Americans Hit Hardest by War-Driven Oil Price Surge

Americans are paying the biggest portion of global energy price inflation resulting from the war in the Middle East, a Finnish energy and climate outlet has reported. Estimating the global total in fuel inflation at $468 billion, the Centre for Research on Energy and Clean Air said the U.S. portion of this total stood at $160 billion.On a per-capita basis, Americans are also paying the most, CREA also said, estimating their additional costs at $471 per person, while the global total has been estimated at an average of $60. The fact that this is an average per-capita additional fuel cost could be misleading: comparing a global average to a national average is not, strictly speaking, a fair comparison.What is more, CREA is comparing fuel costs specifically, but the war between the United States, Israel, and Iran has also affected electricity costs—and other countries have fared inarguably worse than the U.S. because of their reliance on imported gas and coal, while the U.S. benefits from its position as the world’s largest natural gas producer.Japan, for instance, one of the world’s most import-dependent nations in energy, has seen its electricity prices soar as a result of the war, and this month they hit a record high across the country because the government cut subsidies as it could no longer keep paying them. European countries have also suffered a serious blow, with fuel prices across the European Union significantly higher than those in the United States. Germans, for example, are paying an average 2.30 euros per liter of diesel. This translates into $9.73 per gallon—and there are a lot more diesel cars of European roads than there are in the United States. The Finnish Centre for Research on Energy and Clean Air blamed the high cost for Americans on their driving habit. “This [the financial hit] is because of America’s exceptional oil consumption due to high reliance on inefficient, oil-burning private vehicles and a slow transition away from petrol and diesel – leaving households, truckers and farmers particularly exposed to global fuel market shocks,” the outlet wrote.Again, we have European countries as a counterpoint. EV sales in Europe have been surging this year in response to the fuel price surge. This has done absolutely nothing for the affordability of any energy in European countries, as suggested by the spread of protests that many attribute to the cost of living becoming too high. In other words, an increased reliance on electricity for transport has not brought bills down for any European country that has pursued it.The EU’s solar industry lobby group claimed earlier this year the bloc had saved some 37.4 billion euros in energy costs thanks to solar this year. This is equivalent to $41.76 billion and is based on estimates that EU countries would have had to import more natural gas to generate electricity had it not had that solar capacity. In the context of struggling solar operators due to excess competition and negative wholesale electricity prices, one could argue SolarEurope’s claim of savings may not be telling the whole story.Fuel prices in the United States are still significantly higher than they were this time last year. The country’s status as the largest oil and gas producer is no help because the U.S. is also the world’s biggest oil and gas exporter, and exports affect prices at home. However, arguing that Americans are paying the most for energy because of the war omits important considerations in other parts of the world that are not North America, such as Europe and Asia—including the world’s number-one energy transition investor and biggest EV market, China.By Irina Slav for Oilprice.comMore Top Reads From Oilprice.comRas Tanura Fire Follows Attacks on Aramco Offices and Near Shaybah FieldInvestors From 119 Countries Pile Into Dangote’s Record Refinery IPOOPEC+ Set to Keep Oil Quotas Unchanged