Gettin' Gassed

The economy is growing at a rate (4.8%) that is larger than the unemployment rate (4.7%). Personal incomes have grown by 6.2% in the first quarter of the fiscal year (MarketWatch, 5/4/06). Real after-tax income has risen by 9% under the Bush administration (The White House, Press Release, 5/3/06). But you have to pay a little more for gas, so the economy is a wash, right? And "Big Oil" is really sticking it to us, right?

We learned in an earlier post that gasoline prices are a direct reflection of the worldwide market and that gasoline companies' profit margins have stayed consistent throughout the past several years. That was a basic Economics 2105 lesson in that post, and you can bet your behind that every politician understands the market forces involved in our present situation. However, many of them are accusing oil companies of price gouging and calling for windfall profits taxes after oil companies reported record profits. They're fighting for you, right? Wrong.

Politicians are so quick to point the finger at oil companies because they are actually taking more of your dough than Big Oil! The media goes along with this grandstanding because 85% of them are big government liberals. The drama began last year when ExxonMobil reported profits in excess of $36 billion. The politicians cried along with the public about the poor little man and cursed the Big Oil Big Wigs who were undoubtedly sipping something cold on a yacht in the Aegean. What you never hear is that government tax revenues from gas alone totaled $54 billion that same year!

Big Oil profits total 9 cents per gallon, and the federal government makes 18.7 cents per gallon. Just for fun, add on an extra 14-44 cents for various state taxes. Yes, the government makes approximately 4 times as much money on each gallon of gas than the companies that provide it.

If oil companies are guilty of price gouging, then the government should be registered as a sex offender.