Gas prices in comparison

Here in Concepcion, Chile, the gas prices listed on the gas stations show 717 pesos. Using an online currency converter, this turns out to be $1.51. Not too bad, eh, especially considering that gas prices in Ann Arbor, MI is in the range of $3.36-$3.59.

This seems to make such stories as "A gas station sign of the times" worth merit: gas prices have gone up $0.15-$0.25 in two weeks, caused mostly be increases in the price of oil, cause mostly by the fighting in Libya. However, taking the price of ~$3.47 (the midpoint of the price range) in Ann Arbor as a base price, and comparing it to the $1.51 in Concepcion, Chile, is such a rise really such a financial hardship?

Well, looking at Purchasing Power Parity (PPP), using various comparative national metrics between the US and Chile (with the understanding that Ann Arbor and Concepcion aren't necessarily representative of the national metrics, but let's continue):

IMF 2010 statistics:
USA: $47,123
Chile: $14,982

World Bank 2009 statistics:
USA: $46,436
Chile: $14,331

CIA World Factbook 2010 statistics:
USA: $47,400
Chile: $15,500

OECD 2009 statistics:
USA: $45,674
Chile: $14,346

In other words, the relative PPP of the United States is 3.15 times larger than in Chile. If gasoline prices matched this relative PPP difference, then taking the midpoint Ann Arbor price of $3.47, then the relative price in Concepcion, should be around $1.10, as opposed to the standing price difference of a 2.30 times difference.

HOWEVER, the price of $1.51 for gasoline in Concepcion is dollars per liter, while the price of $3.47 is dollars per gallon. Translating the Chilean prices into dollars per gallon, one gets a Chilean gasoline price of $5.72/gallon... which is 1.64 times larger than the prices in Ann Arbor. In other words, in a country with a PPP that is slightly less than 1/3 that of the United States, the actual gasoline prices are 1.64 times larger than in the United States.

Looking at prices for petrol (aka "gasoline") in my alma mater, St Andrews, UK, one finds the price ranging from 126.90p to 131.90p, and an average price of 128.11p. Doing the conversions: 128.11p/liter = $2.09/liter = $7.90/gallon (i.e., TWICE the price in Ann Arbor).

The photo in the story "A gas station sign of the times" does show a sign of the times, but it is only troublesome when one thinks about how the United States has become so dependent upon gasoline for everything. People live in such a pattern that many have to drive to work, have to drive to shop, have to drive most places they wish to go, even if most daily car trips are less than 2 miles (i.e., a 30 min walk or 12 minute bike ride).