My Own Freakonomics: Oil Prices in Europe and America

Here is my first contribution to Freakonomics. It relates to gasoline prices. I was recently in the States and read articles, one that emphasized that while in America consumers were very concerned about the rise in the price of gasoline, in Europe people were less worried. In the article there were many unusual theories as to why this may be the case.

One related to unemployment in Germany being so high, the point being that people in Germany have bigger things to worry about than the price of gasoline. Other seemed closer to the point and it said that in Europe people are more energy efficient and compensate for the fact that gas is around $5 per gallon in the Continent. I however think that there´s an obvious reason why people are concerned more about gas price increases in America than in Europe, and that is gasoline taxes. As gas in America is taxed much less than in Europe the price of oil has a much greater percentage impact on gasoline prices than in Europe. Gasoline went from $2 to $3 dollars a gallon in America while in Europe it went from $4 to $5. That´s a 50% increase in gasoline prices in America while only a 25% increase in Europe. If gasoline had gone from $4 to $6 dollars a gallon or euro per liter equivalent in Europe the outcry over here would be the same.

• Europe
• oil
• USA