| It's getting a little bit ridiculous that people keep saying that the oil companies are to blame for the rising oil prices. There are a few points that I wish to state, and I'll let you think about it.
1. The high prices are not new, nor are the reasons that they are high. Consider this: when you factor in the difference in buying power of the dollar between 1981 and today (2006), gas is still $.15-.20 shy of its peak in 1981, 15 years ago. Why did it peak then? Tensions in Iraq and Iran, and the peak occured right after the start of the the Iraq-Iran war. What is driving oil prices up today? Tensions in Iraq and Iran...
2. The oil companies are not making as much of a profit, per gallon, as the media would want you to believe. It is unfair to call on any industry in a capitalist society to give up their profits to satisfy the consumer, and even if ExxonMobil, or BP, or Shell were to cut all of their profits out of gasoline, the price would only drop to something in the area of $2.60 a gallon. From the period between 1977 and 2000, profit margins in the oil industry dropped from an average of 9.7% to a mere 5.9%, while the average profit margin across all industries dropped from 11.5% to 7.3%. Profit margins across the market have risen in the past 5 years, as we have recovered from the 2000 recession and 9-11. The oil industry is no different, and I don't understand why we expect them to be.
3. We're still paying a lot less than Europeans. The average cost of a gallon of gasoline in France = $5.80, Germany = $5.96, Netherlands = $6.73, USA = $2.88. Put into that perspective, it's not that bad, eh?
4. The government makes as much, or more, off of a gallon of gasoline than the oil companies, but who's calling for a reduction government mandated gas taxes? In Ohio, 40.4 cents of every gallon, or about 14% of every dollar spent on gas, goes to the government, while only about 9-10% goes to the oil company. In other words, the government is making more money off of oil than the oil companies. Does that make sense?
As I hope to have shown, we are both fortunate and misguided in America. We should be calling on the government to cut back on their illegitimate profit-sharing in gasoline sales. That would save us as much as $.30-$.40 per gallon. |
