The weird pricing of consumer goods in comparison with oil

The prize puzzle

Have you ever wondered why soft drinks, such as Coca-Cola or Fanta, seem to carry a hefty price tag? As I pondered this question, I decided to delve deeper into the world of consumer pricing. What I found was truly surprising and thought-provoking.

Petrol vs soft drinks

In the Netherlands, we are fortunate to have access to affordable and clean tap water (which arguably is even cleaner than bottled water) is about 1 cent per 7 liters! To put this in perspective, let’s compare it to another vital fluid: oil. The startling revelation was that a bottle of Coca-Cola, priced at €1.99, is more expensive than petrol RON 95 (E10), which costs €1.97¹. Yes, you read that correctly; oil is cheaper than branded soft drinks!

The luxury factor

Perhaps this pricing paradox can be attributed to human desires for luxury and the willingness to pay more for things we like or believe we need. I am not one to advocate for consuming less, as I, too, enjoy the occasional soft drink or beer. However, it is truly remarkable to contemplate how something extracted from 2-6 km beneath the Earth’s crust can be priced similarly to flavored water. Moreover, the comparison extends beyond soft drinks. Here in the Netherlands a bottle of water costs (€1.05), this is more expensive than petrol in the US (€1,00)¹!

Such a realization is baffling. No, I am not comparing the oil rich middle east countries that have challenges getting fresh purified water. No, I both are two rich western countries. Remarkable. How pricing of consumer goods can be. Instead, you could also say how cheap oil is.

Environmental consideration

Perhaps it is time to consider the environmental impact of our choices. While oil might seem cheap in terms of monetary value, we must also account for its environmental cost. This includes factors like carbon emissions, environmental degradation, and the depletion of natural resources. Should there be an environmental tax on oil to address these issues? Such a discussion is complex, but it demands our attention as we contemplate the future of our planet and the cost of our lifestyles.

A pricing paradox

As we reflect on the weird pricing of consumer goods in comparison with oil, it becomes apparent that there’s more to pricing than meets the eye. The luxury factor and environmental considerations play crucial roles in shaping the costs we see on the price tags. We must be mindful of the choices we make and the impact they have on our world.

Next time you reach for that soft drink or fill up your car with petrol, take a moment to contemplate the story behind the price. Only then can we begin to shape a future where luxuries are sustainable and our choices reflect a deeper understanding of their true costs.

1. At the time of writing 29-07-2023. ↩ ↩²