Gas Price: Who’s Gouging Who?
April 13th, 2008I got an email this morning from a fellow in Reno demanding fast government action on gas prices:
The prices at the pumps are unbelievable. What has happened? Oil companies are reporting record profits, and making lame excuses but the bottom line is-THESE PRICES WILL BRING AMERICA TO ITS’ FINANCIAL KNEES. Something has to be done, and at the average citizen (aka the backs on which the oil companies are climbing to be able to record those record profits) level all we can do is pay. Yes, I know we can drive less, drive slower etc but the fact is we have never seen prices like this. If we choose to drive less it will mean we are spending less at the stores, tourist attractions, movies, and travel. The prices are escalating almost daily, definitely weekly, and there seems to be no stopping their ascent. Our government must do something, and it has to be done immediately. As you are well aware every level of our economy is being affected.
My last fill-up was pretty painful, I have to admit.
So I started my fact-finding at gasbuddy.com, a great site where people from all over participate by entering into a database what they paid at the pump the last time they went. Here’s what gasbuddy says about Senate District 6:
| Gasbuddy Gas Prices provided by GasBuddy.com |
| Click here to add this map to your website. |
Gasbuddy also offers a national map, where you can zoom in on your neighborhood to find the least expensive gas station.
One of the “gougers” in the gasoline supply chain is government. Here’s a map that compares gas tax amounts by state, showing that Nevada is a top-ten state for gas tax. At last, a state ranking placement that Dina Titus can be proud of!
You can click the map for a full report comparing gas taxes by state.
I also found this webpage from the US Department of Energy, which includes some important information even if it is a few years old: most US gasoline is produced along the gulf coast, so prices are historically lower there and higher the farther away you get, and most of the price of a gallon of gas goes for the crude oil consumed to create it.
Finally, I found this page which compares gas prices in seven different countries around the world, most of which have a more fascist/socialist system of government than the United States, and all of which have more expensive gasoline (and have had all this decade).
All this leaves me thinking that human beings who look to their governments to keep gas prices low will be very, very disappointed.
You?
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April 13th, 2008 at 4:13 pm
If the Big Oil firms will not build any new refineries and will not reveal the truth about the HUGE oil find in North Dakota it may be time to place them under the control of the Public Utilities Commission (PUC).
Gasoline used to be a luxury and considered as an ‘extra’ expense. Now that almost everyone here in the U.S.A. must purchase gasoline as their means of going to work,actually working, delivering necessary goods, going to grocery stores, and doings lifes works (shopping, medical visits, etc.) .
Gasoline has become just like electricity, gas and household water. It is a necessity of life.
The Big Oil firms are taking this to their advantage and, in their evident thoughts, to hell with our citizens. Investors are the only people Big Oil seeks to placate and this is not right for the simple reason, it has become a necessitry, no longer a luxury!
April 19th, 2008 at 1:22 am
The following are excerpts from an article published in 2000 by a group called Weathervane. According to the article Government revenue from taxation on gasoline is double the “obscene” profits of the gasoline producers.
“Federal and state taxes on gasoline production and imports have been climbing steadily since the late 1970s and now total roughly $58.4 billion. Due in part to substantial hikes in the federal gasoline excise tax in 1983, 1990, and 1993, annual tax revenues have continued to grow. Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.”
Also reported by Weathervane is the following:
A Weathervane Commentary
by Ian Parry September 15, 2000
The immediate cause of the fuel price increase is the trebling of world oil prices over the last two years as the world economic boom has raised the global demand for oil. But petrol prices are also high in Britain because the government now imposes a higher rate of excise tax on petrol than in any other country. The current duty per litre is 50 pence ($3.40 per gallon), and even adjusting for inflation this is 75% higher than the 1990 level. The tax constitutes 60% of the price of fuel, which now stands at about 83 pence per litre ($5.65 per gallon, more than three times the U.S. price).
As one can see by these articles the increasing cost of gasoline is more a result of increased taxation than increasing profits. The more relevant increase in cost stems from the increase in price of crude oil which is driven by the Central Banks (AKA Federal Reserve - a private company) devaluation of the dollar.
April 19th, 2008 at 7:59 am
Maybe it is time for Gas Rationing!
