When you think about rising gas prices the first thing to understand is that the people we expect to solve this problem – the folks in Washington – are the very people who do not want it solved.
To ask politicians to do something about the skyrocketing cost of gasoline at the pump is like asking Osama bin Laden to do something to prevent terrorism. Neither can provide solutions because they are both responsible for the problem to begin with.
How many years has it been since we’ve been living with an energy crisis? Why hasn’t it been solved?
It’s because politicians are always looking for some issue to exploit, and when they have an issue dealing with a matter that hits everyone in the pocketbook they would much prefer to have the problem always on tap so they can demagogue it at election time.
Why do you think that the Democrats and their enviro-crazy allies have prevented us from drilling in the ANWAR area of Alaska, one of the most desolate places on the face of the earth which they picture as an unspoiled paradise, or looking for oil offshore in Florida and California? Why have they made it all but impossible to build the refineries needed to produce gasoline and heating oil? They don’t want to lose an issue they can continue to exploit, and will until we are all riding bicycles.
The current gas hikes are perfect fodder for demagoguery – the oil industry’s complicated pricing structures challenge the ability of anybody but the most sophisticated insider to grasp the economics of the oil business. A politician can easily distort the facts surrounding a price increase, blaming it on the oil companies, and people will fall in line and start demanding that the industry be punished. It’s perfect when you are a Democrat running for office when the GOP is in power – you blame it on the Republicans for letting the evil oil barons line their pockets with excessive profits at the expense of the average American.
This is what we are seeing now. If you listen to the likes of the odious Sen. Charles Schumer, one way to reduce the price of gas at the pump is to tax the living daylights out of the oil companies. He doesn’t want you to stop and think that if you raise the industry’s cost of doing business by increasing their tax burden, the industry will have to raise the cost of their product – gasoline – at the pump to pay the higher taxes.
Conscienceless demagogues like Schumer will have quick answer to that problem – simply get the government to fix the price of gas at the pump, preventing the oil companies from coping with the tax increases and driving them toward economic instability and bankruptcy.
For Marxists such as Schumer and company, that’s the end result they lust after – the opportunity to nationalize the oil industry and allow government to take over and run the industry – presumably with the same efficiency it dealt with the after-effects of Hurricane Katrina.
If you take a close look at the cost of a gallon of gasoline you will discover that nationwide the federal and state governments make an average of 45 to 46 cents per gallon. In New York a gallon of gas is taxed 62 cents.
In the face of that, Exxon, for example, made a profit of 9.8 cents a gallon. The reason why they made an $8 billion profit in the first quarter was simply because people are buying more of their product. They are still making the same 9.8 cents whether they sell 100 gallons or 100 million gallons or 2 billion gallons. They are still making the same percentage which compared to the government’s take of an average 46 cents is modest.
According to the Tax Foundation, over the past 25 years – in inflation adjusted dollars – oil and gas companies have paid in royalties and state and federal taxes $2.2 trillion dollars. At the same time they have made a little over $630 billion dollars in profits. So their taxes and royalties are three times greater than their profits.
The real question, Chuck Schumer, is who is gouging whom?
©2006 Mike Reagan. If you’re not a paying subscriber to our service, you must contact us to print or web post this column. Mike’s column is distributed exclusively by: Cagle Cartoons, Inc. Cari Dawson Bartley email Cari@cagle.com, (800) 696-7561.