“Somehow we have to figure out how to boost the price of gasoline to the levels of Europe,” said Dr. Steven Chu, director of the Lawrence National Laboratory, in an interview with the Wall Street Journal in September 2008. We ended that year with an average U.S. retail price of $1.67 for all grades of gasoline on December 31, 2008.
In contrast, the price of a gallon of regular gasoline that summer was $6.78 in Greece, $8.24 in Italy, and $9.39 in the Netherlands, according to Eurostat, the statistical office of the European Union.
Dr. Chu’s proposal to hike gas prices in the United States to European levels was published in the Wall Street Journal on December 12, 2008. Six weeks later, on January 21, 2009, he was sworn into office as President Obama’s Secretary of Energy.
The difference between the Dutch gasoline price of $9.39 and the U.S. price of $1.67 is $7.72 per gallon. The U.S. Energy Information Administration reports that the average U.S. household purchases 1,100 gallons of gasoline per year. That means a $7.72 price increase per gallon would cost the average American family an extra $8,492 per year.
For the middle fifth of the U.S. population in terms of income, the $8,492 price hike per year would cut their after-tax income by an average of 15 percent.
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Professor Ralph R. Reiland (photo)