Why is gasoline so cheap in the U.S.?

We in San Diego like to complain because we pay the highest gas prices in the U.S., but really it could be much worse. In Europe, gas is about three times the price it is here, and in most other countries it is significantly more expensive. Is the U.S. government subsidizing cheap gas, or are they just taxing it less than other countries do?

That’s the way that it is on this bitch of an earth."
– Pozzo, Waiting For Godot

Two reasons:

  1. Yes, we tax gasoline a lot less here than in Europe.

  2. We pump much of the crude we refine right here in the USA (esp. Alaska, Texas, California and Oklahoma)

If you go to someplace that has even greater reserves and moderate taxation you will find even cheaper gas (like Mexico, Venezuala. etc.)

Although our consumption leads the world, we still produce ~45% of the hydrocarbons that we consume. Most of central Europe does not produce very much at all. Asia has quite a bit of production, but her leading economic light, Japan, has none to speak of.
Taxation on gasoline in Texas is 38.5 cents/gallon which seems like a hefty chunk to me, but I usually trust PB’s info - - - PB; what IS the taxation situation on gasoline in Europe?

I’ve gotta admit, Beatle; I have no idea. I’m basing that assumtion on the fact that last time I was in Britain, I calculated that gasoline was about four dollars a gallon. This despite the fact that Britain has vast gas reserves in the North Sea, that they are vigorously exploiting. A huge gasoline tax is the only way I can explain the huge mark up.

According to this article:

The Chancelor of the Eschequer takes 7.50 pounds for every 10 pounds spent at the pump.

Let me try that again

According to this article:

The Chancelor of the Eschequer takes 7.50 pounds for every 10 pounds spent at the pump


YIKES! If I read that link correctly, and I read it as you did, there’s a 300% tax on gasoline in Britain.

In response to PapaBear’s post… here in Mexico we pay about 4.50 pesos per liter of low-octane unleaded, which is approximately equivalent to two U.S. dollars per gallon.

Not cheap, especially when considered as a function of the average wage for people who use automobile fuels here.

“Anything is peaceful from one thousand, three hundred and fifty-three feet.”

Has it always been that expensive, Loco? I seem to remember gas being around 80 cents per gallon down there a few years back.

Expensive? What do you mean? In mid California it’s $1.60 to $2.29 US bucks [cause I live right next to a gas station].

That $2.29 is where they put it in for ya.

I saw the taxes on it the other day [you can find them posted on the pumps] $.36 -.48 a gallon.

I think gas has always been more expensive in Mexico, as El Mariachi Loco confirms. Of course there’s a monopoly, isn’t there? That may have something to do with it. I’m shocked that it’s so expensive in “mid-California”. Maybe San Diegans are whining for no reason. Regular unleaded gas is only about $1.30 a gallon, although it was significantly higher a month ago. I don’t know about full-service, because I’m not even sure where there is a full-service station around here.

Not really related to the original post but I found in a cross-country drive that the cheapest gas was found in New Jersey and Georgia- as far as I know, neither of these states drill for petrol. Gas gets more expensive the further west you go and Texas, where they do drill for petrol, is more expensive than Virginia, where they don’t. Whats really bizarre is that the most expensive gas in NJ was comparable to the cheapest gas here (DC area) even though NJ requires by law that all gas is sold full serve. I felt really weird sitting in my car during the entire gas-refuelling process.

IMO its due to taxes but I have no evidence to back this up.

I live in Oregon. No self service gas stations allowed. I pay $1.23 per gallon, regular unlead. Take that, you pro-self-serve self-serving type pro-people! Or whoever it is that is always trying to convince Oregonians it’s cheaper to go self-serve. I worked at a gas station all through high school, I ain’t pumping my own gas now without a paycheck!

Anyway, my point was, the price of gas peaked about a month ago at $1.39 per gallon (at Arco, anyway, which is a pretty cheap station compared to some of your ritzier stations like BP or Texaco), and has been falling steadily since then.

“I hope life isn’t a big joke, because I don’t get it,” Jack Handy

I live in St. Louis. Yesterday I filled my tank with regular unleaded at 93 cents per gallon. Being a transplanted New Yorker, I consider this a great deal, but people around here take it for granted; they start complaining if it goes above 95 cents!

Yes, gas in Europe is around $4/gallon. A little lower in some countries, a little higher in others. It’s tax, of course, and the governments love it. One, they make moneys, two, it cuts down on car usage, and makes people use public transportation. Not a bad idea in many European countries and cities.
Without tax, the prize would be the same as in the US.


When in trouble or in doubt, run in circles, scream and shout

This is probably a bit of a chicken-and-egg issue. The fact is in most parts of Europe far fewer people drive than in the US anyway. I didn’t learn to drive until I moved to the US when I was 25, many of my friends back home still can’t. High petrol taxes may be one of the reasons, but the cost of autos is a greater reason and still more is the fact we don’t NEED to drive the way you do in the US. It’s much easier to get round without a car in most parts Europe. Fewer drivers = less pressure on the government to reduce taxes, I would presume.

I live in NW Ohio and pay roughly $.95 to 1.05 a gallon (reg/unlead/self). About 2 months ago gas went down to about .70 a gallon. I figured out that the State of Ohio was making more money on each gallon than the oil companies were. I get really pissed when gas goes above $1.10 a gallon.

I belive that 'Mericans pay less because we bombed the hell out of the Middle East, thus forcing them to keep their prices low. This may not be totaly true, but I think that at least some part of it is.

“I’m not dumb. I just have a command of thoroughly useless information.”
– Calvin and Hobbes

Obviously taxes cause the fluctuation in the cost of gasoline.

The fed gov’t of course levies the same tax on all states when it comes to gas. I am not sure what it is, but I know it went up a couple of years ago.

Then there is the tax collected by the state itself.

In GA, where I live, I paid 84 cents for reglar unleaded just the other day and only a few months ago it was 69 cents a gallon.

Both AL and FL are about the same and do compare with NJ (Last I was there it was around a 1.08 per gallon)

I guess CA and maybe the cities are taxing the gas the most.

The funny thing is GA has always had lower gas prices than AL, but our roads were usually better (gas taxes usually are supposed to help pay for roads).


I don’t know if gas has always been historically expensive in Mexico. But as far as I know, the oil is drilled by Pemex (the state-owned oil monopoly), sent to the United States for refining, and then reexported back to Mexico in the form of low-grade gasoline. Pemex has a monopoly at all stages of production, save some basic petrochemicals and propane gas distribution.

The prices are set by the federal finance ministry… so in a way 100% of the consumer price is a form of taxation. There are preset inflationary increments that will represent an annual 15%-or-so rise in price by year’s end. So even before the OPEC accord that made historically low U.S. prices shoot up in recent months (leading to the “Great American Gas Out”–what a laugh) drivers in Mexico were watching the price steadily increase.

“Anything is peaceful from one thousand, three hundred and fifty-three feet.”

2) We pump much of the crude we refine right here in the USA (esp. Alaska, Texas, California and Oklahoma)

If you go to someplace that has even greater reserves and moderate taxation you will find even cheaper gas (like Mexico, Venezuala. etc.)

this is utterly false. i live in abilene texas–the center of a huge oil dome–there are two oil refineries right outside of town (subsiquently the water tastes like crap) and there are 14 or so grasshoppers (those tilting oil pump thingies) within a mile of my house. yet when i go to fill up, its not uncommon to pay $1.15 and up (although a few months ago durring the oil surplus, gas was as low as 72 cents per gallon.)

i am on a never-ending quest to eliminate capital letters