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Think U.S. Gas Prices at $5 a Gallon Are Bad? Try $10

The average price of a gallon of gasoline in the U.S. is now above $5 for the first time ever.

gas prices by country 5 10 dollars gallon petrol
The United States is somewhere near the middle in a ranking of gas prices by country.

With the average price of gas now more than $5 a gallon, Americans are reeling at the pump. But the United States is by no means the most expensive place to fuel a car. Global gas prices are skyrocketing. The world’s highest gas prices are in Hong Kong, where the cost of a gallon of gas — referred to as petrol in most countries — is more than $11, according to GlobalPetrolPrices. In fact, the average price of a gallon of gasoline in the U.S. on June 6, 2022 was $5.04, just under the global average of $5.40.

The U.S. is a bit of an outlier among advanced economies. The average price of gas per gallon is $6.75 in Canada, $7.89 in Germany, $8.33 in the United Kingdom, $8.70 in Singapore. But the price of gas in Australia and China aren’t that much higher than in the U.S. In Australia, a gallon of gas is $5.36, while it is $5.50 in China. Fuel subsidies are quite high in Australia, totaling $11.6 billion in the 2021-22 fiscal year.

Why Are Gas Prices So Expensive in Some Countries and Cheap in Others?

In general, gas is the cheapest in countries that are net exporters of crude oil and refined oil products. These countries have surplus oil production that they can export and provide gas to their domestic markets at below-market, heavily subsidized costs.

Gasoline is cheapest in Venezeula — at less than 8 cents a gallon — followed by Libya and Iran, where it is twenty cents a gallon or less.

Ethiopia is an anomaly here. At $2.70 a gallon, gasoline is at half the global average of $5.40. But Ethiopia is a net energy importer that barely produces any oil of its own. In the most recent fiscal year, it spent around $2 billion on fuel subsidies.

These subsidies have additional costs. They promote the inefficient use of a finite, carbon-intensive resource. Domestic subsidies of fuel can also incentivize the smuggling of these commodities to neighboring energy importers.

For example, Iranian oil is smuggled over the border to Pakistan, a net energy importer. Smuggled fuel ends up being a bargain for Pakistani consumers because the Iranian government’s domestic subsidies are effectively transferred to the Pakistani market. The government of Pakistan also loses out on tax revenue from smuggled fuel. And the trafficking of hazardous contraband is dangerous. Deadly accidents involving smuggled fuel are common in the region.

Subsidized fuel, however, can keep populations happy and help control inflation. And it’s worth noting that the poor have low purchasing power and are disproportionately impacted by surges in the prices of globally traded commodities. But given that vehicle ownership generally corresponds to higher levels of wealth, untargeted fuel subsidies disproportionately benefit the wealthy.

Gas or petrol is generally expensive in countries that are net importers of fuel. Many advanced economies, especially in Europe, also heavily tax fuel in order to constrain demand and control pollution. These countries direct those revenues toward public transportation, which is a more climate-friendly way of transporting people. Studies show that rising fuel prices lowers fuel demand, which in turn reduces transport demand and emissions.

fuel taxes by country gas petrol
Fuel taxes by country, according to the Organization for Economic Cooperation and Development database. (Image Credit: U.S. Department of Energy)

The combination of climate change and a global commodities supercycle could incentivize investment in electric vehicle charging networks and alternative fuels like green hydrogen.

Global Gas Prices By Country

These are the countries where gas (petrol) is the most expensive, according to GlobalPetrolPrices:

10. Netherlands  — $9.11/gallon

9. Monaco  — $9.16/gallon

8. Central African Republic  — $9.29/gallon

7. Sweden  — $9.33/gallon

6. Greece  — $9.54/gallon

greece petrol fuel gas prices
Gas prices in Greece are among the world’s highest. (Image Credit: Wikimedia Commons)

5. Iceland  — $9.55/gallon

iceland gasoline petrol price by country
Gas or petrol prices in Iceland are among the fifth most expensive in the world. (Image Credit: Wikimedia Commons)

4. Finland  —  $10.13/gallon

finland petrol prices most expensive world
Finland ranks among the world’s ten most expensive places for gasoline. (Image Credit: Wikimedia Commons)

3. Denmark  — $10.32/gallon

denmark flag petrol gas prices by country
Extensive fuel excise taxes make gas or petrol in Denmark among the most expensive in the world. (Image Credit: Wikimedia Commons)

2. Norway — $10.82/gallon

norway gas petrol prices by country
Norway produces most of its electric power from hydroelectric plants. Its fuel taxes are among the highest in the world. (Image Credit: Wikimedia Commons)

1. Hong Kong — $11.21/gallon

hong kong gas petrol prices
Hong Kong has the world’s highest gas or petrol prices. (Image Credit: Wikimedia Commons)

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