Rant: Gas prices got you down? Let’s assign some blame.
In tough times, it’s always easy to point to someone who’s making a huge profit on everyone else’s backs, and right now the gas (oil) companies are easy to point at. Folks will even ask, “what are you doing with all those massive profits to help develop alternative energies?” But since it’s also an election year, let’s see how the oil company’s share of the blame stacks up.
Let’s say you’re paying $4 a gallon for gas. That’s expensive right now, but it’s a nice, round number. First, to even get that $4, you have to earn closer to $7, because the Federal (and in most cases, state) government likes to get a piece of the pie in the form of income tax. So right off, the government has already kept $3.
Off the pump price comes Federal gas tax - $.184 per gallon - plus state taxes, which average about the same amount (although they can be higher than $.30 per gallon - Wisconsin leads at $.321 per gallon, Georgia is cheapest at $.075, and nobody lets you have it for free). So on average about $.36 per gallon goes to the gummint, leaving $3.64 as the real price.
Now, the gas pump owner keeps about 20% of the pump price - in many cases, much less, but let’s call it worst-case. So from that $3.64 post-income-tax money, the station owner keeps $.73 per gallon. He has to pay most of his expenses - rent, utilities, wages, etc. - from that, meaning the owner’s net profit is usually around $.22 per gallon (this is why most gas stations now come with convenience stores - they need to make better margin from something other than gas). From that, the government keeps about a third in “corporate income tax” - and many states that have no personal income tax still have a corporate income tax, jacking the number to a bit more than a third. So let’s say the owner keeps about $.15 while the governments get another $.07. It’s tough to get upset with a station owner taking home $.15 per gallon - that’s a tiny margin of the $4 pump price. But the government so far has racked up $.43, plus the initial $3 in tax from your paycheck, so they’re up to $3.43.
Oil companies get the remaining $2.69 per gallon. From that, they pay for all the production and transportation - most of which goes to unionized labor, who help to make sure people in those jobs get good pay and good benefits. Most oil companies, according to their public financial records, pull in 35-40% profit margins on the high side. Many don’t make that much, but let’s call it worst case: They pocket about $1.07 per gallon. Oh, wait - here’s Uncle Sam again, who hits oil companies with a whopping ~50% income tax - meaning $.54 for the government, raising their share to $3.97 of the money you earned to spend on gas. The oil company keeps another $.54 per gallon.
So of the original $7 you earned for gas, our leaders keep $3.97, and have the unmitigated gall to ask, in Congress, what the oil companies are doing to fund alternative energy research. Um, ex-squeeze me, but what’s the government doing? Apart from rolling in money, I mean.
Don’t get me wrong - oil companies play a bad game, raising prices at the slightest hint of trouble, and taking forever to lower them again. But the lion’s share of your money is going to the government, and the next-largest share is going to pay people’s salaries - not fat-cats, but the people doing the work. Oil companies make a crapload of profit solely on quantity, while the government makes out like bandits from start to finish.
It actually gets worse. Of that $2.69 per gallon that oil companies get to work with, much of that is paid out in worker’s wages - which are again taxed by the government from the workers’ paychecks, and again when those workers buy products which are subject to “corporate” income taxes.
So if you’d like to be mad about someone over gas prices, go right ahead - start with your elected officials, who are the ones really eating us alive. Make sure you’re getting value for all that money you’re paying them. Of the original $7 you earned, 56% went to government. Sure, some of it goes to pay for roads and other services - but in an election year, it’s time to think about what that 56% is buying you as you head to the polls.
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