Wednesday, October 29, 2008

Comparison Shopping

2008 has been a roller coaster year at the pump, filled with record climbs, steep drops, and plenty of unpredictability. Having spent the spring and summer in Paris, I watched as the price of a barrel of oil topped $140 and French citizens withstood the pain of an ever-expensive trip to the pump. I also heard the horror stories from back home of $4.00 gallon of gas. But by the time I returned to Minnesota in mid-August, the price of gasoline in the United States had already begun to decline. Here in the U.S., the cost of filling up your tank is closely related to the cost of a barrel of oil, so while the world watched as oil prices crashed, American consumers began paying less and less at the pump. Road trippers and middle-class families alike rejoiced.

I assumed this was how it worked all over the world; the price of a barrel determined the price of refined gasoline to consumers. Imagine my surprise when, on an October visit to Paris, I discovered that French consumers were seeing no such relief. The price of a liter of gas has stayed roughly the same, that is, at the peak summer 2008 rates. Because European governments place heavy taxes on gasoline, it is always more expensive to fill up your tank in Europe than it is in the United States. For example, it was not unusual to see prices this summer in Paris at €1.50 a liter, which, at the time, was approximately equal to paying $8.50 a gallon. This fall, after gas prices in the U.S. had fallen to nearly half their summer levels, Parisian prices remained at €1.50 a liter. Shouldn’t they have dropped too?

This week, the national average price for a gallon of gas stateside is $2.65. Minnesota is generally below the national average, as evidenced by this station offering unleaded for only $2.17. It’s the equivalent of paying €.46 per liter; a price I’m sure many Frenchmen and women would be happy to see. Alas, it is not to be. Price drops in France have been minimal or nonexistent, and certainly no where near the tumble witnessed on the other side of the Atlantic. Either their pricing system is far more complicated than the barrel-to-gallon link in the U.S., or French citizens are getting taken – both literally and figuratively - for a very expensive ride.

1 comment:

Nomadic Matt said...

good! it should have stayed high here.....force people to conserve!!