“Since the general civilization of mankind, I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpation” -James Madison

Tuesday, May 02, 2006

Who is "gouging" whom?

JB Williams has created an amazing essay breaking down the economics of oil and gas. Below is a germane example.

Where Does All the Money Go?

Based upon a $3.00 gallon of gasoline, the average break-down is as follows:

Gasoline Retailer--------------->$0.01 per gallon
Oil Company-------------------->$0.08 per gallon
Refining------------------------->$0.29 per gallon
Marketing/Distribution--------->$0.32 per gallon
Taxes---------------------------->$0.59 per gallon
Cost of crude------------------>$1.71 per gallon (delivered)

Who is gouging who?

So the manager of the local Quiktrip gets a PENNY off your 3 bucks.
The evil oil company gets 8 PENNIES off your 3 bucks.
Uncle Sam takes 59 cents -- this is just under SEVEN TIMES what the producers make.
Refining and Distribution get 61 cents -- so Uncle Sam gets the same amount as the cost of running refineries and dstribution trucks. For doing what, exactly?
And of course the crude....our Arab and Venezuelan friends get $1.71 -- nearly 3x what Uncle Same gets, and NINETEEN TIMES what the capitalists make.

The oil companies are not the problem. Let them have their profit -- They Have Earned It.

My state, Georgia, is reasonable about this stuff. Last year they cut the state gas tax for 30 days. This year they are considering waiving it for 60 days. It will take that sort of leadership to have government effectively combat prices in the immediate short term.

Long-term? Drill. Drill. Drill. Build more refineries. Congress has got to loosen the death grip the enviromarxists have around their throats and wallets. The central reasons for the cost of gas (which are demonstrated in the above-mentioned article to be not really that high) are due to poor decision-making and asinine policy on the part of domestic production management.

Congress: Waive or lower the taxes. Allow drilling in ANWR and our continental shelf. Waive the crushing environmental bulwark against building and upgrading refineries. Ditto the nuclear power plants.

Until these things happen, oil prices and gas prices will remain high and the demagogic congressional elite will point the blame at the only ones who can't do much more than they already are -- the oil companies.

As mentioned in my article yesterday, just imagine if one of these companies says, "I've got enough money. Store's closed. Good Luck....."


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