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“Windfall Profits” Farce Part 2
By JD Bluefield | May 2, 2008
Due to my inquisitive nature, I needed to find out exactly how much of taxes, profit and crude oil costs factor into the final cost of oil. After a little more digging, I found a this interesting information on the breakdown of gasoline prices.
This graphic to the right is from the Department of Energy, for the month of March 2008. As you can see, Refining makes up only 8% of the cost of gasoline.
Here is a table showing the actual cost of gasoline in California, from the California Energy Commission.
| Portion of Price | $ | % of Price |
|---|---|---|
| Retail Price of Gas | 3.89 | 100% |
| Crude Oil Cost | 2.83 | 72.8% |
| Refinery Cost and Profits | .31 | 8.0% |
| State and Local Sales Tax | .29 | 7.5% |
| State Excise Tax | .18 | 4.6% |
| Federal Excise Tax | .18 | 4.6% |
| Distribution Costs, Marketing Costs and Profits | .09 | 2.3% |
| State Underground Storage Tank Fee | .01 | .25% |
At 72.8%, Obviously the majority of the cost of gasoline comes directly from the price of crude oil. The 10.3% portion that goes to the oil companies are the “Refinery Costs and Profits” and “Distribution Costs, Marketing Costs and Profits”. The local, state and federal taxes make up 17% of the total cost of gasoline. If you’re asking, ‘What the hell is the “State Underground Storage Tank Fee” for?’ This fee is to remove the underground gasoline storage tank if a gas station closes and doesn’t have money to pay for the removal. These occurrences are very rare and pretty much gets immediately spent for other purposes.
For my readers in Hawaii, if you recall a couple years back, there actually was a committee formed to investigate whether gas companies are gouging prices… here’s what they found from the Seattlepi.:
A report on the state’s petroleum industry in December found that gas prices may have been 10 cents per gallon cheaper if the state’s gas price cap hadn’t been suspended in May 2006, according to Fairfax, Va.-based ICF Consulting, which analyzed information for the state as part of a $1.2 million-a-year petroleum industry monitoring program.
But the report didn’t find that Hawaii gas prices were out of the ordinary.
“Our consultant concluded that refiner margins on bulk sales of gasoline and jet fuel are competitive with other markets,” wrote Lisa Kikuta, chief researcher for the Public Utilities Commission, in an e-mail. “Supplier retail service stations are above mainland markets but may still be reasonable because of the relatively high cost of doing business in Hawaii.”
Oil refiners’ profit margins in Hawaii are already lower than on the Gulf Coast, said Chevron spokesman Al Chee.
So it found nothing, cost tax payers over $1.2 million and may have caused prices to go higher. That is awesome. In my opinion, every elected official who pushed for a committe and the gas cap should be fired. Someone with Google and 10 minutes could have done the same search I did an hour ago, posted info from the DOE and California Energy Commission and called it a day.
In my opinion, we should keep the taxes the same and use them properly, or raise them and encourage more people to drive smarter. Hell Europe and Japan was paying $4/gal years ago, and have the most well kept roads in the world.
Topics: Engineered Living, Investing |
3 Responses to ““Windfall Profits” Farce Part 2”
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May 2nd, 2008 at 6:05 pm
17% tax, $.62 for every gallon in California is a lot. Schwarzenegger was right. Hawaii has the same problem, tax used as other than intended. Blogging should bring more light to the issues and hopefully the up and coming voters can make wiser decisions. Keep going! The more informed people become the better our future.
May 3rd, 2008 at 9:07 am
This is why people like John McCain frighten me. By McCain’s own admission, he doesn’t have a good grasp of economics, and then presents plans like a summertime federal gas tax holiday that will relieve nothing, probably encourage more gas use, and ultimately result in higher prices.
Not that I hear better plans coming from the other candidates…..
May 4th, 2008 at 11:28 pm
Well, Hillary and Obama are for a “Windfall Profit” Tax, McCain is against it. McCain and Hillary are both for the summer tax break. Obama voted for the state gas tax breaks 3 time while in the Illinois Legislature. I think the gasoline problem is being played up in the news to avoid talking about solutions to other bigger issues. Its easy to talk about helping consumers with their gas problem, and that is really all this is. Telling people what they want to hear. “What? You’re going to give me something for nothing, you got my vote.”