As Gas Prices Continue To Rise, Obama’s Answer Is To Increase The Gas Company’s Costs
May 31st, 2008 | by Matthew Kowal Published in Economics, Environment, Global Warming, Oil
Gas prices are quickly becoming one of the major issues of the election, and with the democratic primary coming to a close it’s very likely debates on the solution to the problem will become rather heated. As we all know, the major reasons for the increase in price are:1. The Global Warming Myth 2. Biofuels 3. Increased demand from China 4. Slumping dollar 5. Increased taxes by the democrat held congress Currently, OPEC makes eight cents for every gallon of gas pumped. Thats a profit margin of around 2% depending on the price of gas. The federal government alone, takes in 18 cents for every gallon of gas pumped. This does not include state or local taxes. So the oil company searches the global with million dollar equipment to find the oil, map it, and then drill it. However to drill it in the ocean they have to construct a small town in the middle of the ocean, and build a pipe and drill that goes from the surface of the ocean to the ocean floor and into the earth’s crust. Yet they are expected to recover those costs plus pay to refine it, barrel it, and ship it all over the world. After all that, they only receive 8 cents a gallon. Our government takes in more than twice that. Now Obama wants to raise taxes on OPEC, and anyone with any business experience knows that all that happens when costs are raised they are passed right on to the consumer. Especially with such an inelastic item like gasoline, any new taxes levied on the oil companies will undoubtedly be passed on to the consumer. In the state of Illinois it only gets worse as the state is already somewhat bankrupt. A dramatic increase in gas tax is going to help pay for the deficit the state currently has, however people are driving less and filling up even less. This summer there could be a record low for fill ups that might rival the gas crisis of the seventies. So I ask you Governor Blagojevich and Senator Obama, when will you wake up and lower costs the capitalist way? Drill in ANWAR and on the cost to increase supply and lower the cost of gas. A high school economic student could solve this problem and still have enough time to increase his rank in Halo 3.
