Chuck Schumer (Dem., N.Y.) recently asked “If $75 a barrel oil and a $3 average for a gallon of gasoline isn’t a wake-up call, then what is?” and as the Wall Street Journal notes it is indeed a fine question for Senator Schumer to ask. They go on to note:

In fact, Mr. Schumer and most of his Democratic colleagues in the Senate–the very crowd shouting the loudest about “obscene” gas prices–have voted uniformly for nearly 20 years against allowing most domestic oil production. They have vetoed opening even a tiny portion of the Arctic National Wildlife Refuge in Alaska to oil and gas production. If there is as much oil as the U.S. Geological Survey estimates, this would increase America’s proven domestic oil reserves by about 50%.”

[…]

The dirty little secret about oil politics is that today’s high gas price is precisely the policy result that Mr. Schumer and other liberals have long desired. High prices have been the prod that the left has favored to persuade Americans to abandon their SUVs and minivans, use mass transit, turn the thermostat down, produce less consumer goods and services, and stop emitting those satanic greenhouse gases. “Why isn’t the left dancing in the streets over $3 a gallon gas?” asks Sam Kazman, an analyst at the Competitive Enterprise Institute who’s followed the gasoline wars for years.”

This graph shows the average price of gasoline, per gallon, in both the United States and some European countries. Click this Link to see where Mr. Schumer really wants gas prices to go (he won’t tell you, I just did) Is that what you want Mr. Schumer? If it is, then be at least honest enough to say so without the fancy footwork designed to make you look indignant (when you aren’t) and gouge the American People under the guise of concern which you are obviously trying to do.

Let us be honest in this debate about gasoline prices. First, there is no evidence of price gouging to date. Since the 1990’s the SEC and FTC have been scrutinizing the oil companies without finding any evidence. Second, the inflation adjusted price of gasoline today is less than the cost of gasoline in 1979/80. View image! As you can see from the graph, the cost of gasoline of gasoline was higher in 80/81 than now. That does not mean that gasoline won’t go still higher and break records but the reasons for that are not necessarily under the control of the oil companies. It is called supply and demand and with India and China feverishly working to increase their supplies, that will drive the price up all else remaining the same.

Looking at the cost as a percent of personal comsumption expendatures on a monthly basis, you will see that while expenditures are indeed up, the cost are still below the ‘80/’81 levels View image. Again, while the costs and expense for families is high, it has been higher.

We also need to take a look at where the real costs of gas at the pump come from. The hype of the left is that the oil companies get it all, or at least that is what they want you to believe. The reality is that the cost of crude (and remember we import way too much oil) is 47% of the cost. So, at $3.00 a gallon $1.47 of that is just for the cost of the oil to make the gas. Add to that another $0.69 for state and federal taxes and you are already over two thirds of the cost of a gallon of gasoline. But wait, we aren’t done yet. It costs $0.36 to get the gasoline to you and to advertise their product and we are now up to $2.46 of the cost of a gallon of gas at $3.00. That is just shy of 84% of the cost. View image According to the Energy Information Administration: Department of Transportation: Bureau of Economic Analysis, those folks charged with knowing how much you have to pay for gasoline, only about 27 cents is profit and another 27 cents goes into refining costs. TWENTY SEVEN CENTS!!! Yeppers, that’s price gouging. NOT! Economics are obviously not the forte of Mr. Schumer and his cohorts.

There are other reasons for the significant rise in the cost of gasoline that the liberals/Democrats don’t want you to know. While the UN dithers with Iran, world concern regarding supplies have driven up costs lest the Iranians block the exit to the Persian Gulf or other major disruption of oil transshipment. There are also currently seventeen types of “botique” blends of gasoline and ethanol that are mandated by congress and or the states. This causes disruptions in delivery and where in one locality one type of fuel has to be turned down because it is not a mandated type. There is a move afoot in congress to whittle that number down to six.

Just a lowly eight months ago, Congress passed and the President signed an energy bill with significant tax breaks to get the oil companies up and moving because of the major disruption caused by Hurricaine Katrina and Rita. The disruption of the refinary capacity has caused part of the problem and we have not built any new refinaries in over 20 years. That is also part of the problem because the majority of refinaries located on the Gulf Coast were damaged and supplies disrupted. Now, congress is debating on rolling back the tax breaks but that will only increase receipts to the government because the fact of the matter is that corporations do NOT pay taxes. You do. Taxes are part of the economic mix that are passed on to the consumer in the form of higher prices IN ADDITION to the taxes you pay at the pump.

Then there is the move by the President to halt filling the Strategic Petroleum Reserve that is almost full anyway and this will hardly make even a small dent in the cost of gas. Bold move Mr. Bush. NOT!

Which brings me to the Republican’s efforts (What efforts?…Ed! - precisely) in this mess. They are as busy with double talk and crapping on the oil companies making it look like they are so concerned and are acting just like Democrats. In fact, it is getting harder and harder to tell the two parties apart (execept the Republicans don’t have anyone near as deadly as Schumer when it comes to getting between Schumer and a TV camera). I fear the Reps will find out that we really don’t need two liberal parties in November and that the population will just vote for Democrats rather than Republicans acting like Democrats. But, maybe the Reps will wake up, it is not too late. YET!!!

Cross Posted at GM’s Corner

Said GM @ 6:30 am | Permalink   

1. Where does the 69 cents for taxes come from? Federal taxes on gas are 18 cents a gallon and state taxes vary from state to state.

   It sounds good to say only 27 cents of that $3.00 per gallon is profit (actually that is not a bad profit at all) but it overlooks that in the late 90s profits for gas companies were around 7.3% and they now are 9.7% per gallon. My calculator tells me this is a 32% increase in profits. Now that figure doesn’t sound so good unless of course you happen to be the CEO of one of those oil companies or other top dog. I have to assume at some point the shareholders will also reap some benefits as well they should. My point is you are playing loose with the numbers. Pick the right number and they look like they are being used as scapegoats but pick another and they look like villans. They are in the business of making money I realize that. And the price of making their product is going up so the price of the product should follow suit. That doesn’t change the fact that they get tax breaks we can only dream about. Oil companies are some of the biggest recipients of corporate welfare in America.

   Comment by Carol — 4/30/2006 @ 4:02 pm

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2. Carol, welcome back. Where ya been? We been missing ya…..finally get that new dose of Chuckitol balanced out?

   Comment by Kender — 4/30/2006 @ 7:11 pm

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3. Had some surgery and was under the weather. Now I am trying to play catch up with my work so I don’t expect I can really get into the fray with y’all anytime soon.

   Comment by Carol — 5/1/2006 @ 4:19 pm

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