Just read an excellent article about what is driving the price of gasoline in the U.S. and around the world. I’ve been telling my friends that the whole “running out of oil” doomsday scenario is all a bunch of hooey. Seems even the standard notion of “supply and demand” has been ripped away from the crude oil industry. Oil prices have been artificially inflated because of fat-cat Wall Street commodities traders… not the infamous “Big Oil” companies (run for your lives, we’re all gonna die!!!)
You see, us peasants get to tighten our belts and - in some cases - suffer, so global financial companies like Goldman Sachs get rich “speculating” on the oil supply. Pipeline breaks somewhere? Price of oil goes up. Oddly enough, by the time the traders hear about the pipeline break - it has most likely already been fixed. Who cares? Let’s make some money (on the backs of the peasants.)
And, let us not forget our glorious government. (Pick one.) I’ll pick the United States, since I happen to live there. The U.S. Federal Gasoline Tax is 18.4 cents per gallon. I live in the State of Mississippi, where the state tax is an additional 18 cents per gallon. I also happen to live on the Gulf Coast - where we have a lovely man-made sand beach with a concrete seawall. Those of us who live in the three coastal counties of Hancock, Harrison and Jackson get to pay an additional 3 cents per gallon which supposedly goes towards maintaining the seawall. (You know all that sand that blows up onto Highway 90 when the winds are high and from the south? The Seawall Tax is where the money comes from to pay the crew that sweeps all that up into trucks and takes it to Jackson so the State Legislature can use it for the sand traps at their golf courses.)
Oh, I almost forgot… we also pay an another 0.4 cents per gallon for an “Environmental Protection Fee.” I guess that is to cover all the Red-Necks who dump their old oil down storm drains when they’re working on their pick-up trucks in the back yard. Thanks, GreenPeace!
O.K. So, that gives us a grand total of 39.8 cents per gallon in Federal and State taxes in Mississippi. I believe that’s right, but I always sucked at math. But, it is close. :) I mean, gee whiz, don’t they tax the oil companies? If you live in the U.S., figure yours out if you want.
On top of that, the oil companies themselves only make 9.5% profit from each barrel sold. Compare that to 22.5% for the Application Software industry and 10.2% average on your local water utility company. When is the last time you bitched about the price of water? Hell, in most places you can’t even drink tap water.
Clearly, it’s not “Big Oil” making all the money here… it’s the Wall Street suits and the taxes. But, fear not! The evidence indicates that we are looking at a price “bubble.” Same thing that happened to all the Dot-coms when the Internet Bubble burst will likely happen to the price of oil. Then everything will just be hunky-dorey, right?
Screw it… I’m moving to France.
Related Links:
Economics 101: The Price of Gas
UP, UP AND AWAY: What’s Really Driving the Price of Oil?
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