Is Gasoline Cheap or Expensive in the United States? And Why.

Gasoline Price in the United States

The historical pricing of gasoline in the United States, up over time.

One of the presenters here at Plug-in 2013 mentioned that gas was just under a dollar in 2000. That shocked me so I checked the historical price of gasoline in the U.S. and confirmed that her facts were indeed correct. In 13 years our gasoline has increased by 400% but compared to some parts of the world it seems quite cheap. In Europe gas ranges from around $8/gallon to close to $10/gallon in Norway and Turkey. It’s true however, that in some countries it’s less than in the United States.

Cheap gas is prevalent in Venezuela where it’s just pennies a gallon as well as in Saudi Arabia and Kuwait to name a few.

But why is it cheaper in the United States than in Europe? How can the price range so much from well less than a dollar to $10? Turns out the big difference between Europe and the U.S. is the amount of tax added to the cost of the gasoline. Taxes are much higher in Europe, whereas in the U.S. the gas tax does not cover the actual cost of the gasoline (that cost includes our efforts to protect our supply) and certainly doesn’t cover the cost of maintaining our freeways as it used to do.

Our cost of gasoline is heavily subsidized by our federal government. But there is no “free lunch.” That money comes from income taxes which means that everyone pays for our petroleum whether they drive or not, as long as they pay income tax. That means that people who don’t own cars, or who drive electric cars, pay for gasoline. Why aren’t we in an uproar about this? Instead, we resist even the idea of taxes increasing, denying the fact that we are paying them all the while. We worry that an increase in gas taxes would disadvantage people who drive for a living and those with lower incomes — while at the same time those very people are paying a large portion of the cost of maintaining roads and wars using their income tax.

Recently, Washington state has begun charging a tax on electric vehicle owners so that they can pay their “fair share” of the cost of road maintenance — this of course ignores the fact that those people, or at least the majority of which who pay income tax, are already paying for a large part of the cost of our gasoline and roads!

Let’s put the tax where it belongs — on gasoline and not use our income tax for this purpose. What do you think? I look forward to your comments!