American pain at the pump is no match for Europe
Gas or petrol prices around the world show how consumers in dozens of countries – especially in Europe – are paying far more than Americans currently pay to fill up their cars.
Several European countries pay north of $7 or $8 per gallon, including Germany, France, Italy, Spain and the United Kingdom. At the top of the list of most expensive prices is Hong Kong, where prices per gallon are over $11, followed by Norway at over $10.
“European prices for energy of all kinds are higher than what consumers are paying in the United States,” Peter McNally, global sector head for industrials, materials and energy at Third Bridge told Reuters. YahooFinance. “It was before 2022, but it’s only gotten wider since then.”
McNally explained that the main reason for the discrepancy is “the difference between fuel prices in the US and Europe is tax rates – Europe has significantly higher taxes than the US” .
Another reason for rising petrol or gasoline prices in Europe is that crude oil typically uses Brent (BZ=F) as feedstock, which trades at a higher price than the index US benchmark West Texas Intermediate (CL=F).
“Not only do refiners in Europe pay this premium for crude oil feedstock,” McNally noted, “but they generally have higher operating costs than refineries in the United States.”
The countries that pay the least for gasoline are the oil producers, Venezuela, Iran and Libya. A gallon of fuel in these places costs between 8 cents and 20 cents a gallon – cheaper than bottled water in the United States.
“Rising interest rates around the world will hurt the consumer’s wallet”
As central banks around the world continue to fight inflation by raising interest rates, demand destruction for gasoline and other refined products will likely follow.
“Rising interest rates around the world will hit the consumer’s wallet,” Andy Lipow of Lipow Oil Associates wrote in a note to investors. “I think that will lead to further demand destruction and lower prices.”
Relief for Americans could be coming: The national gasoline average now sits at $5 a gallon, down 2 cents from a record high earlier this week, according to AAA.
“I expect gas prices to fall 5 cents per gallon over the next 7 days to $4.95 and hopefully another 5 to 10 cents thereafter,” Lipow said. “Gasoline futures prices are off their highs.”
The same may not be true for diesel prices, which continue to reach record highs.
“Diesel is the most scarcely available refined product in the world,” Lipow noted.
Ines is a markets reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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