Follow up from yesterday's MTNP show
A couple of quick follow ups from the show:
Skip - I'm not sure suspending the gas tax will help - doesn't that just put off paying bills? guess I'd like a) relief from oil company profits, and b) federal and state programs cancelled that can't demonstate 80+ % going to what it was intended for. The perception is, its all spent on admin and special interest projects. -J
I agree with point B - I wish that all programs started had a sunset clause built into them - just like the tax cuts that President Bush pushed through have. What's good on the revenue side should be good on the expenditure side too! After all, fair's fair, right?
On point A, I disagree.
If you think about it, there is no "relief" legally from profits. After all, remember a few things:
- Government actually retains more $$ from a gallon of gas (when all things are factored in) - 18.4 cents/gal than Exxon does (about 7.5% profit MARGIN). Exxon made far less than the government on their oil.
- Profits are reinvested in R&D and back to shareholders - many of whom are retirees and holders of stock in their 401(k) programs. So ask yourself - why does Hillary want to keep that money from the elderly?
From our friend, Jorge, comes this info:
Are gas prices really all that high? A change in price can be a result of inflation, taxes, changes in supply and demand, or any combination of the three.
First, we need to take into account inflation.
The result of the Federal Reserve printing too much money is a loss of purchasing power of the dollar: something that cost $1.00 in 1950 would cost about $8.78 today. As for gas prices, in 1950 the price of gas was approximately 30 cents per gallon. Adjusted for inflation, a gallon of gas today should cost right at $2.64, assuming taxes are the same.
But taxes have not stayed the same. The tax per gallon of gas in 1950 was roughly 1.5% of the price. Today, federal, state, and local taxes account for approximately 20% of gas's posted price. Taking inflation and the increase in taxes into account (assuming no change in supply or demand) the same gallon of gas that cost 30 cents in 1950 should today cost about $3.13.
Neither have supply or demand remained constant. The world economy is growing. China and India are obvious examples. At the same time, Americans continue to love driving SUVs and trucks. As for supply, we are prohibited (whatever the reasons may be) from using many of the known oil reserves in our own country. Furthermore, due to government regulation, the last oil refinery built in the United States was completed in 1976. In addition, the Middle East is politically unstable which leads to a risk premium on the world's major source of oil. It is obvious that the demand for oil has grown while supplies have been restricted.
The average price of gas in the United States today is approximately $3.25. The question is, why are gas prices not higher than they are?
Blaming greedy oil companies on the rising price of gas is simply irresponsible. The profit margins of a few selected industries are as follows:
Periodical Publishing 24.9%
Shipping 18.8%
Application Software 22.5%
Tobacco 19.0%
Water Utilities 10.2%
Major Integrated Oil and Gas 9.5%
Hospitals 1.4%
Drugstores 2.8%
The water utility industry has higher profit margins than major oil and gas firms! Why isn't every CEO with profit margins above that of the oil companies made to testify before Congress for "price gouging"? Clearly, greedy corporate profits are not the issue.
Again, while just over nine percent of the price of a gallon of gas goes to oil company profits, approximately twenty percent of the price of a gallon of gas is composed of federal, state, and local taxes.
Those who want the government to step in and do something about the high price of gas are either forgetful of recent history or too young to remember the oil crisis of 1979. During that time, restrictions on the price of gasoline led to the inability of some to find gas at all. Price ceilings always lead to shortages. The only thing worse than having to pay "too much" for gas is not being able to find gas at any price.
We also mentioned that Barak is supporting the UN request that the US spend 0.7% of GDP on foreign aid. And when the UN calculates that amount, it does NOT include that given by private citizens. Why? Because compared to other countries, we DO give as individuals - the rest of the world are pikers compared to us. And they only count cash - the cost of our battle group that aided the tsunami victims, for instance - would not be counted. Not the military salaries, the supplies we dropped, the oil and gas we used. And certainly not the cost of a nuclear aircraft carrier that was taken off station to render assistance.
Only cash. So again, our friend Jorge rushed some stats to us:
Some facts:
The 2006 (last one available) US GDP was $13.13 trillion. 0 .7% of GDP would be $91.91 billion
Total US Foreign Aid in 2006 was $22.822 billion, with 1/3 ( or $4.315 billion) going to Egypt and Israel--which are not listed as "developing" countries.
For Foreign Aid totals for last 6 years by recipient country, go here
For GDP, go here United States — GDP: $13.13 trillion (2006 est.) (purchasing power parity)
In other words, we would have to increase our taxes 4 X just to meet somebody's idea of what is fair. Regardless of what we as individuals give willingly.
