May 17, 2007

Who Profits Most On Gas?

I’ll give you a hint – not the oil companies.

While oil companies make about 13 cents on a gallon of gasoline, the federal government makes 18.4 cents (the federal tax) and California's various governments make 40.2 cents (the nation's third-highest gasoline tax). Pelosi's San Francisco collects a local sales tax of 8.5 percent -- higher than the state's average for local sales taxes.

And the solution, proposed by Pelosi and other Democrats – is to increase the profit the government makes through taxation, thereby raising the price of gas.

As George Will points out, adjusted for inflation the price of gas is below what it was at the start of the Reagan Administration.

And as I noted in February, oil companies are not making that big of a profit.

As a percentage of total earnings, ExxonÂ’s profit was 10.45 %. Is that really an unconscionably high profit?

And taken per share, the profit was $6.62. With shares trading at $74 dollars as of this morning, that means that each share had a profit of 8.9%. Again, does the level of profit really shock the conscience?

So who is gouging the consumer – Big Oil or Big Government?

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