Gasoline and diesel usage and pricing
||The examples and perspective in this article may not represent a worldwide view of the subject. (August 2015)|
|This article is outdated. (June 2015)|
The usage and pricing of gasoline (or petrol) results from factors such as crude oil prices, processing and distribution costs, local demand, the strength of local currencies, local taxation, and the availability of local sources of gasoline (supply). Since fuels are traded worldwide, the trade prices are similar. The price paid by consumers largely reflects national pricing policy. Some regions, such as Europe and Japan, impose high taxes on gasoline (petrol); others, such as Saudi Arabia and Venezuela, subsidize the cost. Western countries have among the highest usage rates per person. The largest consumer is the United States, which used an average of 368 million US gallons (1.46 gigalitres) each day in 2011.
- 1 Fuel prices in the United States
- 2 Petrol usage and pricing in Europe
- 3 Countries with subsidised gasoline
- 4 Countries which had formerly subsidised gasoline
- 5 Protests
- 6 See also
- 7 References
- 8 External links
Fuel prices in the United States
US petroleum consumption reached an estimated 18.87 million barrels per day (3,000,000 m3/d) in 2011, and is expected to increase to 18.96 million barrels per day (3,014,000 m3/d) in 2012. Drivers in the United States traveled 500,000 miles (800,000 km) per day in 2011, and were expected to travel 8.158 billion miles (1.3129×1010 km) in 2012. This equates to an average of 33 miles (53 km) per vehicle per day. On average, US drivers consume 1.49 US gallons (5.6 L) of gasoline per day, or about 10.44 US gallons (39.5 L) per week. As of March 2013, the average price for 87 octane gasoline was $3.22 a US gallon (85¢/L).
In 2008 a report by Cambridge Energy Research Associates stated that 2007 had been the year of peak gasoline usage in the United States, and that record energy prices would cause an "enduring shift" in energy consumption practices. According to the report, in April fuel consumption had been lower than a year before for the sixth straight month, suggesting 2008 would be the first year US usage declined in 17 years. The total annual distance driven in the US began declining in 2006.
The average price per US gallon in 2012 (as of 31 December 2012[update]) was $3.618 (96¢/L), the highest ever for a year. As of 31 December 2012[update], the average price of gasoline was $3.298/gal (87¢/L),[contradiction] with New York at $3.70/gal (98¢/L) for the highest in the US, and Colorado at $2.987/gal (79¢/L) for the lowest.
Finished motor gasoline amounts to 44% of the total US consumption of petroleum products. This corresponds to 18.5 exajoules per year. As of 2012[update] the cost of crude oil accounted for 62% of the cost of a gallon of gasoline in the United State while refining accounted for just 12%. Taxes and distribution/marketing accounted for 12% and 14% respectively.
After Hurricane Katrina and Hurricane Rita, gas prices started rising. They became record high levels. In terms of the aggregate economy, increases in crude oil prices significantly predict the growth of real gross domestic product (GDP), but increases in natural gas prices do not.
All the damages from the hurricanes ran up gas prices. By 30 August, a day after Katrina’s landfall, prices in the spot market, which typically include a premium above the wellhead price, had surged pass $11 per gigajoule ($12 per million British thermal units), and by 22 September 2005, the day before Rita’s landfall, the spot price had risen to $14/GJ ($15 per million BTU).
Crude oil is the greatest contributing factor when it comes to the price of gasoline. This includes the resources it takes for exploration, to remove it from the ground, and transport it. Between 2004 and 2008, there was an increase in fuel costs due in large part to a worldwide increase in demand for crude oil. Prices leapt from $35 to $140 per barrel ($220 to $880/m3), causing a corresponding increase in gas prices. On the supply side, OPEC (or the Organization of the Petroleum Exporting Countries) has a great deal to do with the price of gasoline, both in the United States and around the world. The speculation of oil commodities can also affect the gasoline market.
Taxes are the next biggest contributor to gasoline prices at around 12%. In the United States, both state and federal taxes apply to gasoline. In addition, other taxes may be placed on gas including applicable state sales taxes, gross receipts taxes, oil inspection fees, underground storage tank fees and other miscellaneous environmental fees.
Marketing and distribution
Distribution and marketing makes up the remaining 5%. The price of transporting crude oil to a refinery then gasoline to a point of distribution is passed on to the consumer. In addition the price to market the fuel brand is passed on.
