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Americans are not happy about the price of petrol and who can blame them? A year ago, petrol averaged $1

Americans are not happy about the price of petrol and who can blame them? A year ago, petrol averaged $1.54 per US gallon, the equivalent of about €0.40/litre. A year later it's 23 per cent higher at $2.01 or €0.52/litre.

That's a substantial jump and the knock-on effect has been reduced demand for big SUVs such as the Hummer H2, a clamber for petrol/electric hybrids and an increasingly disgruntled public. Paying that much for petrol is akin to being charged for breathing - Americans can't survive without their cars.

Life in America is built entirely around the automobile. The landscape is dominated by the roads, bridges and car parks needed to accommodate the big vehicles to which its citizens have become so accustomed.

Bus-lanes, cycle-paths and even footpaths can sometimes be hard to find because it's expected that people will take their car absolutely everywhere. Americans drive 2.6 trillion miles every year - that's equal to driving to the sun and back 14,000 times - it also equals a lot of oil.

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An increase of a few cents on the price of crude has a massive impact on the US economy when you consider they use close to 20 million barrels of the stuff every day.

Unfortunately for America, it's much worse than that. The rate of economic and industrial growth in China is such that it will overtake the US as the world's single biggest car market before the end of the decade. India, with its massive population, is also just aching for a set of wheels.

The result is an ever-rising demand for oil. This demand is driving prices up and the impact is already seen: Saudi Arabia increased oil output by half-a-million barrels a day to offset the post-invasion drop in Iraqi production, but the extra oil was simply gobbled up by the Asian market.

This might explain why crude oil is now around $50 a barrel - twice the price it was two years ago.

If the trend continues it could have a very severe impact on the US economy. American dependence on foreign oil means prices of just about everything would soar overnight, while the average American, with no other means of getting from A to B, would have to spend more on petrol leaving them even less money in their pocket to spend.

On top of all that, the staple of the American motor industry, the truck and SUV, would practically disappear as people defect to smaller, more efficient cars. This, in turn, would lead to a sharp decline in the income of Detroit's Big Three car-makers, resulting in job losses across the country.

This is only the tip of the melting polar icecap and yet the US government does nothing. The obvious, immediate solution is to tax people into smaller, more efficient cars but in American politics there are two taboos - gay marriage and tax increases.

Fuel-sipping diesels would be another simple way of reducing America's dependence on oil but diesel is actually more expensive than petrol in many places and, in five states, car makers aren't even allowed sell diesel cars.

Europe, on the other hand, may not suffer as badly because the various governments can soak up the increase in oil prices to reduce their economic impact. For the US, this isn't possible because taxes are so low.

In the US there's a federal tax of 18.4 cents per gallon (less than €0.04 per litre) as well as a state tax, which varies from 8 cents to over 31 cents per gallon. On average, combined state and federal tax equates to about 42 cents per gallon - or €0.11 per litre.

Compare that to two of Europe's big economies - in Britain tax per litre is €0.74, while Germany takes €0.62 per litre. If needs be, those governments can cut fuel taxes to stabilise prices and stave off recession. There's also sufficient public transport to offer an alternative means of getting about, further deflecting the impact of higher oil prices. Again, here the US is at a loss.

Diesel? While the latest diesel technology gives European buyers a viable means of saving fuel, American car-makers have instead wasted millions on hybrids that offer questionable real-world savings and unknown long-term reliability.

Surprisingly, Ireland has one of the lowest rates of fuel tax in the EU at just over €0.40 per litre. This gives the government less of a cushion to soak up fluctuating oil prices.

Having a relatively small economy and a large dependence on the US for investment and jobs doesn't help matters, nor does our dismal public transport system. And, since the Irish already drive more tiny-engined cars than any other western nation, it's difficult to see how we can be any more fuel-efficient unless we take to the High Nellie again. Perhaps we should follow America's example. Let's just ignore the problem and hope it will miraculously go away.