Oil company leadership claims the continual escalation of prices is being caused by Wall Street investors and speculators. It seems though the Oil Companies are the benefactors of the rising prices. It would seem logical the CEOs and big oil company managers would place these speculators on their payrolls for no other reason than to keep pushing prices up resulting in the record breaking profits for oil companies. That may sound like racketeering, and it probably is!
Two things seem to be in order to help check the growing use of gasoline; first - better traffic control; less traffic lights and better timing of the lights. I use almost as much gas idling at long traffic lights as I do driving to work. Second - maybe it is time to look again at gas rationing! people “cruzing” the streets, people running to the store for a gallon of milk, neighbors driving to the same place of employment; so much wasted gas. With rationing we could cause people to be more aware of the need to conserve. There are many people who have need for greater amounts of fuel (our business takes us all over the Northern part of the State- Fuel cost are about to shut us down) but others live and shop within 2-25 miles of their home. Many families have several cars and they are all on the road at the same time; dad goes to work, mom goes to work or shopping, one or two kids drive to different schools. Gas rationing could take into consideration the needs of families and the individual while reducing the waste.
April 19th, 2008 at 8:53 am
Bob, if I’m not mistaken, it’s not the oil companies who are keeping us from getting at our reserves in N. Dakota, ANWAR, off the coast of Florida-where the Chinese Communists and Fidel’s little brother are going to drill, of the CA coast and elsewhere, it’s our politicians in Washington, with Harry Reid playing a huge role, who are making those reserves off limits. I think Governor Jeb Bush pushed back against the drilling in the Gulf and I think John McCain is opposed to drilling in ANWAR. So both parties are culpable. We can bash the oil companies all we want, but I think we should blame public policy for not tapping these reserves and for making it too difficult to build a refinery. These people are willing to make American’s suffer for their environmental policies. This huts those who can afford it the least-but that’s nothing new for government. As long as they can laim good intentions, who cares about the results or who it hurts.
I don’t know if that’s the total answer, but I think we have enough oil that if our politicians would let us get to it, gas could go back to $1-2 a gallon again. Maybe oil companies have some culpability, but I think we should finger the politicians and public policy for why prices are so high.
April 19th, 2008 at 11:23 am
We could sit and argue about this all day. Once a method of energy is set in motion like gasoline as it is being used to move our cars and also with most government directives, it is very hard to change course. Individuals and companies jump on board to “feather their nests” with opportunities to keep above the masses like the rest of us. We are helpless to fight this and our very American way of life is being threatened. Alternative energy might be the solution but it never seems to be equal to or to finally arrive. The early seventies should have taught us a lesson there but as soon as the oil companies got thier prices then there was plenty of oil available. This is what is happening again now I believe and perhaps when the oil companies reach that price they have in mind then everything will quiet down. But that will leave more of us on the welfare rolls. At what point will government begin to govern for the welfare of it’s people?
April 19th, 2008 at 12:35 pm
When the euro started, the dollar was 1.05 euros. Now it is .55 euros. It does not take a genius to realize that the government is not supporting the value of the dollar, and that even Exxon imports 52% of its oil. You only get half the oil you got with a stronger dollar, or for those who went to public schools, imported oil is twice as expensive. If we do not drill for more of our oil, off the CA coast and ANWAR, the price will never come down, and our government must quit spending like a drunken sailor and support the dollar. Finally the idiotic Ethanol program must be terminated. If all agricultural production was in corn, it would only supply 20% of our needs. The amount of corn production for Ethanol is raising food prices already. Enough!
April 19th, 2008 at 6:33 pm
Heard of the cat whose tail is pinched by a rocking chair, yowls, twitches its tail, but does not move? Check the majority of us!
We know we voted for “government” that refused to allow use ofAmerican resources, so allowed other nations to charge us what they will. We know we voted for “government” to just add a tax to our gas for roads, etc. We know we own a large brick building near the Clark County Commission building full of people for which we cannot vote, being paid from our pockets known as the Regional Transportation Commission. They as well as the water authority and health district even place bill boards, and radio/tv adds with our monies.
When will the majority of us move to check up on what the government representatives we voted for on the local level are actually doing rather than yowl & twitch?