Aside from this breakdown, many other factors affect gasoline prices. Extreme weather, war or natural disaster in areas where oil is produced can also in turn raise the price of a gallon of gasoline. Legislation by several states for cleaner burning fuel also affects certain areas' prices of gasoline. Furthermore, demand directly affects the price of gasoline. For example, when more people are on the road, typically in the summer months or during holidays, the price will increase.
A "real time" price of petrol at points of distribution is posted and publicly updated at: http://www.gasbuddy.com/GB_Price_List.aspx
Petrol usage and pricing in Europe
Most European countries have high fuel taxes. The prices have traditionally been three to four times the price in the United States, with prices during 2000–2005 of €1.00/litre (about US$1.42/L or $5.40/US gallon) while the US had prices around $1.50/gal or $0.40/L. After a large increase until the summer of 2008, the end of 2008 experienced a strong decline linked with a sharp economic downturn, with the average price of fuel in the US at $1.613/gal (29 December 2008). However, the price of fuel in Europe is still more than double the US price at €1.85/litre. Russia and some neighboring countries have a much smaller tax, with fuel prices similar to the US.
Competitive petrol pricing in the UK is led by supermarkets with their own forecourts. Generally each supermarket tends to match the other's prices; the lead players being Asda, Tesco, Sainsbury's and Morrison's. In recent years the AA has criticized the speculators as being the prime reason for fuel fluctuations in the UK.
Turkey has the highest gasoline and diesel prices in the world due to high taxes and profit margins in the country in addition to soaring oil prices, new energy data has revealed on 29 September 2012. Around that date, the price of a liter of gasoline in Turkey reached $2.6 and diesel $2.4, according to International Energy Agency (IEA) data. With the recent price hikes in 2012, gas and diesel prices hit TL 4.92 ($2.71 per liter) and TL 4.81, respectively. The share of taxes in gas prices in the Turkish market is 72 percent, while by comparison it is 62 percent in Germany, 57 percent in Italy, 60 percent in Japan, 25 percent in Canada, and 12 percent in the USA. On 8 July 2013, there was another price hike which raised pricing to $9.98 per US gallon.
Countries with subsidised gasoline
A number of countries subsidize the cost of petrol/gasoline and other petroleum products. Subsidies make transport of people and goods cheaper, but discourage fuel efficiency. In some countries, the soaring cost of crude oil since 2003 has led to these subsidies being cut, moving inflation from the government debt to the general populace, sometimes resulting in political unrest.
Fuel subsidies are common in oil-rich countries. Venezuela, which has vast oil reserves, maintains a fixed price of Bs.F 0.097 per litre (around US$0.08 per gallon), and has done so since 1998, thus making it the nation with the lowest gasoline and diesel prices in the world. Other countries with subsidized fuel include United States of America, Saudi Arabia, Iran, Egypt, Burma, Malaysia, Kuwait, Bahrain, Trinidad and Tobago, Brunei and Bolivia.
In February 2010, the Iranian government implemented an energy price reform by which the energy subsidies were to be removed in five years; the most important price hike was in gasoline, as the price went up from 100 rials ($0.10 US) to 400 rials ($0.40 US) per litre, with a ration of 100 litres per month for private passenger cars (later reduced to 60 litres per month).
On 26 December 2010, the Bolivian government issued a decree removing subsidies which had fixed petrol/gasoline and diesel prices for the past seven years. Arguing that illegal export (contraband) to neighboring countries was harming the economy, Bolivia eliminated the subsidies and raised gas prices as much as 83%. After widespread labor strikes, the Bolivian government canceled all planned price hikes.
United States of America
The oil industry receives subsides through the United States tax code, which include Percentage Depletion Allowance, Domestic Manufacturing Tax Deduction, the Foreign Tax Credit and Expensing Intangible Drilling Costs. It is estimated that these tax deductions are worth $4 billion annually and are currently being debated by the government for reform. Although such subsidies exist, the sale of fuel is also taxed at rates that generally exceed the sales tax rates for other goods. It is thus unclear whether the tax impact on fuel is a net subsidy or not.
The Iranian government introduced an energy price reform in February 2010. The reform was brought forward by the government and approved with some changes by the parliament. The major aim of the policy was to slow down the increasing trend of energy consumption in Iran by removing the energy subsidies. The plan included electricity, natural gas, gasoline, and diesel subsidies. According to the plan, all energy prices were to increase by 20 percent annually. The price reform was particularly important in gasoline, as consumption had been increasing dramatically creating a huge burden on government budget. Furthermore, to meet demand, Iran had to import gasoline from other countries, which made the country vulnerable to possible sanctions by the US and European countries. The gas price prior to reform was $0.10 US per liter with the quota of 100 liters per month per passenger car. The reform raised the price to $0.40 US per liter and later reduced the ration to 60 liters per month. The price for over-quota consumption and the imported cars were $0.70 US per liter. The energy price reform included a cash-rebate program through which each person received 455,000 rials ($15 US) per month from the government. The overall consumption of gasoline after the reform decreased from about 65 million liters per day to about 54 million liters per day.
