Tuesday, April 25, 2006

The Hidden Evil of Gas Prices

Found this 2001 Senate report that explains exactly how our gas prices are set. Interesting that many of the same issues that were discussed in detail in this report are still some of the same problems we encounter today. But whether or not you like paying $3+ a gallon for good old 87 octane of unleaded juice, the truth behind the numbers is we are exceeding our supply with an extraordinary demand. So as much as we love to blame "big oil" for our problems, they really aren't the issue here - or at least the one most Americans should really focus on.

The issue we should focus on is the hypocrisy of our government who pushes legislation such as the Clean Air Act and other environmentally-focused legislation that do little more than make production costs go up and the average citizen shell out more for their tank of gas. What we should focus on is the excessive amount of taxes that are pushed onto each gallon you pump into your car. In Maryland (my home state) we pay just over 40 cents a gallon just in taxes. California takes the pie with 50 cents a gallon. Here check your state.

Quick math here...Depending on the price of gas in your state, that's a tax of about 20% of the cost of a product. Tad high considering most sales taxes on other products are first of all, local (gas taxes also include federal taxes) and usually in the range of nothing to 8%.

Our politicians over in Washington should can the big oil rhetoric, control their spending, and cut taxes on our fuels rather than start another committee to investigate a problem that already has a clear solution.


Anonymous Chuck said...

I've always perceived one of the underlying themes of Scaggsville to be "Personal Responsibility." So if we're going to focus on something, wouldn't it be more effective if we each focus on ways that we can reduce our personal consumption of oil, thus simultaneously bringing demand closer to supply, and forcing Big Government to adjust its spending by giving it less to spend?

It just seems to me that you're proposing we shift the finger-pointing from Big Oil to Evil Taxes, rather than suggesting we have the balls to point fingers at our own ridiculous consumption.

11:27 PM  
Blogger Chowda said...

Sounds good in fairy tale land where hybrids run off of water or if you want to ride a bike to work, but it's slightly more realistic, especially in the short term, to cut or remove taxes on the one thing that Americans need most and will need in the very near future.

10:16 AM  
Blogger The Management said...

I'm all about that Chuck... If you don't like like gas prices, do something about it. Everyone should. Public Transportaion and fuel alternatives are two great ways to limit demand. (though somethings are out of our control like OPEC production and Chinese consumption)

Anyway, I agree with you completely. I personally don't stress too much over gas prices. When I can, I just don't drive as much.

The point about Evil Oil is that these are companies just doing business. There is nothing hidden there. Taxes however, is something that we as citizens have direct control over (through the democratic election system... in theory).

Oil companies (produces not retailers) make about 9 cents profit per gallon of gas. The government makes an average of 40 cents per gallon in taxes.

I just don't like finger pointing by the Government that ends in more legislation that in the end hurts everyone.


2:26 PM  

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