Friday, May 11, 2007

Government Giving Us Gas

If you haven't been paying attention to gas prices, they've shot up recently. It's getting to the point that people...are going to keep doing what they're doing, but they're going to complain about it. And when the people complain, politicians leap into action like superheroes, but fortunately they don't wear tights because that would scare little children.

The latest action by the Liberal League...I mean the Democrats has been to introduce legislation to prevent price gouging by oil companies. To many, it's a pretty easy logical step to make. Oil companies are making millions off rising oil prices, so naturally there must be price gouging, right?

Yes there is. However, it's not being done by Big Oil. When you break down the cost of gas prices, you should see a couple of things. One, the evil Big Oil isn't making that much after you factor in the expenditures they have to make in order to sell their products. Yep, in order to get you that gallon of gas, oil companies have to pay for refining, advertising, research and development, and other costs involved with actually producing something. All told, the evil Big Oil companies make less than ten cents of the cost of a gallon of gas.

You know who is making a killing off high gas prices? Government. They put very little into making gasoline, but they take over 50 cents out of every gallon of gas in taxes. And since they don't spend much, if anything, to make gasoline, it's all profit. Let's see...less than ten cents profit for oil companies vs. more than five times that much for government. And Democrats think the oil companies are price gouging?

Another thing to consider when discussing gas prices is that oil is a commodity, meaning it is openly traded. The oil costs are based on what the oil companies pay for a barrel of oil. Higher oil prices mean more money that has to go towards buying the oil, and that means higher gas prices since those costs get passed down to the consumers. Unless the government sets up price controls on oil (which will be promptly laughed down by OPEC since they're not subject to our laws), government can't fix the problem.

So, government blames an entity making much less than they do off high gas prices while not being able to do anything about the problem, given the reason for high oil prices. Just another day's work for the Liberal League!

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