When gasoline prices go up, oil companies get blamed. Obscene profits! Greedy exploiters of the public trust! Now that gas prices may drop below $3.00 per gallon, the oil critics are silent. If oil and gas prices are rigged, then why are prices falling? Oil is down to $80 a barrel. Last month oil was around $105 a barrel. Some analysts are projecting the price will drop to $72 a barrel.
Why aren’t the oil companies being praised for these lower prices? Where are the 99 percenters? Why aren’t they in the streets thanking the oil companies for the reduction in price? Liberals need a bad guy in order to pump up the troops, so they will ignore how much consumers are now saving because gas prices are falling.
There are a couple of things that are contributing to lower oil prices, and it’s not all good news. First, there is a worldwide slow-down in the economy. Demand is down because business expansion is down. Europe and China have cut economic expectations given the instability of the markets and questions about the stability of banks and the ability of European governments to meet their huge financial obligations.
Second, America is a nation on wheels. We love our cars. It’s summer, and it’s vacation time. Many families are foregoing vacations because they are uncertain about the economic future.
One thing that is not going down is the taxes that our governments – local, state, and federal – charge on each gallon of gasoline sold. Oil prices may have dropped, but government treasuries still get theirs no matter how low gas goes. The nationwide average tax on gasoline is 48.8. The federal tax on gasoline is 18.4 cents per gallon. The average state gasoline excise tax is 20.9. Other taxes (such as applicable sales taxes, gross receipts taxes, oil inspection fees, county and local taxes, underground storage tank fees and other miscellaneous environmental fees) were 9.5. Some states, like Georgia, figure their gas tax on a percentage basis.
If governments stay out of our economic business, economies and prices generally find equilibrium. If there’s a glut in oil and less demand, prices will drop and production will slow. If there’s higher demand, prices will rise and more production will result as investors see a way to make money.
It doesn’t help when oil companies have to get permission to drill for oil, are denied the right to build pipelines from oil-rich areas like Alaska and Canada, and that so-called federal lands are bottled-up.
So the next time you fill up at the pump, thank an oil company.