Gas/Petrol, Litres/Gallons and all the conversions…

Today I saw a story that people in the US might be going to pay up to $4.00 per gallon for gas (or petrol as we know it). That seemed to be rather a lot but on further reading I found this was a future peak forecast, not unlikely but some time away in the near future. The full story is here.

For us in Australia, this price comparison between $US/Gallon and Our $AU/Litre is hard to judge. We are paying now upward (and over sometimes) $1.50/Litre for petrol (or Gas) and off-hand we have no comparative concept of what that equates to, so I did some calculations…

The table below list some comparisons, the US would be unpleased to know that they are probably paying much less than anywhere else in the world, particularly in comparison to Australia as I have shown.

OK, here’s the real interesting part, why is there any difference?

Oil is sold on a world market, it makes no difference as to where the oil was from North Australia, Texas or the Middle-East, it all goes on the world market to be sold to all at a similar/standardised price. This price is per barrel and has just peaked at about $112US for the crude raw product to make all other fuels from, Diesel, Unleaded and even Turpentine and plastics etc.

Next to this each country may impose additional taxes. Australia is really good at this, we add some 25% additional expenses on top for roads (which we also pay for through other insurance and registration, council, state and local taxes too, but petrol also gets a slug) and then also environmental additions and all that.

So somewhere between the $112 per barrel, Australia pays currently 50% more at the pump for gas than the US. The same product (under a different name, at a different ratio) still adds up to a marked difference in retail price to get a car from point A to point B.

Then on that, would you say this is a bad thing? For the reason of difference I say yes, if we all pay the same amount for the crude, then the retail product should all be sold at a similar price. Not doing so flies in the face of competition and consumer regulations, a cartel effectively in each country controlling the overall price, a price not maintained entirely by market forces.

On the other hand, and personally I agree, that we don’t pay enough for petrol!

When we pay more then we discover alternatives, we reduce our consumption and the overall result is better. Now that petrol is getting realistically expensive we are getting hybrids, we are beginning to accelerate our technology of battery power storage, we are all buying leaner and greener cars. If petrol remained cheap this would not happen.

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