By Frank Holmes
The second visual shows the price of gas on a global scale. Using data from mytravelcost.com, the infographic illustrates two concepts. The dollar figure represents the cost of a gallon of gas in several countries. Whereas the price of a gallon of gas in the U.S. seems high at $3.75, in every other country shown, except Russia, it’s much higher. In China, it is $4.88, in Colombia, drivers pay $6.17 and in Hong Kong, a gallon of gas costs $8.36!
Through incentives or taxes, government policies have significant effects on directing its countries’ traffic to foot, car, bus or train. Consider public transportation, which is considerably cheaper in other countries compared to the U.S. According to Deutsche Bank, the minimum fare cost in New York City is $2.50. In Hong Kong, it’ll cost a fraction of that–only $0.44. In China, the minimum fare is $0.30. The only countries on Deutsche Bank’s survey with more expensive public transportation than the U.S. is in Canada (Toronto’s minimum fare is $2.62), the U.K. ($2.90), and Australia, where Melbourne residents pay a whopping $3.63! Government policies also affect the use of global resources. When a country implements infrastructure plans devoted to the building of highways or high-speed rail, these projects translate to a future consumption of global resources. GE highlighted how numerous emerging markets are pulling out their checkbooks to spend $4 trillion over the next 2 to 20 years on infrastructure projects dedicated to increasing standards of living and reducing wealth disparity.
You can’t underestimate the pursuit of the American Dream. Compared to the U.S., in China, incomes are lower, public transportation is cheaper and gasoline is more expensive. Still, Chinese consumers consider automobiles as status symbols. We’ve seen the car culture in China grow considerably over the past decade, and ISI has projected that growth to continue.
About The Author – Frank Holmes is CEO, Chief Investment Officer of U.S. Global Investors, an investment management firm specializing in commodities and emerging markets based in San Antonio, Texas. Frank is also the co-author of The Goldwatcher.
The views and opinions expressed herein are the author’s own, and do not necessarily reflect those of EconMatters.
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