This is one of the best articles I’ve seen in a while on why gas prices are so high … and it has nothing to do with those damn windbags screaming “windfall profits” in Washington.
For those of you that haven’t run a business, 8.5% is not a windfall profit (no matter how many dollars come into play, the percentage profit is the real number to examine) … it’s slightly above average. Even though Exxon pulled in “record profits” in dolalrs, they still only have an 8.5% profit margin. Top US banks make almost 20% profit every year, but I haven’t seen the congressional hearing on that marketplace yet.
Combined state & federal taxes on one gallon of gas are approximately 45 cents … yes, that’s more than the oil company gets to keep out of each gallon (and they still have to pay the tax bill at the end of the year).
Do I think we need to keep driving giant vehicles that poorly process dinosaur-based residue … no, I don’t. But I’m not ignorant enough to think overtaxing companies that provide energy services will solve the problem. That doesn’t mean oil companies can keep doing business as usual, but they won’t be able to give customers an alternative to petroleum if they can’t use profits to fund research.
Despite my love for cars that get over 30 MPG (like my trusty 1998 Neon), my next car will have to be a large truck (spouse’s horse habit). It will be diesel, so it will be able to burn biodiesel (even if I have to drive to Athens to get the stuff). I’m facing the fact that nobody in the US has large enough spherical body parts to actually drill new oil reserves in Alaska, Colorado or Florida (where we know the oil is) or put up with the flack when they want to build a new domestic refinery.
If the US is content with depending on countries that hate us for fuel, I’m going to have to start burning grease in my car to get to work. Maybe that’s what it takes.
Oh, one more economics lesson: companies don’t pay taxes … they pass the costs of taxes on to their end customer, serving as a tax collector for the government. If Congress adds another tax to the oil companies, gas prices will go up more to compensate.
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