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Who really gets rich from gasoline? Big oil companies or big government?

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Here’s a great article that will blow your mind from the Wall Street Journal. (H/T Tom)

Excerpt:

With the average price of gas in America hovering around $3.50 per gallon for regular unleaded, it costs more than $50 to fill a typical car’s 15-gallon tank this summer. Why does gas cost so much?

You may blame high gas prices on rich oil company executives or greedy gas station owners. The truth is that governments rake in a larger profit at the pump than anyone—and with gas taxes on the rise in many parts of the country, there’s no relief in sight.

The price of a gallon of gas is based on the combination of four costs: that of crude oil, of refining gas, of distribution and marketing, and of taxes.

Crude oil costs make up about 76% of the cost of gasoline, according to U.S. Energy Information Administration (EIA). Thus $2.66 of a $3.50 gallon of gasoline is set before the oil is even refined. Global markets, reacting to supply and demand, determine the cost of crude oil. Just like any commodity, from gold to corn, a shortage in supply or an increase in demand leads to a rise in prices.

Refining oil is the next step in the process—and the next expense for drivers. Gasoline is extracted from crude oil and additives, including lubricants and detergents to reduce engine deposits, are added. As of January 2012, the EIA found that refining was responsible for 6% of the cost of gasoline.

Distribution and marketing—the part of the process most apparent to consumers—constitutes another 6% of gas prices. That portion of the cost includes the shipping and transportation of the gasoline, a markup to cover retailers’ expenses, and any advertising created to appeal to customers.

The remaining 12%—or almost 50 cents per gallon today—goes directly to federal, state and local governments in an array of sales and excise taxes. The federal gas tax is 18.4 cents on every gallon of gasoline sold in America. State gas-tax rates vary from a low of eight cents per gallon in Alaska to a jarring 49 cents per gallon in New York. Other states where it’s steep to fill up include California and Connecticut—each with 48.6-cent-per-gallon gas taxes—and Hawaii, at 47.1 cents per gallon.

Some local governments have gotten in on the act, too. In California, local sales and excise taxes on gasoline average 3.1%, according to the Los Angeles Times. That works out to about 12 cents in local taxes for each gallon of gas, based on the state’s current average of $3.80 per gallon.

[…]Exxon, for example, made only seven cents per gallon of gasoline in 2011. That’s a drop in the bucket compared to the nearly 50 cents per gallon that federal, state and local governments rake in on an average gallon of gas pumped in the U.S.

That’s not going to stop the unproductive socialists in government for accusing oil companies of being greedy. Who’s really greedy? Government is greedy. They take more of your money in gas taxes than the oil companies do.

3 thoughts on “Who really gets rich from gasoline? Big oil companies or big government?”

  1. Don’t forget the looting from the property taxes on refinery infrastructure, those nicely paid engineers and blue collar plant operators who have their incomes looted of federal and state taxes, local property and sales taxes from what they are able to buy from their income, and the taxes from the transfer and sales of stock in some of these companies.

    Yes, the government is the profiteer here.

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    1. Taxpayers pay for it. The money comes from business owners and their employees. Government is just a parasite on the private sector. Government provides no services and makes no goods. They just take from people who create value at gunpoint and reward their allies in the unions.

      Here’s government:
      http://online.wsj.com/article/SB10000872396390443437504577547313612049308.html

      Quote:

      In the last five years in New York City, 97 tenured teachers or school employees have been charged by the Department of Education with sexual misconduct. Among the charges substantiated by the city’s special commissioner of investigation—that is, found to have sufficient merit that an arbitrator’s full examination was justified—in the 2011-12 school year:

      • An assistant principal at a Brooklyn high school made explicit sexual remarks to three different girls, including asking one of them if she would perform oral sex on him.

      • A teacher in Queens had a sexual relationship with a 13-year old girl and sent her inappropriate messages through email and Facebook.

      If this kind of behavior were happening in any adult workplace in America, there would be zero tolerance. Yet our public school children are defenseless.

      Here’s why. Under current New York law, an accusation is first vetted by an independent investigator. (In New York City, that’s the special commissioner of investigation; elsewhere in the state, it can be an independent law firm or the local school superintendent.) Then the case goes before an employment arbitrator. The local teachers union and school district together choose the arbitrators, who in turn are paid up to $1,400 per day. And therein lies the problem.

      For many arbitrators, their livelihood depends on pleasing the unions (whether the United Federation of Teachers in New York City, or other local unions). And the unions—believing that they are helping the cause of teachers by being weak on sexual predators—prefer suspensions and fines, and not dismissal, for teachers charged with inappropriate sexual conduct. The effects of this policy are mounting.

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