April 26th, 2008 at 11:59 am
I have an idea. Anyone who does not like the price of gas can simply go into the business. That’s right, raise the capital, form a corporation, find the oil, refine the oil, and sell it for $1 per gallon (OK, fifty cents since taxes are on average fifty cents per gallon). That would solve everyone’s problem and you would be a hero. It is the American way, you know (or at least it used to be the American way).
No takers, huh? That is because if you owned the gas, you would do what everyone else does with what they own that is for sale….try to maximize profit. That is simple economics. Everytime our government messes in the mix it gets worse for the consumer. The seller buys the Congressmen, the Government passes some inane laws and pays for “enforcement”. This way oil companies can charge what they want and we have to pay extra for enforcement. Oh, that’s right. Gas taxes go to fund highways. Well, if that was true, how come we fund road construction with bond funds and we are looking at toll roads? Maybe the taxes we pay for roads are going to something else?
If you turn to Government for a solution there are only a few things that are certain:
There will be stings attached to reduce your freedom
There will be a large cost for ineffective “oversight”
Congressmen will see another way to scare you for your vote
Taxes and the cost of what you asked the Government to help you with will both go up.
The Government will “borrow” more money.
I defy anyone to show me a Government program that did otherwise.
So, go ahead. Ask the Government for help. That is what got us in this pinch in the first place (remember, Nancy Pelosi told us that gas prices would go down when Democrats got in….is this a modern version of newspeak?). I know I will go down with you when our system fails, but I do not think I would feel good about myself if I did not at least try to instill some common sense in our public. So far, my way of thinking does not seem to be catching on. Too bad, we had a pretty good thing going.
So who will be the first to get us $1 gas? The US Government, who you asked to help (in the form of Democrats) has gotten us $4 gas and moving fast to $6. It may be a lot of work, but a lot of Americans would love you for it.
May 11th, 2008 at 1:31 am
I know my comments here won’t make me too popular, but I don’t tend to think that higher gas prices are necessarily a bad thing. In the short term, certainly they are going to translate into higher prices for everything and increased pain for everyone. Its been certainly painful filling my gas guzzling SUV at the pump each week for my 50 mile per day round-trip commute.
With the prices increasing as they are, simple economics and market forces will work to correct the situation. America is currently pulling 1/4 of our oil imports from an inherently unstable region of the world, the middle east. The instability we are seeing in Iraq has fed market fears about an interruption in the supply of oil, and has resulted in higher prices. This is not the only factor driving the price of oil, but it is an important one, to be sure. The increase in overall global demand has also worked to increase the global price of oil. Simple economics resulting in demand for a scarce resource.
As gas prices increase, the demand in the market place has opened the door for substitute products. It will become more and more profitable to develop less costly alternatives.
I think the worst thing we could do is increase government regulation of the oil and gas industry. Anytime we start to look to government to solve our problems, I cringe and really hope we are smarter than that. The costs of compliance with new regulations will ultimately result in those costs being passed on to us in the form of more expensive energy.
We’ve never had a clear energy policy, and we have not learned from the past (i.e. 1973 embargo) with regard to where we get our oil. Certainly, we can legislate tax policies to influence certain behaviors, but ultimately it will be market forces that will solve the problem.
May 18th, 2008 at 10:29 am
Craig is right on. I am looking for a break in the traffic based on the increase of gas prices. At least this would be one benefit of more cost. The trouble is that nobody is driving less. Demand is just as much for $4 gas as $2 gas. Why would any sane company not push the price higher until a reduction in demand is met? One danger of this is, as Craig stated, innovation will drive us to another power source. Free-enterprising inventors will see a money tree in the creation of a substitute and, at $4 per gallon, there would be more profit in it than at $2 per gallon. This is what happened in the 1973 gas crisis. Smaller cars and innovative energy plans instantly got attention. Once the oil companies got the price where they wanted it, they lowered just a bit and it stuck for awhile. “Wow gas at only a dollar a gallon” was the cry of the citizen who forgot their original cry of “how can we afford to pay a dollar a gallon, this is ourtageous”. Once gas was available again, the party continued. Small cars were sold at auction and alternative energy programs stopped. The game is simply to get the price point you want, lower the price a bit and everyone is happy. Just wait. You will see. The citizen quote will be “Wow, gas at only $5 per gallon, what a great deal”…….and the cycle repeats.