The truth is that we are only now setting records for gas prices. In 1918, using 2008 dollars, gas cost $3.50 a gallon. In 1981 it was $3.17. In fact, it wasn't until around 1998 that the price dropped below $1.50, and then only for a year or so. While we tend to look at actual numbers -- I remember when gasoline cost $.50 a gallon -- but in terms of a consistent measure of values, it's not quite that easy ... or clear.
This government site explains the cost of gasoline in terms of its individual components. For instance, in 2007, 58% of what you were paying for gasoline was paying for the crude oil. Ten percent went toward distribution and marketing, 15% was taxes, and 17% was refining costs and profits. Did you get that? Only 17% went toward refining and profit. Our perception is that it's likely something closer to 50% of what we pay is going into the pockets of the oil companies, but the truth is far from it. In fact, if you subtract out the cost of refining, the oil companies are making less than anyone in that chain.
How about this statistic? Current rate of usage in the U.S. is 380 million gallons of gasoline ... a day. Got that? We're using up almost 400 million gallons a day. Now, if, as the oil companies claim, they are making $.04 per gallon, when you calculate that amount for that many gallons for a year, you're looking at $5.55 billion. That is a lot of money, but it's not a big profit margin. How many people do you know will produce something on which they make 4 cents each? And consider the next logical thought. If Congress decided to steal -- sorry, appropriate that money as windfall profits tax, what do you get back? That's right; nothing. But if the oil companies (for whatever stupid reason) decided to give up all their profits for us, you would be looking at gas at 4 cents a gallon cheaper. That ought to make you happy ... right? Me either.
None of us like the rise in gasoline prices. None of us like to hear of oil companies making large profits when many of us feel like we're working hard to scrape together enough money to buy a loaf of bread. None of us like to think that we're getting ripped off. How much, though, is perception -- faulty perception? I'm thinking that we've all bought a piece of the lie. Government will take care of us. The rich are evil. We deserve better. The truth is that government will not fix our problems, people with money are not the problem, and we really don't want what we really deserve.
4 comments:
$5.55 bilion? I'm not so sure of that.
Royal Dutch Shell, by itself, reported:
For the year, profit was a record $31.3 billion, while sales rose 12 percent, to $356 billion.
The rich might not be evil per se, but they sure didn't get rich by being Mother Teresa. :-)
I will always be suspicious of big corporations and big government, "Hudge" and "Gudge" as Chesterton named them, respectively. The name of the game for both groups is to extract as much wealth as possible from "Jones". And you know who Jones is, you and I.
Take a look at this site called GasBankUSA, located at http://www.gasbankusa.com. They talk about fixed price gasoline. Interesting...
Jim,
The $5.5 billion was simply the math from $.04/gal. through 380 million gallons a day. And the 380 million gallons a day is in the U.S. only. If you add in the gas sold by American companies to foreign markets (which would increase the 380 million gallons) and suspect the claim that they only make $.04/gal so that they make something closer to, say, $.10/gal, the numbers go way up. It still doesn't add up to anything I can use at the pump.
The problem with the "the rich are evil" mentality is that for the most part those evil rich folks are the one paying the salaries of us poor(er) folk as well as 85% of the taxes. Eliminate the rich (we would call that "socialism"), and who will pay for the majority of our jobs and the majority of taxes?
Tony, interesting site. I'll have to investigate further.
One problem I see with GasBank is that, if history is any indication, today's prices will fall. The main factors that keep it high are demand, which has already peaked, decreased production and market jitters, which is tied to politics, and the legal speculation on the futures market.
I do not believe the "rich are evil". I know that the rich are powerful, and that power corrupts, or to be more precise, the temptation is there.
Us Republicans need to stop putting a blind eye to the goings-on in large, powerful corporations. Big government and big business go hand in hand by the way. We must be wary of both, and that goes for both parties.
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