A recent study published by British car insurer Staveley Head indicates that the cheapest gasoline prices are found in oil countries (Venezuela, Saudi Arabia, and Libya), knowing that the most expensive ones are also found to be in oil-producing countries (Norway and Britain). As the study has originated in Britain, prices were surveyed in the British currency (GBP) instead of the dollar as is customary in such cases. Also, The study did not show prices in local currencies and rates were as follows: The lowest gasoline rates in the world are found to be in Venezuela, where the price of one liter of gasoline was one to three pence, which means that it is possible to fill a 70 liter tank at around 1.5 pounds, compared to about 95 pounds in Britain, as the study mentions. The second-lowest gasoline prices in the world are in Saudi Arabia, the world's largest oil-exporter, where a liter of gasoline costs around eight pence. Saudi Arabia is followed by Libya, where the price of one liter of gasoline is around nine pence. Meanwhile, a unique situation exists in Turkmenistan, the relatively new country in Central Asia, which has promising and large hydrocarbon reserves. There, car owners can receive up to 120 liters of gasoline for free each month, but if they consume more than that monthly, then the price of additional fuel is about nine pence per liter. Bahrain is fifth on the list of countries with the lowest gasoline prices in the world. Although the country has limited oil reserves, it enjoys a high refining capacity. The price of gasoline there is about 13 pence per liter. Kuwait is next. Ranked sixth on this list, the price of one liter of gasoline there is about 14 pence, followed by Qatar, where the price of gasoline is about 15 pence per liter. As for Egypt, a country with limited oil and gas reserves, but high population density, the price of one liter of gasoline is about 19 pence. And in Oman, where oil output stands at about 878 thousand barrels per day, the price of one liter of gasoline is 20 pence. Algeria is last on the list, ranking tenth among the countries with lowest gasoline prices, with a price of 20 pence per liter. On the other end of the list, the highest gasoline price is found to be in Norway, where the price of one liter of gasoline is 1.64 pounds, with Britain in third place, with 1.35 pounds per liter of gasoline. The above data was reported by Staveley Head's study, but what is the importance of this trend and its implications, especially for the Arab countries? Why is the price of gasoline low among OPEC member states and what repercussions does this have? OPEC member states have become accustomed to subsidizing the price of gasoline as assistance to the citizenry, but this policy has left many negative marks on the local oil industry. It is clear that the selling price of gasoline, per liter, is much less than the cost of refining it. It has also become clear that low prices for gasoline and the rest of petroleum products encourage more consumption and produces inaccurate measurements. For example, we find that at present, energy consumption in oil-producing countries is increasing annually at rates similar to those found in emerging nations (China, India, Korea and Brazil), despite the large difference in economic progress between these two country categories (i.e. emerging vs. oil-producing). Moreover, the large consumption rate of petroleum products, while not being matched by significant economic progress, constitutes an important financial burden on oil countries. For one thing, it means losses will be incurred as a result of not being able to export and sell these quantities at the high international prices. Citizens in OPEC countries have become used to cheap gasoline, since they live in oil-producing countries. The governments there, meanwhile, have used their subsidies for gasoline prices as a way to help their citizenry economically, and reduce the latter's financial burdens. Yet, this picture began to change with the major political shifts occurring in countries such as Iraq, where people have suffered greatly as a result of shortages in petroleum products in local markets throughout the past decade. For the people there, this sounds awkward, since they happen live in an oil-producing country at the end of the day. As for why gasoline prices are highest in Western industrialized countries, the reason for this has to do, mainly, with the fact that gasoline is taxed as part of the high taxes that the government collects from its citizenry, and in return for which services are provided. High taxes on gasoline are also part of the widespread campaign for environmental conservation in Europe, and the attempts to lower carbon dioxide emissions by reducing the use of petroleum. This is despite the fact that Norway and Britain are countries that somewhat rely on oil revenues in their economies, albeit not as much as OPEC countries do. *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
