Monday, March 7, 2011

Don't scare me like that!

I stopped on the way to work to get gas (petrol) in my car. What did I see?

Just kidding. These are not the prices in my neighborhood! We're only paying about \$4.00 per gallon, which is very high but not THAT astronomical.

"It's those oil companies getting rich! Those politicians taxing us to death!" ranted my wife.

Hmmm. Does elementary math (as taught in Excel Math curriculum) help us to understand oil prices, taxation, etc?  Just a little bit? I'd say yes.

Here is some data I got from the Energy Department:

It looks like the crude oil costs a lot but there are also some other costs that are larger. As the price of fuel oil has gone up, the percentage of the taxes and profits have gone down.

How do we compare with other nations? That's a tough question to answer, but here's a comparison I was able to assemble based on research done in Spain recently. The prices reflect averages collected around 2005-2006 and are stated in euro:

That's pretty frightening, isn't it? This is shown in cents (euro) per liter of fuel. Using some simple math, and assuming a euro is worth \$1.40, we can do a more direct comparison of what we and our compatriots in the UK and Spain were paying:

USA   .51 x 1.40 (euro) x 3.78 (liters/US gallon) =  \$2.70 per US gallon
UK   1.30 x 1.40 (euro) x 3.78 (liters/US gallon) =  \$6.88 per US gallon
SPAIN  1.02 x 1.40 (euro) x 3.78 (liters/gallon)  =   \$5.40 per US gallon

Apparently politicians can raise the taxes MUCH higher than we have so far in the USA, and it doesn't take advanced mathematics to see HOW HIGH. Virtually infinity! In the UK the tax is double the value of the fuel!