If Oil Corporations Are "Greedy" Because Of Gas Prices Then What Is The Government?
Updated: Mar 23, 2022
I hear it all the time suddenly. The EVIL oil companies are killing us with gasoline increases. They probably sit in their big fat chaired offices, smoking illegal Cuban cigars, while wondering how they can wring another cent or two out of a gallon of gas. Heck, they almost literally are picking our pockets.
Yet that is quite different from the previous charge against them where they were artificially keeping prices low so that they could scuttle President Joe Biden's move towards green energy.
So which is it?
Oh wait, the left will probably try to say both...
Except it is not "both," in fact it is neither of those. If you want to know why the gas prices are going up, I wrote about that HERE.
What I find astounding in this entire scenario is that some people are so vehemently opposed to oil profits, but are absolutely silent on gas taxes. The entire thought is crazy to me, and I hope to explain why I think that.
For our example today, we are going to go with a gas price of $4.00 per gallon. This is considered excessive everywhere but in New York and California, so it is an easy price point to make the argument from. At this price, most people are getting angry at "Big Oil" for price gouging.
So let us examine it more closely, eh? Remember, the below is an average, and your state might be MUCH higher in taxes if you live in a Democrat run state.
If gas were $4.00 a gallon, your breakdown would be:
$.20 - State Taxes
$.50 - Federal Taxes
$.64 - Goes to the marketing company and the truckers
$.56 - Goes to the refinery
$.09 - Goes to the gas station
$2.01 - Goes to the oil company
Now, at first glance, the accusation seems to stand up, but that assumes that all $2.01 is profit. It's not.
It can cost up to $24 a barrel to produce the oil, and that's before the oil company pays to transport it from the pump to the point of sale on the commodities market.
So, $24 divided by 55 (the number of gallons in an oil drum) is $.44 per gallon in pumping and then let's be nice and only add $.05 for transportation. That means that $.49 of every gallon is production cost.
So $2.01 - $.49 = $1.52
But that's not the profit either.
They have to pay labor costs for the non-production positions, then there are benefits costs, building costs, oil exploration costs, failed well costs, corporate taxes, foreign corporate taxes, international money costs, land purchase costs, mineral rights purchasing costs, and a number of other costs.
In the end, they make about $.70-.75 per gallon in ACTUAL profit that ends up in the bank at $4.00 per gallon. Well wait a minute, at $4.00 a gallon, the government takes an average of $.70 per gallon in taxes. They did NOTHING for it, it is pure profit.
That means that on average, government profits +/- $.05 to the gallon compared to the oil company. Why do we not say that THEY are price gouging? Oh yeah, and in liberal states where the state taxes are more like 24% instead of 5%, the governments profit per gallon dwarfs the oil company's.
Still, I do not hear the same charges being made against them.
Are they not "stealing food from the table of the poor" just like the oil companies? Well, they actually do worse because they get these taxes AND they engage in inflation which is a double gut punch to the lowest economic classes in America.
Oh, and before you attempt to say that the Government works for us all so that money goes to us anyway, have you researched congressional junkets and lizards running on treadmills? If not, you might want to do that before you start commenting on the "benefits" of government.
At least the oil companies pay people and create jobs and economic movement. Governments just absorb economic activity into a big black hole from which very little genuine return value escapes.
So if you are angry at the oil companies for profiting $.70 cents per gallon but are not upset at the government profiting $.70 per gallon, then I doubt I can help you, because you are likely already a converted corporation hater.
Government and Corporations share one thing in common, the people at the top feast, and everyone else can just "eat cake." Too bad the only things they leave are crumbs.