Government is the real beneficiary at the gas pump

Gas prices are at all-time highs, and “Punish the price gougers” is a popular refrain echoing through the halls of Congress and reverberating across the media.

I agree. We should punish the price gougers. But before we take punitive action, we need to determine who is actually doing the gouging. Politicians like Rep. Nancy Pelosi (D-San Francisco) are fingering big oil as the guilty party, and yes, there is evidence to suggest that they’ve made a healthy profit of late. But price gouging?

It’s only fair to consider all the evidence, and determine who is profiting the most from gasoline sales.

According to the Tax Foundation, “… tax collections on the production and import of gasoline by state and federal governments are already near historic highs. In fact, in recent decades governments have collected far more revenue from gasoline taxes than the largest U.S. oil companies have collectively earned in domestic profits …”

That’s right, the government has made more on gas sales than all the big oil companies combined. “Federal and state taxes … now total roughly $58.4 billion. … Since 1977 governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues,” the Tax Foundation reports.

In California, the state flat tax is 18 cents per gallon and the federal flat tax is 18.4 cents per gallon. Then add the sales tax, which varies by county, and for every gallon of gasoline sold more than 60 cents goes to the government. The government takes more than 56.2 cents per gallon in Maryland, and 57.15 cents in Washington, D.C. The national average is 45.9 cents.

Taxes are second only to the cost of crude oil in contributing tothe cost we pay at the pump.

Of that $3 per gallon, gas station owners are lucky to make 6 to 10 cents per gallon. So, on a 20-gallon sale, the station will make at most $2. And that’s before they pay their rent, employees, insurance, etc.

As for the big oil companies, well, they make less than 9 cents per gallon of refined petroleum. But times aren’t always so profitable, and it fluctuates daily. This is a high-risk business, as we’ve just seen with Bolivia nationalizing its oil fields.

The U.S. Department of Energy’s Energy Information Administration data shows that “domestic profits of the 25 largest oil companies in the U.S. have been highly volatile since the late 1970s. For example, between 1977 and 1985, the oil industry recorded relatively high profits, averaging nearly $33 billion per year after adjusting for inflation. These good years were followed by ten years of flat profits, averaging $12.3 billion per year. In 1996, profits began to rise again but have not been stable, ranging from $9 billion to nearly $42 billion per year.”

So, what do the politicians want to do to remedy the high price of gasoline?

According to CNN.com, “Democrats called for a new energy bill and federal legislation to punish price gougers. House Minority Leader Nancy Pelosi of California said Democrats want to roll back billions in tax breaks for oil companies …”

Hmm … roll back the tax breaks, which means the government will make more money. Such distorted logic would be amusing if it wasn’t true.

So, who’s the real price gouger? Why don’t the politicians propose rolling back gas taxes to ease the pain at the pump? Taking 45.9 cents off the price per gallon certainly provides more relief than getting the mere 9 cents the big oil companies could kick in.

Kathleen Antrim is a columnist for The Examiner. She can be heard every Monday on the nationally syndicatedradio talk show “Battle Line with Alan Nathan,” and “The Lee Rodgers and Melanie Morgan Show” on KSFO in San Francisco. For more information, go to www.KathleenAntrim.comGeneral OpinionOpinion

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