Several European countries pay north of $7 or $8 per gallon, including Germany, France, Italy, Spain and the United Kingdom. At the top of the expensive list is Hong Kong, where prices per gallon are higher than $11, followed by Norway at more than $10.
“European energy prices of all kinds are higher than what consumers in the U.S. pay,” Peter McNally, Global Sector Lead for Industrials, Materials and Energy at Third Bridge told Yahoo Finance. “This was the case before 2022, but it has only become wider since.”
McNally explained the primary reason for the discrepancy is “the difference in U.S. and European fuel prices is the tax rates — Europe has significantly higher taxes than in the U.S..”
Another reason for higher gasoline or petrol prices in Europe is because the continue generally uses brent crude (BZ=F) as a feedstock, which trades at a premium compared to the U.S.’s benchmark of West Texas Intermediate (CL=F).
“Not only do refiners in Europe pay that premium for crude oil feedstock,” McNally noted, “but they generally have higher operating costs than the refineries in the U.S.”
The countries which pay the least for gasoline are oil producers Venezuela, Iran and Libya, A gallon of driving fuel in those places costs between 8 cents and 20 cents per gallon — cheaper than bottled water in the U.S.
‘Rising interest rates around the world is going to hit the consumer’s pocketbook’
As central banks around the world continue to fight inflation by raising interest rates, demand destruction for gasoline and other refined products will likely follow.
“Rising interest rates around the world is going to hit the consumer’s pocketbook,” Andy Lipow of Lipow Oil Associates wrote in a note to investors. “I think it will result in additional demand destruction and lower prices.”
Relief for Americans may be coming: The national average for gasoline now sits a $5/gallon, down 2 pennies from a record high earlier this week, according to AAA.
“I am forecasting that gasoline prices will drop 5 cents per gallon in the next 7 days to $4.95 and with any luck another 5 to 10 cents after that,” Lipow said. “Gasoline futures prices are well off their highs.”
The same may not be true for diesel prices, which continue to see record highs.
“Diesel is the refined product that is in the shortest supply around the world,” Lipow noted.
Ines is a markets reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
This story originally Appeared on Yahoo