Do Americans pay enough for gas? Americans are screaming about $3-a-gallon gas, but fitting up in other countries can cost twice as much.This spring, as Americans paid upward of $3 a gallon to fill their gas tanks, Congress scrambled for quick fixes to assuage angry voters. In April, the House approved steep new penalties for oil companies convicted of "price gouging" (even though the Federal Trade Commission has found no evidence of illegal manipulation of prices). And legislators from both parties floated proposals ranging from $100 taxpayer rebates to temporary suspension of the 18.4-cent-per-gallon federal gasoline tax. While American politicians debated gas prices, a German newspaper complained about new taxes proposed by the government: a higher sales tax, a health-care tax, and a surtax Surtax An additional tax on income paid by an individual or corporation.Notes: For example, during the Vietnam War U.S. Congress levied a surtax on income to finance the war effort. This added to the animosity towards the war. See also: Corporate Tax, Direct Tax, Income Tax, Indirect Tax, Self-Employment Tax on the wealthy. But there was no mention of fuel taxes, which account for more than half of every euro spent at the gas pump. Gas had just hit the equivalent of $6.40 a gallon, but few Germans were calling for gas taxes to be cut. It's not that Europeans like paying $6 a gallon. Nor do they relish paying gas taxes. But they seem to agree that taxing gasoline is both necessary--as a way to raise money for the government--and beneficial for the environment. In Japan, gasoline costs nearly twice what it does in the U.S. because of the taxes. Other high-tax countries include Europe's two big oil producers, Norway and Britain, as well as Turkey, South Korea, and Poland. The main reason for soaring gas prices is the sharp rise in the price of crude oil, which is near record highs of around $70 a barrel. Supply and demand have both played a role: Booming economies in China and India have meant more cars and factories and more demand for energy. On the supply side, political strife in Iraq, other oil-rich Middle Eastern countries, and Nigeria have caused disruptions to oil supplies. In the U.S., oil production was hobbled by Hurricanes Katrina and Rita last year, which knocked out oil wells and refineries along the Gulf of Mexico. WHY IT FEELS SO BAD IN THE U.S. Because Americans were paying so much less for gas than most of the world, the recent jump in the price of crude oil resulted in a proportionally bigger hike in gas prices in the U.S. than elsewhere: If gas costs $2 per gallon in the U.S. and goes up by $1, that's a 50 percent increase. If gas costs $6 per gallon in Britain and it goes up by $1, that's only a 17 percent hike. So that same $1 increase feels a lot worse in the U.S. than it does in Britain. In his 2006 State of the Union address, President Bush called on Americans to break their "addiction to oil" through the development of cleaner, cheaper alternative fuels and electric or hybrid cars that are at least partially powered by batteries. Using less fuel altogether is another approach: Some Americans are already trading in their gas-guzzling S.U.V.'s for smaller, more fuel-efficient vehicles. Some experts believe that higher fuel prices can actually have a positive effect--and that perhaps Americans don't pay enough for gas. Higher gas prices would make alternative fuels more competitive, and promote their development. Robert H. Frank, an economist at Cornell University, proposes an additional gasoline tax of $2 a gallon. He says that the higher price would encourage people to consume less energy. "That would not only reduce our dependence on foreign oil," Frank wrote in The Times, "but would also alleviate air pollution." By Mark Landler in Munich Mark Landler is Frankfurt bureau chief for The New York Times. |
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