Americans and Petroleum Economics

Posted on Wed 01/23/2008 by

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Americans are woefully ignorant when it comes to petroleum economics, and Democrat politicians are fueling this ignorance. With record high prices at American gas pumps, Rep. Bart Stupak (D) Michigan introduced House Resolution 1252, a bill that would “protect consumers from price-gouging of gasoline and other fuels”. Penalties would be up to $150 million for corporations or $2 million (or 10 years in prison) for an individual. It passed the House, but was referred to the Senate Committee on Commerce, Science, and Transportation. A windfall profits tax in the 1980’s depressed the domestic production and extraction industry and furthered our dependence on foreign oil.

In the past 25 years, oil companies paid more than $2.2 trillion to federal and state governments. That is more than three times what they earned in profits during the same period. Today the federal tax is 18.4 cents per gallon and state taxes vary from 8 cents in Alaska to 50 cents in New York. At $3.00 per gallon, major oil companies are making an average profit of 10 cents a gallon on their U.S. refining and marketing operations.

When we buy a 20 ounce bottle of water for $1.00 (or more) at a restaurant or convenience store, we are voluntarily paying $6.40 a gallon for water. Does that make sense?

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