Houston Community News >> Gas Prices

6/4/2008-- Half the world's population benefits from energy subsidies, which translates into a quarter of the world's gasoline production, they say in a note to clients. Though three-quarters of the world's gasoline consumption is taxed, those taxes vary hugely around the world, resulting in a spread of prices at the pump from five cents a liter in Venezuela to $2.70 a liter in Turkey. (It is about $1 a liter in the U.S.)

Such subsidies distort the market, by preventing rising prices from lowering world demand to the extent that the textbooks say they should. While oil prices remain fundamentally driven by supply and demand, they are not absolutely so. Demand is overshooting, so prices are, too.

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