US prices still cheap

April 4, 2005
At this time of year, many Americans are planning summer vacations. Many will hit the highways in sport utility vehicles (SUVs) or minivans and face a dilemma.

At this time of year, many Americans are planning summer vacations. Many will hit the highways in sport utility vehicles (SUVs) or minivans and face a dilemma.

Since the terrorist attacks of Sept. 11, 2001, many Americans have been afraid to fly, preferring instead to travel by road. But with gasoline prices hitting an all-time high, many may feel that flying is the better option.

Consider the example of an SUV trip from Tulsa to Disneyworld in Orlando, Fla., a popular summer destination. The round trip covers 2,450 miles. If the SUV gets 13 mpg it will consume 188 gal of fuel during the trip. At the $2.34/gal average price for premium gasoline that the US Energy Information Administration reported for the week of Mar. 28, the total cost would be $440. Whether that’s enough to encourage families in significant numbers to fly instead of drive remains to be seen.

Click here to enlarge image

The Mar. 28 price for premium gasoline was up 40¢/gal from the fuel’s price at the same time a year earlier. At last year’s late-March average price for premium gasoline, fuel costs for the trip would be $75 lower.

These are early-spring prices, not prices during the heaviest part of the summer driving season, which can be higher than earlier in the year.

European prices

Of course, Americans traveling by motor vehicle in Europe would be shocked.

European gasoline prices have risen as they have in the US and for the same basic reason: rising prices of crude oil. But European prices at the pump are usually $3-4/gal higher than they are in the US (see table).

The main difference is taxation. In European countries, taxes represent 75-85% of the total price of gasoline. In the US, taxes account for 20-25% of the total price.

At the average European price for premium gasoline in the most recent data in the table, total fuel costs for the SUV trip from Tulsa to Disneyworld and back would not be $440 but $1,087. What was that about air fares?

Fuel-price differences are why there aren’t as many 13-mpg SUVs in Europe as there are in the US. But in the European countries in the table, of course, there aren’t as many 2,450-mile road trips to take.