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By Robert Rapier on Nov 17, 2007 with no responses

U.S. versus U.K. on Gasoline Prices

In the U.S., high gas prices tend to focus anger toward oil companies. In fact, as a reader recently pointed out, Shell’s CEO has even gotten death threats over the issue:

Oil CEO Receives Death Threats

But a letter I just read in a UK newspaper, Coventry Telegraph, shows that the ire here tends to be pointed at the tax man:

I WAS amazed to see the prices displayed at petrol stations – unleaded from 99.9p up to pounds 1.02 and diesel from pounds 1.01 up to pounds 1.09.

I am a self-employed plumber and my single biggest running cost is my van, most of which is down to tax – pounds 200 per year is in road tax, then you pay tax on your insurance, VAT on your MoT and repairs. I put about pounds 50 of diesel in my van everyweek, but pounds 37 of that is tax.

When petrol prices rise, the cost of delivering goods rises, the cost of running petrol-driven equipment on farms, building sites etc rises and, for me, the cost of getting to people’s homes rises.

After the last wave of petrol protests, it was evident that the government stuck two fingers up in our faces and we continued to accept paying the best part of just under pounds 1 for fuel. With these latest tax rises, along with the increase in oilprices, the government is pushing us all over the edge.

If the price of diesel has not fallen back below pounds 1 by the end of next weekend, I will be protesting at my local petrol station on the Monday morning and would urge everyone out there to make the same stance against the extortionate amount of tax we pay on our fuel.

Colin Goode, Courtland Avenue, Coundon.

I look at the U.K. as a sort of test case of what will happen in the U.S. as gas prices continue to escalate. As someone recently said to me, “Well, when gasoline gets to $5/gallon, biofuels will really start to come on.” I had to point out that we are paying $8/gallon in the U.K., and biofuels aren’t making a dent. I think you will find the same is true in the U.S. Even at $8/gallon, a lot of alternatives will struggle to compete because they have such high fossil fuel inputs. And what the man described above – higher gas prices rippling through the economy – will happen, and is starting to happen in the U.S. I think it is only going to get worse.

Of course there is a huge difference between the amount of gas tax paid in the U.S. and the U.K. Oil companies are not reaping nearly the windfall of governments here in the U.K. But, I also don’t think most people in the U.S. realize that the U.S. federal and state governments generally reap greater returns from fossil fuel sales than do oil companies. On gasoline alone, the average tax is $0.42/gallon, which amounts to about $60 billion in revenues each year. Now, I don’t favor lowering gas taxes – in fact I favor the opposite to spur conservation. But the different attitudes between the two countries on the issue of high gas prices is stark.