The price of petrol is very low in the US, the good news and the not so good news

Chapter 28 The price of petrol is very low in the US, the good news and the not so good news

Historically the price of fuel in this country has been very low compared with other countries.  Prices we pay are about ½ the average for Europe and even less when compared to the Scandinavians. There are several countries where prices are lower, but in almost all of these cases the price is subsidized by that government. Current prices (2015) average $2.30 with a range of $2.09 – $3.10 (California). Price where I live is $2.17. In 1963 the price was $.30 per gallon. If you apply the CPI to that the $.30, compounded annually to 2015 it calculates to $2.39. Gas is less expensive today!

Our ability to produce oil and maintain low fuel costs allows us a competitive advantage in the world economy. If we view energy production in the short term our strategy of focusing of additional fossil fuel exploration and production seems valid, but what about the future. Have you asked yourself why the prices in other countries are so high? For certain some of the reason is that they are not producers, but is that the entire reason?


“While part of that difference in prices is due to relatively low U.S. pretax gas prices, pretax price differentials are small compared to the total price differential. Pretax prices vary from $1.51 in the United Kingdom to $2.23 in Norway. Thus, the price differential between the United States and the rest of the world can be attributed almost entirely to differential taxation.”

So what, you ask? How long do we expect our supply of gas and oil to last? My research indicates a range, depending on which scientific group is doing the analysis. The most pessimistic view says 2050; the most optimistic indication is 2070. Currently the US derives 86.4% of its energy from fossil fuels. This same rate for the world in total is just under 81%. At the same time there are several European countries that were this number is less than 50% and in France it is 20%. Taxing an energy resource with a limited supply actually makes sense to me, as long as a substantial portion of the revenue is dedicated to developing alternatives.

One promising energy source that is the most abundant element in the Universe is Hydrogen. It galls me that we are letting Japan and Korea take the lead in developing this alternative energy technology. While the focus is currently on supplying energy for vehicles, it has potential applications for the generation of electricity to the grid. There are challenges in terms of the cost and infrastructure required, but in long term it may prove to be economically viable. The side benefit it that it clean!

I am convinced that this issue may be one of the most critical to the welfare of our next generation.