According to a CNN.Money survey, 78% of American said they figured gasoline would move to an average of $5 per gallon. source

That story was released on May 5, 2008 when the average gas price had hit $3.61 in the United States and was on the verge of hitting $4 dollars a gallon. Many Americans quickly found themselves in a quagmire about holding on to their gas guzzling SUV, or thinking about making a change to a more fuel efficient car. In that period of time almost three years ago in the US, we saw a massive purchase of electric vehicles, and the beginning of a conscious change about how Americans viewed their automobile purchases. Now, just a few years later you hardly hear anyone talk about those high priced gas days. American is back to its normal routine having dodged that high priced gas bullet.

Not for long, if you want my prediction. If you look at the top 25 cities for gas prices around the world, New York City only ranks 24th at $2.85 a gallon. Many countries impose large taxes on gasoline, and we are one of the few countries that do not have a major gas tax at the pump.

Here’s what a gallon of gas goes for in the 34 cities around the world that AIRINC surveyed:

(As of June 30, 2010)

1. Asmara, Eritrea | $9.59
2. Oslo, Norway | $7.41
3. Copenhagen, Denmark | $6.89
4. Hong Kong | $6.87
5. Berlin, Germany, and Monaco, Monte Carlo | $6.82
6. London, U.K. | $6.60
7. Rome, Italy | $6.44
8. Paris, France | $6.04
9. Sao Paulo, Brazil | $5.69
10. Seoul, Korea | $5.55
11. Tokyo, Japan | $5.40
12. Singapore, Singapore | $4.81
13. Nairobi, Kenya | $4.31
14. Mumbai, India | $4.25
15. Santiago, Chile | $4.18
16. Johannesburg, South Africa | $4.05
17. Sydney, Australia | $3.84
18. Toronto, Canada | $3.81
19. Beijing, China | $3.71
20. Bangkok, Thailand | $3.64
21. Buenos Aires, Argentina | $3.58
22. Havana, Cuba | $3.64
23. Karachi, Pakistan | $3.02
24. New York, U.S. | $2.85
25. Moscow, Russia | $2.80

Source: www.dailyfinance.com

If nobody remembered, the United States is in a serious heap of debt. It is not the kind of debt we work our way out of without some radical changes to increase/accelerate revenue. There is no chance of reducing the debt substantially by cutting our overhead. While the focus in the news has been largely around things like income and estate tax, I think one of the major changes we will see over the next few years is an increased gasoline tax to get us to $5 a gallon.

Americans largely don’t change behavior until the pain of where we are now is worse than the pain of where we have to go to in the future. If there isn’t major pain or eternal convenience, we generally don’t change our behavior. This has been true in our history, and it will be true with how we change what we drive on the road as well. Car manufacturers can come out with all sorts of electric, hybrid, and other types of car designs, but no real significant change of any scale will happen until we have a rise of prices at the pumps and it hits us in our wallet. While I don’t look forward to seeing gas at $5 a gallon, the reality is we have to create revenue somewhere and this could be strategy to force change to happen in the country. Change can be painful as we saw just a few years ago when gas prices approached $4 per gallon.

If you think my prediction sounds crazy, just ask the citizens that live in Hong Kong, London, or Paris and they will tell you $5 for a tank of gas is a bargain!

oXYGen Financial, Inc. co-CEO Ted Jenkin  is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.

Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
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