Factor devaluation in gas price increases

John W. Pack, Las Vegas

Friday, July 25, 2008 | 2:02 a.m.

Pity the poor Europeans? No, pity us.

My wife and I just returned from a three-week trip to Europe. Taking advantage of Volvo’s generous overseas delivery program, we picked up a new car at its factory in Gothenburg, Sweden, and drove it nearly 2,000 miles, through six countries, to Italy.

Every time we filled up the tank we mourned the poor Europeans. Wow! They’re paying more than $9 a gallon.

After we got home, I did a little research, and now I’m thinking our pity was misdirected.

Throughout Europe, gas was selling for about 1.5 euros per liter. There are roughly 4 liters to a gallon, so the Europeans are paying about 6 euros per gallon. With the dollar trading at about 1.6 per euro, that translates to more than $9 a gallon.

But wait a minute. Before George W. Bush’s presidency, the euro was worth only about 80 cents. Thanks to our enormous trade imbalance and deficit spending, in part from funding a war with borrowed money, the world has lost faith in the greenback.

So our currency has halved in value over that time versus the euro. While we have seen the price of oil quadruple in terms of dollars, the Europeans have seen it barely double.

Thanks, Mr. Decider.