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So you think you’ve got (gas) problems? PDF Print E-mail
Apr 08, 2012 at 07:49 PM
Image Fuel prices have climbed sharply in the United States in recent months, at the end of March reaching an average price of around $3.90, with peaks of well over $4.20 in various parts of the country. This represents a real problem for drivers and also for the economy as a whole. But you think you've got it bad? The price per litre (a litre is somewhat less than a quart) of unleaded benzina in Italy now stands at over $2.30, which works out to between nine and ten dollars PER GALLON. Gas prices have always been MUCH higher in Europe than in the United States, primarily because of the weight of government excise taxes and other duties. But now things are getting ridiculous!

Gas still costs more in Norway than it does in Italy but recently, the Economist pointed to Italy as the country where fuel prices have increased more over the last year than anywhere else (even Greece), between 18 and 19% to be exact. Other countries where the price of gas has increased by more than 10% over the last calendar year include Hungary, Poland, Lithuania, Ireland, United States, Slovenia and Canada. And whereas taxes represent only 11% of gasoline in the United States, in Italy, thanks to recent austerity measures, it now represents an unprecedented 60% .

But even if the latest increases in Italian gasolineprices are related only in small part to the cost of crude oil or to vicissitudes in trading, they are having a serious impact on consumers, gas station owners, and the automobile industry as a whole. A TV broadcast I happened upon this morning said that gas sales at the pump have dropped in recent weeks by 20 percent, that new car registrations were down by 26% in March, falling to 1980 levels, and that - partly because of gas price rises and partly because of the ongoing crackdown on tax evasion - purchases of luxury cars are way down. One of the speakers said that since car dealers must sell six small cars to have the same added value as with one luxury saloon, the outlook for the Italian car industry was very, very bleak, indeed.

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