia also provide significant subsidies on gasoline. In fact, China subsidizes almost all “essentials”, including water, electricity, coal and fertilizer for farming.
On the plus side for China, the country recently adopted gas mileage standards which are higher than the CAFE standards in the US. With a population of 1.3 billion, China “only” has 35 million cars on the road (compare to 120 million vehicles in US with population of 300 million), but the number of vehicles in China is growing quickly - estimates put the total number up to 120 million in about 10 years. Hopefully, China will increase fuel efficiency standards faster than the US has done.
But as Chris pointed out last week, the car with the best mileage is the one which is not driven.
I wonder what the price of gas is in Iceland?
Image from inglis.house.gov
Tags: china, gasoline subsidies, true price of gas, US
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