OK, so we're all feeling the burn at the pumps these days and hope that it's only temporary. But our pain is shared by many countries.  In fact, to a number of countries, US gas costs are actually cheap! 

Don't believe it?  Review the chart we put together below to end your disbelief.  In it, you will see worldwide gas costs per gallon of gas for 2004 (green bars) and for the present, 2008 (white bars). 

As the chart depicts, gas is twice as expensive in Europe and Israel, and 50% more expensive in Japan as well as in Brazil, where ethanol for sugar cane has emerged as a viable, widely-used alternative to gasoline.  But in Venezuela and Saudi Arabia, two of the largest oil-exporting countries in the world, gas in cheap.

So why do gas prices vary so much between countries when every day you hear that a barrel of oil costs a certain amount worldwide?  It's a mix of reasons, really, but for the most part, prices vary due to the amount of subsidies and taxes placed on the commodity.  The Europeans limit their subsidies on gas to keep cost truer and tax it a high rates to compensate for the environmental damage caused by drilling and burned fuel emissions.

In contrast, in countries like Venezuela and Saudi Arabia where the government controls the oil business, the government subsidizes the fuel costs of the local oil and does not tax it, keeping the price artificially cheap to keep its people happy and encourage economic growth.  It is currently 19 cents per gallon in Venezuela and 45 cents in Saudi Arabia.

The other main reason gas prices vary worldwide stems from currency differences.  As the euro is currently valued 50% higher than the dollar, euros have more buying power.  So even if gas prices in Europe seem crazy expensive at $8 per gallon, because of currency differences, Europeans are only paying 5.33 euros per gallon. 

In the US, gas taxes average about 18 cents per gallon, pretty low compared to European countries and certainly too low for the proposed gas tax moratorium to have any real effect on spending.  Those looking for a break from the high prices at the pump should stop looking for a sweeping government bailout. The US isn't likely to embrace the economic policies of Venezuela and start selling its own gas at discounted rates to US citizens, especially since private companies, not the government, owns the oil industry.

Like any economic situation, there are two ways to alleviate high commodity costs: reduce demand and increase supply. Neither one will happen overnight, but taking a hard look at our transportation system reveals much room for eliminating some demand.  By embracing smart growth - development in clusters instead of sprawling superhighways punctuated by strip malls - we can begin to curtail the need to drive miles and miles to get anywhere.  Other opportunities for decreasing demand can come from increasing availability of public transit, increasing vehicle fuel efficiency, and engineering our vehicles to run on a resource that is not finite.  

To increase supply, the only option on the table is drilling for more oil domestically. Certainly, this would increase supply by a small amount, but it wouldn't affect global prices much and it would take 5-10 years before a drop of new oil makes its way into the petroleum network.  However, by increasing the efficiency of the engines that demand the commodity, resources are stretched and the net effect is an increase in supply. 

There is no panacea to curtail the escalating energy crisis, but one thing is clear: oil is not and will never be the answer to the problem.  So why look for solutions inside the oil industry?  Oil is what got us into this mess in the first place - why drill for more of it? 

If the money spent on the Iraq War went into developing a hydrogen economy or designing cars that ran on electricity generated from geothermal, wind, solar, and wave power, the US could be selling its oil to the rest of the world within ten years at $6 per gallon and laughing about it.  

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