On 1 January 2012, the Nigerian Government headed by president Goodluck Ebele Jonathan, tried to cease the subsidy on petrol and deregulate the oil prices by announcing the new price for petrol as USD 0.88/litre from the old subsidised price of USD 0.406/litre (LAGOS), which in areas distant from Lagos petrol was priced at USD 1.25/litre. This led to the longest general strike (eight days), riots, Arab spring like protests and on 16 January 2012 the government capitulated by announcing a new price of USD 0.60/litre with an envisaged price of USD 2.0/litre in distant areas. The situation is still fluid.
PEMEX, a government company in charge of selling oil in Mexico is subsidized by the Mexican government. This serves to quell inflationary pressures in Mexico. Mexico buys much of its gasoline and diesel from the United States and resells it at US$98 per barrel. Many residents of US border communities cross the border to buy fuel in Mexico, thereby enjoying a cheaper fuel subsidy at the expense of Mexican taxpayers. This has caused supply shortages at a number of filling stations for Mexican drivers, especially truck and bus drivers who use diesel.
Trinidad and Tobago
Trinidad and Tobago through its national energy agencies Petrotrin and Trinidad and Tobago National Petroleum Marketing Company Limited (NP) offers petroleum fuels at varying subsidised prices to the users within the country. Unleaded Gasoline is offered at two grades - Ron 91 at US$0.43/Litre and Ron 95 at US$0.91/Litre. Diesel is offered at US$0.24/Litre making this fuel some of the cheapest in the world.
There are an estimated 791,086 cars in the country as at February 2015 and they consume 1.2 billion litres of liquid fuel annually The Government of Trinidad and Tobago spent an estimated US$173.2 million in subsidies for gasoline and diesel in half year period October 2014 - March 2015.
Today, PDVSA, Venezuelan state owned company, spends US$1.7 billion in direct costs of importation of gasoline, and subsidizes all sales of gasoline in the internal Venezuelan market. The sale price of gasoline is US$0.015 per liter, on a fixed price in the local currency that has been in effect since 1997. Given the low price of gasoline, it is distributed free of charge to gas stations.
The domestic prices of 92-RON, the most commonly used grade of gasoline in Vietnam, is VND 24,570 (US$1.16) a liter on July 17.
Countries which had formerly subsidised gasoline
In March 2005, Indonesia increased the price of gasoline and diesel by 29%, causing widespread protests. The price of gasoline was raised from Rp 1,800 (US$0.20) per litre to Rp 2,400 (US$0.25) per litre, while diesel rose from Rp 1,650 (US$0.18) to Rp 2,100 (US$0.23). Prices were increased again in October to Rp 4,500 (US$0.48) a litre, an 87.5% rise, for gasoline, while diesel was increased to Rp 4,300 (US$0.46), and kerosene, used for cooking, increased from Rp 700 (US$0.08) to Rp 2,000 (US$0.22) per litre. The price increases came as oil prices threatened to increase the government's oil subsidy to US$14 billion per year, and caused further protests.
With oil reaching over US$145 a barrel, Indonesia further increased prices on 24 May 2008 to Rp 6,000 (approx. US$0.65) per litre, and diesel to Rp 5,500 (approx. US$0.60) per litre, while kerosene was raised to Rp 2,500 (approx. US$0.28), moves which caused widespread protests. In addition, it was suggested that private car owners, who are wealthy in Indonesian terms, would eventually be excluded from subsidies entirely, with the cheap fuel limited to public transport and motorcycles.
In June 2013, the government raised the price of low-octane gasoline 44% to 6,500 rupiah ($0.66) per liter and of diesel 22% to 5,500 rupiah per liter to help close a widening budget deficit. The move caused violent protest in some areas.
Furthermore in November 18, 2014, the new government led by President Joko Widodo reallocated the government subsidy for gasoline and diesel into nation's infrastructure, education and health budget, hence raised the price of subsidized gasoline and diesel by Rp 2,000 each, so the price of gasoline and diesel became Rp 8,500 and Rp 7,500 respectively. This decision created inflation and protest throughout the archipelago.
People have been encouraged to switch to LPG for cooking, as Indonesia is the world's largest exporter, whereas its oil industry is in decline, and it is now a net importer.
