[IP] more on A question for non USA IPers5 bucks a gallon for gas?

[David Farber <dave@farber.net>]

Begin forwarded message:

From: John Levine <johnl@iecc.com>
Date: August 17, 2005 10:40:35 PM EDT
To: dave@farber.net
Subject: Re: [IP] A question for non USA IPers5 bucks a gallon for gas?


 you write:

> Why the differnce

Taxes.  A gallon of gas in Europe is the same as a gallon of gas in
the US, I don't see any great difference in the delivery system, but
their tax rates are a lot higher.

The US traditionally has a myopic policy of low gas prices, which
makes us much more vulnerable to price swings, since a $1 increase to
$2 gas is a 50% increase, while to $5 gas it's only a 20% increase.

If we'd increased the gas tax by 50 cents or a dollar a gallon back in
1990, the price at the pump now would be about the same, but those 50
cents or $1/gal would be going toward our budget deficit rather than
to unstable governments on the other side of the world.

By the way, anyone who thinks that the US can produce its way back to
lower gas prices disagrees with a lot of geologists.  Under the most
optimistic assumptions, there isn't enough recoverable oil left in the
US to affect overall supply other than at the margins, and it takes
years to bring a new field online.  It does seem true that new
refineries would fix some bottlenecks, but the basic problem is that
we and now the Chinese are buying a whole lot of oil, and producers
have no reason to sell it cheaply.

R's,
John



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