Global Petrol Prices

Fuel taxation system and comparison of global fuel prices:


Fuel tax, also known as gasoline tax, fuel duty or gas tax is defined as a government imposed excise duty or tax imposed on the sale of fuel oil intended to be used for various purposes. In many economies, governments impose higher fuel taxes on fuel used for transportation, whereas fuel used for heating purposes or agricultural purposes is taxed relatively lower. Many countries impose fuel tax as a way of reducing dependence on fuel consumption, whereas others consider it as a source of revenue generation to fund different public sector development projects.

Fuel taxation in the UK:

Fuel taxation in the Great Britain has persistently risen over the past 2 decades. In between 1993 and 1999, duties got imposed on fuel oil exceeding inflation by 300 basis points. In 1993, the Conservative party of the UK government led imposed fuel price hike in efforts to increase government revenue and discourage fuel consumption for environmental reasons.

Gone were the days when fuel prices in the UK were amongst the cheapest in the region and now they are one of the most expensive in today’s Europe. VAT introduction increases, fuel duty rise, and government’s policies to increase revenue via fuel taxes are leading to ever higher fuel prices and perhaps more fuel protests. Currently fuel prices in the UK are amongst the most expensive in the world standing at a staggering rate of 1.269 GBP & 1.319 GBP per liter  of petrol and diesel respectively with taxes divided as follows (March 2011):

  1. Duty – 58.95 Pence (Same for Petrol & Diesel)
  2. Product – 41.8 & 45.97 pence (Petrol & Diesel)
  3. VAT – 21.15 & 21.98 pence (Petrol & Diesel)
  4. Retailer Margin – 5 pence (Same for petrol & Diesel)

 

Fuel taxation in Germany

The price of Diesel and petrol in Germany stand at 1.03 Euros and 1.22 Euros per liter. For per liter of diesel fuel taxation is 0.47 Euros and 0.65 for unleaded petrol. The VAT is 19% applied after the fuel tax has been implemented.

Comparison of global fuel prices:

Getting a comparison of global fuel prices, we find that Europe has the highest fuel prices in the world, followed by America and Asia. UK, Denmark, Norway and Turkey stand at the top selling most expensive fuel oil in the world whereas Iraq, Iran and Venezuela sell the cheapest. The chart below shows the latest price data of global petrol prices for major oil consuming/producing economies of the world as of March 2011. The source of reference is German Agency for Technical Cooperation and the petrol prices stand at:


List of countries

Petrol price $ per liter

Uruguay

1.95

United Kingdom

1.92

Israel

1.87

Argentina

1.75

Japan

1.74

Finland

1.74

Iceland

1.72

Netherlands

1.69

Denmark

1.66

France

1.62

Italy

1.59

Belgium

1.57

Sweden

1.54

Brazil

1.51

South Korea

1.51

Rwanda

1.46

Turkey

1.44

Uganda

1.41

Zimbabwe

1.39

Austria

1.34

Morocco

1.34

Hungary

1.33

Peru

1.31

Switzerland

1.28

Czech Republic

1.26

Portugal

1.26

Madagascar

1.25

Croatia

1.25

Poland

1.25

Norway

1.21

Spain

1.2

Paraguay

1.18

Ireland

1.18

Greece

1.18

Kenya

1.16

Bulgaria

1.15

Mali

1.15

Slovakia

1.13

Malawi

1.13

Bosnia

1.11

Chad

1.11

Niger

1.11

Sri Lanka

1.08

Costa Rica

1.07

Burma

1.06

Haiti

1.05

Chile

1.05

Nepal

1.03

Jamaica

1.02

Cuba

1

Mexico

1

India

0.98

Canada

0.95

Bhutan

0.93

Australia

0.93

Pakistan

0.87

Lebanon

0.87

South Africa

0.82

New Zealand

0.79

Berlin

0.79

United States

0.77

Bangladesh

0.75

Romania

0.75

Syria

0.72

Vietnam

0.62

Philippines

0.61

Ukraine

0.61

Russia

0.54

Oman

0.51

Malaysia

0.46

Sudan

0.46

Nigeria

0.44

Egypt

0.43

UAE

0.41

Saudi Arabia

0.39

Kuwait

0.34

Indonesia

0.28

Venezuela

0.2

Iran

0.08

Iraq

0.05

Turkmenistan

0.03

 

According to the above world fuel prices, Uruguay tops the list followed by UK as the first and second countries selling the most expensive fuel in world. The 5 oil producing giants namely Kuwait, Saudi Arabia, Iran, Iraq and Venezuela have the cheapest oil pricing strategy. It clearly shows that even if the global price hike has taken place, countries rich in oil are very stable in terms of their petrol pricing strategy whereas European nations that rely on petrol tax and sell petrol at very expensive rates. If we compare petrol prices in the UK with those in the US, the former are at right to express their anger whereas the latter have much relief regarding petrol prices. The Americans are much better when purchasing petrol when compared to the Britains.

The economic downturn that took place back in 2008 led to rising levels of unemployment and inflation in many developing and developed countries. Global production had shrunk leading to a price hike for staple food commodities. In order to fight for this situation, governments all over the world had to reduce their public expenditure by cutting down their allocated budgets on health, education and various other public sector development projects and increase taxes to raise their revenue. One such way that all governments used was to rise VAT and tax on petrol, diesel and natural gas leading to price hike throughout the world.

Petrol Price Subsidising

Given such a tough situation, it hardly seems any government is subsiding petrol and diesel to provide relief to their public. Even those countries selling petrol at the cheapest rates are rich oil nations like Iran, Iraq, Venezuela, Saudi Arabia and Kuwait. The citizens of these countries do not seem to get any benefit from subsidy because the government is already selling at very low prices due to ready supply of oil. The governments just have to incur cost for oil extraction, refining and selling, whereas European nations also have to pay hefty bills for crude oil import, and not to forget the rest of refining, and selling process. Another reason why many countries do not subsidize oil prices is because of the escalating government debt and excessive borrowings from the central banks of their respective countries. In order to pay back the huge debt plus interest, fuel prices are taxed heavily not only to discourage its consumption but also help to raise government revenue to cover debt financing.



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