Wednesday, May 16, 2007

Environmental Hysteria: 'Tis the Season

Price-Gouging-Investigation-mas, that is!

It seems to me that the Democrats' idea of reducing America's dependence upon foreign oil is making oil so expensive that only the very rich can afford it. Therefore, the rich are taxed and the poor ride the bus!

An Oregon senator is one of those leading the charge against evil profit-making oil companies this year.

Legislation supported by Sen. Gordon H. Smith (R-OR) that would ban gas price gouging was successfully added Tuesday to a fuel economy reform bill approved by the Senate Commerce Committee.

"Oregonians are sick and tired of being pummeled at the pump. Gas prices have jumped 50 cents just this month. It is time to push automakers to improve fuel economy," Smith said. "The real question is not how we will do it, but when will we do it."

"When it comes to price gouging, the legislation I am supporting goes after profiteers who prey on the vulnerable in the wake of a disaster," Smith continued. "A disaster is not a license to increase profits. [What disaster? - Robo] The government must be given the tools investigate egregious abuse and to prosecute the criminals who perpetuate it."

Legislation Smith is supporting along with Senators Ron Wyden and Maria Cantwell to ban gas price gouging in the aftermath of disasters was included as an amendment to a fuel efficiency bill approved by the Commerce Committee. The price gouging provisions establish tough new federal protections that would guard against profiteering and market manipulation by oil and gas companies.

This latest legislation is in conjunction with Smith's ongoing work to reduce American reliance on foreign oil, including his efforts to:

- provide incentives to support domestic automobile manufacturing and the purchase of efficient vehicles

- create new incentives for vehicle manufacturers or parts suppliers to re-tool, expand, or establish manufacturing facilities that produce advanced technology motor vehicles or components

- encourage the development of renewable energy technology, spur economic development in rural America and further enhance the nation's energy security.


Oregon gas tax is 24.9 cents per gallon - not the most expensive, by any means. But if the state really wants to reduce the price of gas, all it has to do is lower the damn taxes. They don't care what Oregonians pay for gas, only that they make it look like they care in case people remember when election day rolls around.

If the MSM and Congress can recycle stories about price gouging and investigations and bills against price gouging, is it OK if I just recycle my post on price gouging from last year?

I have heard rumblings over the last few weeks of left-leaning officials have been making an effort to convince people that they are experiencing price gouging as a result of events in the Middle East, hurricane season, and greed on the part of oil companies. Certainly, gas prices have decreased appreciably since Hurricane Katrina, so perhaps that would lead some to believe Big Oil was taking advantage of their pain. The MSM has made sure to make a big stink about oil companies reporting record profits while minorities and women suffer from the effects of the severe storms this year. After all, conflict sells newspapers.

Yesterday, Arkansas Senator Mark Pryor said consumers need to be protected from gouging when gasoline is in short supply. I couldn’t agree more, which is why I think state and federal governments need to lower or eliminate taxes on gasoline and stop gouging consumers.

In order to continue selling gasoline to you, the consumer, oil companies need to make a profit. So for the time being, let’s assume the industry 9.1% profit margin is reasonable (I think it is) and examine why the price of gas is so high. The price of gasoline depends on a number of factors. As of September 2005, 50% of the price you pay for gasoline is to pay for the crude oil, 8% goes toward distribution and marketing, 27% goes toward refining costs and profits.

Federal and local taxes account for about 15% of the total price of gas in the United States (down from 31% in 2002). Federal excise taxes are 18.4 cents per gallon, and state excise taxes average 21 cents per gallon. Some states also levy additional sales taxes, as well as local and city taxes. In Europe, gas prices are far higher than in America because taxes on gas are much higher. For example, gas prices in England have risen as high as $6 per gallon, with 78 percent of that going to taxes.

To put it in perspective, I was driving home from work today and saw that gas was $2.35/gallon. That means 35.25 cents per gallon goes directly from my pocket to the government: 18.4 cents to the federal government and 16.85 cents to local governments. Multiply that by the 19.1 gallons in my tank ($6.73 per fill-up), about four times a month, which means that I pay $323.17 a year in taxes on gasoline (for just one of my two cars, not counting extra driving on vacations and fluctuation in prices, we have to assume some things are static for this little mental exercise).

Since 1990, the Gasoline tax has transmogrified from a scheme for deficit reduction and then to a use tax. Due to the faulty and politically charged pseudoscience of global warming and general environmental hysteria, gasoline taxes were nearly double what they are today in order to discourage use and force people to seek alternatives. The problem is the same as it is with use taxes on alcohol and tobacco; the tax doesn’t discourage use and the government becomes dependent upon revenues from the tax so it doesn’t really want you to find an alternative to the commodity it’s taxing. It remains to be seen whether the recent spike in sales of hybrid vehicles is a fad due to the spike in gas prices or will be an ongoing trend.

Some folks will say that they don’t mind paying taxes like this because it benefits society as a whole. The problem is that it doesn’t, since government is incapable, by design, of using your tax dollars effectively. It collects taxes on your income before you even get to see it, and then charges taxes whenever you buy something and still can’t get that pothole down the street filled. That has a lot to do with our current expectations of government to coddle and support us, when they should be worrying about infrastructure, defense and civil preparedness PERIOD. I understand that government needs money to perform these functions, but getting us coming and going is excessive. No tax means $2.00 per gallon of gasoline. No income tax, but a consumption tax on gasoline means that even if gas is slightly more expensive, I’ll be able to afford it. But I digress; I’ll save the consumption tax (fair tax) argument for another day, along with other things the government can stop doing to the petroleum supply chain to help consumers sleep a little better at night.

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4 Comments:

Blogger Bloviating Zeppelin bloody well said...

That's a huge issue -- taxes. Very few if ANY actually take the time to read the small print on the pump which, at least in Fornicalia, indicates how many cents per gallon you are paying in taxes -- but state tax only, NOT Fed. True: gas prices DOWN? Take out the taxes. But NO. Government does NOT want you aware of THAT situation. Additionally, we are competing with massive, burgeoning economies in China, India and other emerging nations.

BZ

17 May, 2007 08:33  
Blogger Robert M. bloody well said...

Liberals should probably learn some day that government regulation makes everything worse. Some basic understanding of the free market would help them too. Until then we suffer at the pump (3.10/g in Maine right now) due to government intervention designed to "help" us.

20 May, 2007 18:03  
Blogger Robosquirrel bloody well said...

See, I dislike high gas prices just as much as anyone. Filling up is really putting a dent in the wallet these days. It wouldn't be so bad if I at least got all of my income up front instead of the government taking back its percentage of what they pay me.

It's up to $3.20 here in Jax right now, which is pretty high for Florida. The part taht annoys me the most about it is how ever years around Memorial Day weekend when the prices spike, the media and Congress are there to play it up. I wonder if that'll happen if a Democrat wins the White House.

Hmmm...

21 May, 2007 11:26  
Blogger Bloviating Zeppelin bloody well said...

Dems win? Double the prices.

BZ

27 May, 2007 00:23  

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