Why does my gasoline cost so MUCH?

Friends,

You won’t see much reported about the true cost of gasoline in our country. The outrageous cost of most commodities is because of Government meddling. I have said that for years. And having worked in the Oil and Gas (OnG), I believe the industry is a good industry – not perfect.

But, here are two related blogs for you to read: Carpe Diem by Professor Mark Perry; and Perspectives by Exxon-Mobile.

Our Government has tinkered with the value of the Dollar against Chinese money. Yes, the Chinese aren’t happy with that. But, the real problem is that it drove the price of Gasoline up more than 30%.

So, Exxon gets $.02 per gallon. The Govt gets 24 times that at an average of $.48 per gallon. And the Federal Govt intentionally forced up the price more than $1.00 per gallon.

I think someone owes Exxon-Mobile an apology ….

Mark Perry also looked at what the Federal Govt did with inflation: Professor Perry.

In summation: Not only does the Govt make an insane amount of money for no work (24 times what the Gas companies make); and not only do they blame Oil and Gas for being greedy when they get all the money; but, the greed from the Intelligentsia is destroying America. IMHO.

The Govt greed has become too big to fail.  And they are destroying the American way of life.

Personally? I think Govt needs to quit tinkering with the economy. What do you think?

Wayne
I am not certain this is required, but I have done contract work for Exxon and Exxon-Mobile (about 4 weeks in total, more than a decade ago). I do believe they try to do a good job. I do not have that same faith in BP. It would be nice if politicians and pundits would tell us their recent connection, do you agree?

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About Wayne

First, I blogged on blogger, then Myspace - soon I was consistently ranked. Next, I quit. Then the blogging addiction came back .... Comments are appreciated. Not nice comments are edited. You can follow me at the top right.
This entry was posted in Business, Economics, Leadership, Politics, Society, Transportation. Bookmark the permalink.

2 Responses to Why does my gasoline cost so MUCH?

  1. Anton Noosbusch says:

    Hi, I stumbled across this blog from a link you posted on Yahoo. I have no idea what is compelling me to write this, and I know my efforts will be largely in vain (I feel a bit like Don Quixote tilting at the windmills), but this needs to be said: your analysis is flawed on many levels as a result of a poor grasp of facts and faulty logic.

    The government hasn’t tinkered with the Dollar against the Renminbi – indeed, the opposite is true. The United States’ policy has been to urge China to let the Renminbi float for quite some time. The Renminbi is allowed to float but only within narrow confines; China keeps it largely pegged relative to other currencies. Please reexamine your facts – the Dollar hasn’t decreased 30% relative to the Renminbi. In fact, it has appreciated relative to the Renminbi. And if it had, how would this have affected gasoline prices? Oil futures are not traded in Renminbi – they are traded in Dollars.

    The link to Professor Perry’s post proves nothing other than the Franc and the Yen appreciated relative to the Dollar.

    Regarding the point you made in your Yahoo post: Quantitative Easing is an instrument of monetary policy enacted by the Federal Reserve – an entity independent from the government. You may argue that the Fed is in cahoots with the administration, but it would be nigh impossible for you to make that case. The Federal Reserve system is set up in such a way that it is incredibly insulated from politics – the result is monetary policy that is in the best interests of the country’s long term growth, rather than short sighted policies in the interest of scoring political points.

    Regarding gas taxes: the government is entirely justified in taxing gasoline. Gasoline imposes numerous negative externalities, both environmental and economical. Further, the gas tax funds highway and street paving and repair, which, by the way, is drastically underfunded due to the gas tax having not been raised since 1997 – relative to the price of gasoline, the gas tax has decreased significantly. In 1997, it was about 15% of the price of gas – now, about 4%. Yet, the gas tax remains an important source of revenue for the transportation budget – if we are to eliminate this tax, how do you propose to adequately maintain highways, bridges, and streets?

    Last, please drop the ‘Intelligentsia’ rhetoric. It is overblown, overused, untrue, and to resort to namecalling and strawmen lowers the level of discourse.

    To answer the question posed in the post’s title: your gasoline is expensive because of geopolitical instability in the Middle East, ever-increasing global demand, and a finite and decreasing supply. Period.

    All the best,
    Anton

    • Wayne says:

      Anton,

      Thank you for stopping by. However, your use of straw men does not change the reality in which we live.

      Although, I must admit, your logic is rather effective. And if I did not follow Oil and Gas, logic, and politics, I would have been swayed by your arguments.

      Quantitative Easing (QE) lowered the value of the dollar, and crude oil prices went up in response. The Chinese complain that we are doing QE because they will not float the Renminbi. The Fed says they are justified in QE because the Chinese are not floating the Renminbi. And back and forth. Both govts are tinkering with the money supply.

      I agree with the professor I referenced, and I have been writing and saying the same thing for most of the last decade …. history seems to be on my side.

      But of all of your examples, the most off the wall would be claiming that an average of $.48 a gallon in taxes is JUST 4%. Gasoline is NOT $12 a gallon, yet.

      Yet!

      But, it might be in the next decade, unless global powers took us into the Second ‘Great Recession.’

      And about the age old straw man about ‘political’ instability in the Mid East. War in the Mid East causes spot inflation in the oil markets. It has MUCH less impact upon long term price and supply, because of one simple (and overlooked) factor.

      The oil is ALWAYS sold to someone. The product enters the global pool of oil for sale, and that drives the costs up or down depending more upon demand than upon ‘supply issues.’

      IMHO.

      But, it makes great political rhetoric. And it ‘excites’ the masses. But, after listening to the rhetoric for decades, I have become convinced most people around the world no long believe the rhetoric.

      Again, IMHO.

      Thanks again!

      Wayne

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