Your Gasoline Prices Are Too Low, International Energy Agency Chief Tells Americans
Posted at 2:30 p.m. on July 14, 2014
The head of the International Energy Agency chided the United States on Monday for having gasoline prices that are, in her view, too low.
Speaking at the conference of the U.S. Energy Information Administration in Washington, Maria van der Hoeven, a former Dutch minister of economic affairs, brought up the price of U.S. gasoline in the context of fuel subsidies in countries such as Egypt, Indonesia, and the North African nations.
Altogether various governments spend more than $500 billion annually on keeping the retail price of gasoline and other fuels artificially low through subsidies, she said.
Referring to those subsidies, she said, “We see them actually as Public Enemy Number One in the fight against climate change” because they encourage over-consumption.
She praised the Egyptian government which “has just taken the bold step of reducing fossil fuel subsidies.”
She added, “I recognize that in the United States you do not subsidize the consumption of fossil fuels. But if I look at your gasoline prices, I see that you’re quite a bit lower than what we pay in Europe or anywhere else in the world…. You have the lowest unleaded gasoline prices in the OECD [Organization for Economic Co-operation and Development].”
“The main reason is your gasoline taxes, which are second lowest in the OECD and federal highway taxes have not increased in more than 20 years — and your federal highway fund now faces a shortfall as a result,” van der Hoeven told the conference.
So, van der Hoeven said, “from a broader perspective I just urge you to take a hard look. You may find that with your tax structure on gasoline you, too, may be encouraging wasteful consumption” as do governments that subsidize the retail price of gasoline.
(Our colleague Randy Leonard on the Energy Xtra blog also covered her speech to the EIA conference.)
The IEA chief also told the conference “you may be eroding your own energy security” by encouraging too much gasoline consumption today without regard to tighter oil supplies over the next 30 years if the expected Iraqi and other Middle Eastern oil supplies fail to get developed due to political chaos.
The IEA was founded during the 1973-74 oil crisis in order to help Western countries co-ordinate their response to OPEC and to disruptions in oil supply. The IEA has 29 member countries including the western European nations, Japan, and the United States — but it does not include rapidly growing nations such as China and India.