Summary: The affordability of gasoline varies significantly worldwide due to varying taxes and subsidies. Analyzing the GDP per hour worked against the money price per gallon shows that the United States emerges as the most affordable country for purchasing gasoline, even compared to nations where gasoline prices are heavily subsidized by the government.

According to GlobalPetrolPrices.com, the average price of gasoline around the world is USD5.03 per gallon. However, there is substantial difference in these prices among countries due to the various taxes and subsidies for gasoline. All countries have access to the same petroleum prices of international markets, but countries do not all impose the same taxes. As a result, the retail price of gasoline varies significantly.

The money price of 16 selected countries ranges from $2.26 in Russia to $8.55 in Denmark. But what about the time price? To calculate the time price, we first calculated the GDP per hour worked in each country. The data to calculate this ratio come from the World Bank and the Conference Board.

We then divided GDP per hour worked by the money price per gallon. This gave us the gallons of gasoline that one hour of work would buy in each country:

We also divided the nominal price per gallon by GDP per hour worked to get the minutes required per gallon:

This chart illustrates how much more expensive relative to the US the other 15 countries are in terms of time price:

Of the 16 countries analyzed, the US is by far the most affordable place to buy gasoline. There are other countries where gasoline is more affordable, but the gasoline price in those countries is heavily subsidized by government.

Tip of the Hat: Jeremy Horpendahl

This article was published at Gale Winds on 4/1/2024.