Friday, April 28, 2006
Black Gold, Texas Tea and "Price Gouging"
Back to this stupid gas price issue. (If you don't like my views on this, you should get rid of your car and ride a bicycle -- like me).
Neal Boortz has once again nailed the realities of the issue so well -- by pointing out some things you won't find anywhere in the yellow stream media -- that I'm going to paste his entire rant on the issue below. The usual no-BS grasp of an issue, and laced with appropriate sarcasm. Some things to think about -- or at least be aware of.
"The oil company profits are not obscene. As of September of last year the total take for local, state and federal governments for each gallon of gas sold was 46 cents. In New York that figure is 63 cents. At the same time gasoline retailers were making about 12 cents on the sale of a gallon of gas. Right now the government take is approaching an average of 50 cents a gallon. Retailers are making about 14 cents. so ... who is making the obscene profit? The local gasoline retailer invests in the community, buys a plot of ground, builds a gas station, hires the employees, pays the local taxes, deals with the local regulatory agencies, and makes a big screaming 14 cents on each gallon sold. Meanwhile, the government steps in without having invested one dime in that facility and takes about 50 cents per gallon. Some obscene profits, right?
As for profit margins ... the amount of money earned for each dollar of sales ... oil companies are nowhere near the top of the list. In 2005 pharmaceutical companies made about 17.6 cents for every dollar of revenue. That, for those of you educated in government schools, that works out to a 17.6% profit margin for the drug makers. How about your local bank? They made about 19.1 cents for every dollar of revenue. Almost a 20% profit! Not too shabby. And what about your household goods and cosmetics? Those companies earned 11 cents on the dollar. A lot of competition there. Now, the oil companies. What did they make? In 2005 the average was 8.5 cents per dollar of revenue. That works out to an 8.5% profit margin.
Maybe President Bush could have said something yesterday about MTBE. Congress recently refused to protect the MTBE makers from liability from frivolous lawsuits. MTBE is a component in gasoline ... and the makers are bailing. MTBE is to be replaced by ethanol .. .but the ethanol producers just can't keep up! This affects supply, and reduced supply in the face of increased demand means what? Higher gas prices? Could we get the ethanol we need from overseas? Why yes! We could! But the Bush administration has a 54 cent-per-gallon import duty on imported ethanol! There's your price gouging! Drop that import duty and I wonder what would happen to gas prices.
It's enough of a problem when Americans suffer from a tragic level of ignorance on issues of basic economics due to generations of state-run education. It's even more tragic when politicians pander to that ignorance for political gain."
