Oil Facts
With the latest outrage at the ever growing gas prices many have proposed the so called “windfall-profit” tax. Now my question is who do you think will end up paying this tax you or the corporations?
It’s a rhetorical question, the answer obviously is you.
The people that cry out for this tax fail to mention the break down of oil costs, which for a $3 a gallon price goes as follows:
It’s a rhetorical question, the answer obviously is you.
The people that cry out for this tax fail to mention the break down of oil costs, which for a $3 a gallon price goes as follows:
- Gasoline Retailer $.01 cents per gallon
- Oil Company $.08 cents per gallon
- Refining $.29 cents per gallon
- Marketing/Distribution $.32 cents per gallon
- Taxes $.59 cents per gallon
- Cost of crude $1.71 per gallon (delivered)
That means the corporations make 8 cents (2.5%) while the government makes 59 cents (20%). Now the oil corporations are not innocent or not responsible for growing prices, but they are not the biggest cause of this price increase.
The real solution would be to try to get the companies to cut their profits for a while and at the same time to suspend the tax on gas, but this will never happen. Just think about this statistic:
- Over the last 20 years, gasoline per gallon has increased roughly 60%, which equals an annual average increase of only 3%, which is less than the average rate of inflation. While during the same 20 year period however, the salary of every member of Congress has increased 250% or 12.5% per year. More than four times the average rate of inflation.
posted by Aleksandr at 9:53 PM
4 Comments:
I agree, the oil companies are not gouging (especially since gouging has a very narrow legal definition) but don't agree with suspending tax on it or tapping the stratigic reserve (and stopping flow into the reserve is the same as tapping it). Just let the market do its thing.
I think people are upset they didn't see this coming, even though it is easy to predict (BTW, my prediction of a $3.35 peak looks a bit high now). For planning purposes, take the price per barrel in July and devide by 20, this gives you the price of gas next may. Last July I saw $67 dollars a barrle, so I forcast $3.35. It isn't perfect, but will get you into the ballpark.
I agree with you that we should not touch the strategic reserve. After all that is for strategic purposes not price manipulation.
The tax on the other hand can be reduced, or they should stop taking tolls.
A windfall tax would not benefit gas buyers; it would just take more money to buy votes for the incumbents.
Give lots of incentives to search and drill instead - or as was suggested - lower the gas taxes.
This windfall tax idea sounds lame. We don't tax the pig farmers extra when porkbelly futures go through the roof.
We could cut all those tax breaks for oil companies that were added at beginning of the W period?
Cutting more taxes (like the gas tax) sounds dumb. The more we cut taxes the more we are paying China and Europe in interest on all the treasury notes we issue each time the prez spends money like a drunken sailor on shore leave.
Oil is a limited commodity found primarily. If the government wants to throw money somewhere why don't they throw it at renewable resources we can produce in our own country, like ethanol or oil extraction from coal. Sounds like an investment in the future.
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