The cost of gasoline has Americans angry at the pump, and experts are divided over whether this is the beginning of a longtime crisis or just a minor skid on an oil slick. But while many point out Americans have it a lot better than Europeans who are paying a much higher pump price, the opposite is also true: In a few places gasoline is dirt cheap. A look at prices around the globe shows motorists in London coughing up a whopping $7 a gallon for regular gas this month -- a jump of about $1.40 in three short weeks. It's enough to make Her Majesty the Queen consider putting her Range Rover up on blocks and reverting to coach and horses. Meanwhile, however, drivers in Baghdad, Iraq, are filling up with pocket change at a measly 5 cents a gallon. And in oil-rich Venezuela gas is only 14 cents a gallon because that country's government controls production and keeps gas tax-free as a service to its citizens. Even the next lowest prices, in far away Azerbaijan and Tajikistan exceed what Iraqis and Venezuelans pay by more than $1 a gallon. But low-price areas are the exception. Most places outside the United States are paying far more than Americans. Hong Kong drivers, for example, have been hit hard. They pay $5.62 a gallon to sit in typically gridlocked traffic with the engine idling. It's as bad elsewhere: Danes hand over $5.18 worth of krone at Copenhagen corner fill-ups and Italians in Rome throw more than a few coins in the fountain, forking out lots of lira for their $4.88 a gallon regular fuel. North Americans are not happy to have lost those 1960s 35-cent-a-gallon days, but shouldn't be griping with regular unleaded averaging just $2.05 in the U.S., according to the
Energy Information Administration.
Why the big differences? Here's a look at the whys and wherefores of the gas-price hikes that have North American motorists wondering if they really can afford that road trip this summer. Record-setting price of crude: On the New York Mercantile Exchange, the price of light crude oil for July delivery went to $42.33 a barrel on June 1, a rise of 6 percent, then dropped about the same amount the next day, explains petroleum industry analyst Brian Baran. "It was a 21-year high that was only briefly touched. A realistic price for crude is around $30 a barrel, but traders are frightened about supply stability."
Fear of fear: Rampant fears that the OPEC oil faucet might be turned down to a trickle by terror attacks have worsened the situation.
"What we are seeing is a 'fear premium' of about $15 a barrel," says Baran, a Bakersfield, Calif., oilman who spent 14 years in Riyadh, Saudi Arabia with Aramco, the Arab-American oil company, as a production engineer, then as a markets analyst. "The petroleum industry is afraid that terrorists might cut or seriously disrupt oil supplies, and it's costing the U.S. and Canadian motorists 35 to 55 cents a gallon at the pump. Without that premium on fear, the motorist would pay about $1.80 a gallon." "It is not a lack of supply. It is increased terrorist activity around the world that has caused instability and has driven oil prices over the past six months," says energy strategist Fadel Ghelt, of Oppenheimer and Co., in New York. replacecontent-tcm:8-21644 |