UK Gasoline Prices Hit £5 per Gallon—$7.76 American

The Hourly G is not a place where we beat a horse to death . . . actually, it is a place where we beat horse dead. Hey, beaten horse makes for better hamburgers.

Inflation in the UK: UK gasoline prices are soaring on a combination of increased fuel taxes and higher VAT (value added tax, for those Americans who don’t know—but should get to know, since a lot of people are saying an American VAT might be one way to close the budget deficit).

Recent prices for unleaded are at 128p a liter, the equivalent of £4.84 a gallon, while diesel fuel is at 132p a liter, the equivalent of £5 a gallon—in other words, $7.51 and $7.76 per gallon respectively. Source here, (but discount a trivial arithmetic error in the headline).

Compare that to current average prices of gasoline in the US of $3.00 to $3.20, source here—less than half the UK’s fuel prices.

This goes back to UK inflation. Pundits will claim that the UK puts a lot more duties and tarrifs and taxes on gasoline that the United States does—which is true: See the chart.

Breakdown of UK gasoline prices
as of 2008; VAT now 20%.

However, the inflation rippling through the British economy will eventually hit the United States. Rising commodity prices don’t affect just some people over here, but not other people over there in the Global Economy.

Perhaps the fact that the United States skirted the Asian Crisis in the late Nineties pretty much without a nick or scratch has given Americans a false sense of confidence that what happens elsewhere does not affect them here?

Because rising commodity prices will affect everybody—without exception. And we’re going to be seeing it this winter.