$4 gas: Yes, it's on the way

Why now and why so high?

The declining U.S. dollar and uncertain stock market have prompted many investors to move their investments into commodities such as gold, oil, wheat and copper.

"Investors are looking for a place to invest money that will hold its value," Bullock says. "Oil and gold have been the primary beneficiaries of that. Both are at record highs."

This huge wave of investments into oil has helped to spur the most recent run-up in prices. When the dollar declines in value, oil becomes cheaper relative to other currencies. That lures foreign investors into the futures markets, which pushes up prices.

"You've probably got $20 per barrel of price, as it stands today, that's attributable to speculative investments," Bullock says.

And that trend is likely to continue as long as investors see oil as an attractive commodity.

Global gas prices per gallon

Country	City	Regular	Country	City	Regular
Norway	Oslo	$ 8.42	South Africa	Johannesburg	$ 3.83
United Kingdom	London	8.13	Canada	Toronto	3.71
France	Paris	8.11	Cuba	Havana	3.42
Denmark	Copenhagen	7.70	Pakistan	Karachi	3.28
Germany	Berlin	7.66	United States	National average	3.22
Italy	Rome	7.58	Thailand	Bangkok	3.18
	Hong Kong	7.14	Argentina	Buenos Aires	2.54
South Korea	Seoul	6.63	China	Beijing	2.42
Brazil	São Paulo	5.93	Mexico	Mexico City	2.42
Japan	Tokyo	5.29	United Arab Emirates	Dubai City	1.70
Singapore	Singapore	5.24	Egypt	Cairo	0.89
Kenya	Nairobi	5.16*	Russia	Moscow	0.85
Chile	Santiago	4.80	Kuwait	Kuwait City	0.82
Australia	Sydney	4.76	Saudi Arabia	Riyadh	0.46
India	Mumbai	4.71	Iran	Tehran	0.41
Canada	Montreal	4.04	Venezuela	Caracas	0.12

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Source: Associates for International Research

Think we've got it bad?

The effect of higher oil prices is being felt around the world, especially in some countries in Europe, where drivers pay more than $8 for each gallon of regular gasoline.

Drivers in Paris, London and Oslo, Norway, pay the highest gasoline prices, according to a recent survey by Associates for International Research.

Parisians pay $8.11 for a gallon of regular gasoline, and Londoners pay $8.13. The highest gasoline prices are found in Oslo, where residents pay $8.42 for a gallon of regular gas.

In these cities and in much of Europe, gas taxes account for two-thirds or more of the price of gasoline. In the U.S., gasoline taxes vary by state but amount to about 20% of gas prices.

In other countries, such as oil-rich Saudi Arabia and Venezuela, retail gasoline prices are well under $1 per gallon. The reason? The governments heavily subsidize prices in each of these countries.

Drivers in the U.S. get no such help and feel each and every jump in gas prices right in the wallet.

"For most people, the miles they drive are necessary to get to and from work and for errands," AAA's Sundstrom says. "At the end of the day, people have to spend more on their day-to-day expenses. It makes them feel poorer."

Published March 13, 2008

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