Malaysia had been subsidising gasoline since 1983 and recently had been spending US$6.7 billion on subsidising gasoline, diesel and gas each year. On 5 June 2008 gasoline prices increased by 40% to MYR2.70/litre (US$3.30 a gallon), from MYR1.92/litre (US$2.32 a gallon). Diesel prices rose by MYR1.00/litre to MYR2.58 (US$3.04 per gallon), a 63% increase. It was announced that price increases were planned to bring fuel prices in line with global market cost, suggesting that it may hit US$3.80 per gallon by August. The Malaysian government has also announced a one-off cash rebate of MYR625 per year to Malaysian citizens who own cars with an engine capacity of 3,000 cc or less and MYR200 tax rebate to cars with an engine capacity of 3,000 cc and above to offset the increased costs. The government introduced a temporary ban on buying fuel within 50 km of the country border, but the ban was suspended following a price increase on 7 June 2008 for petrol of 41% (to MYR2.70 a litre) and for diesel of 63% (to MYR2.58).
On 22 June 2008, the Malaysian government announced plans to set up separate pumps at its border petrol stations to sell fuel to foreigners at market rates so that only locals can benefit from subsidised petrol. The new pumps will target Singaporeans and Thais who make day trips across the border to fill their tanks with cheaper fuel there, although Singapore-registered cars must have their tanks at least three-quarters full before they will be permitted to leave Singapore in any case. Petrol stations within 50 km (31 mi) of the country's northern border with Thailand or southern border with Singapore would be affected. Recently, the fuel price has dropped to MYR 2.45 and it has dropped for the second time. A further reduction was made on 1 November 2008. RON97 petrol was reduced from MYR2.30 per litre (MYR8.7/US gal) to MYR2.15 a litre, RON92 petrol from MYR2.20 to MYR2.05 a litre (MYR8.3/US gal to MYR7.8/US gal), and diesel from MYR2.20 to MYR2.05 per litre The Government revealed that it had ceased subsidizing petrol as of 1 November 2008 when the price of oil dipped below US$65 per barrel. However subsidies were still being paid for diesel and natural gas.
On 18 November 2008, the Malaysian government made further reductions in the price of gasoline cut pump prices by seven per cent to MYR2.00 ringgit per litre and diesel by 15 sen to MYR1.90 per litre. The government said that at current prices they were making about 30 sen per litre in sales. Then again on 3 December, petrol prices were reduced further. Gasoline prices were reduced 10 sen to MYR 1.90 per litre and as for diesel, they were reduced 10 sen to MYR 1.80 per litre. On 16 December 2008 the price of RON97 petrol is was reduced further to MYR1.80, while RON92 is selling at MYR1.70 per litre (MYR6.4/US gal). The pump price of diesel was also reduced to MYR1.70 a litre.
From 1 September 2009 however, the price for RON97 increased to MYR2.05, while RON92 has been discontinued and replaced with RON95, at a price of MYR1.80. On 16 July 2010, petrol prices across the board was raised by 5 sen, which brought the prices of RON95, RON97 and diesel to MYR1.85, MYR2.10 and MYR1.75 per litre respectively. Since then, RON97 floats with government controlled revision reflecting the global crude oil prices. As of 1 August 2010[update] only Malaysian-registered petrol vehicles may purchase RON95 fuel; foreign-registered vehicles (mainly from Singapore and Thailand) by law can only purchase RON97 (or diesel) at Malaysian service stations.
On 1 April 2011, RON97 increased from MYR2.50 to MYR2.70. In May 2011, RON97 further increased to MYR2.90, another record high for RON97 in Malaysia. A drop of MYR0.10 in June 2011 brings it to MYR2.80 per litre, the first price reduction since RON97 was floated at market rates.
On 3 September 2013, the price for RON 95 increased from MYR1.90 to MYR2.10, RON97 from MYR2.70 to MYR2.85, and diesel from MYR1.80 to MYR2.00. This was further increased on 2 October 2014, whereby RON 95 would cost MYR2.30 and diesel would cost MYR2.20 per litre. Starting on 1 December 2014, Malaysia abolished fuel subsidies and began using a managed float system, in order to control the country's large current account deficit.
Wide protests on petrol price hikes have been frequent in the last 4–5 years. On 24 May 2012 the petrol price was hiked by ₹7.50, resulting prices in the range of ₹73 - 82 all over the country. Opposition had declared a bandh on 31 May 2012 across the country to protest against the price hike, which evoked mixed response, amid incidents of stone pelting, arson and road blockades in some parts of the country.
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