Thanks to all who participated in the poll.
It’s time to be the answer man. The answer to my question – “Approximately how much do oil companies profit on each gallon of gasoline priced at $4.00 per gallon?” – is 40 cents. The other figures in the multiple choice poll question break down as follows:
$2.64 is the 1950s price of gasoline adjusted for inflation alone.
$.80 is the amount of taxes paid per gallon (about 20% per gallon).
$.20 is just a bogus figure I threw in.
My source for these figures is an article, “Economics 101: The Price of Gas,” from the Ludwig von Mises Institute. I recognize that there are challenges to some of these figures, especially in light of today’s charged political environment. I did a far-from-exhaustive sampling of other sources and found that the cited article is not at any great variance from many other sources. I will leave it as an exercise to the interested reader to follow up; my technique involved googling “profit gallon gasoline.” That produces plenty of material to sift through. Informative stuff, too.
Regardless of what site I went to, it is evident that we pay more for taxes than “big oil” company profits on each gallon of gasoline. In fact, we pay taxes on each gasoline purchase at least twice. In addition to the taxes that consumers pay at the pump, the company pays income taxes. In the case of Exxon Mobile, that has been about 40% of gross profits the past three years (2007 Annual Report, p. 38. Note: 7.55 Mb pdf document, if you choose to open it). Costs, including income taxes, are built into the price structure of everything we purchase. Businesses and property do not pay taxes; people pay taxes.
Even though the profit margins of “big oil” companies have remained steady for many years in spite of the fluctuations in the price of crude oil and refined petroleum products, oil company executives are being hauled into Washington to testify before Congress for “price gouging.” Maybe it’s time for our illustrious elected officials to take a look at who is really gouging consumers. A mirror would help here.
$2.64 is the 1950s price of gasoline adjusted for inflation alone.
$.80 is the amount of taxes paid per gallon (about 20% per gallon).
$.20 is just a bogus figure I threw in.
My source for these figures is an article, “Economics 101: The Price of Gas,” from the Ludwig von Mises Institute. I recognize that there are challenges to some of these figures, especially in light of today’s charged political environment. I did a far-from-exhaustive sampling of other sources and found that the cited article is not at any great variance from many other sources. I will leave it as an exercise to the interested reader to follow up; my technique involved googling “profit gallon gasoline.” That produces plenty of material to sift through. Informative stuff, too.
Regardless of what site I went to, it is evident that we pay more for taxes than “big oil” company profits on each gallon of gasoline. In fact, we pay taxes on each gasoline purchase at least twice. In addition to the taxes that consumers pay at the pump, the company pays income taxes. In the case of Exxon Mobile, that has been about 40% of gross profits the past three years (2007 Annual Report, p. 38. Note: 7.55 Mb pdf document, if you choose to open it). Costs, including income taxes, are built into the price structure of everything we purchase. Businesses and property do not pay taxes; people pay taxes.
Even though the profit margins of “big oil” companies have remained steady for many years in spite of the fluctuations in the price of crude oil and refined petroleum products, oil company executives are being hauled into Washington to testify before Congress for “price gouging.” Maybe it’s time for our illustrious elected officials to take a look at who is really gouging consumers. A mirror would help here.
2 comments:
Thanks for the research, Chuck!
I'm afraid the mirror held up to Congress wouldn't be very effective. Vampires don't create a reflection in a mirror...
LOL! Good one, Skye Puppy!
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