Gas Prices... Who's really at fault?

Shifting the paradigms of rising gas prices and who really controls the price at the pump.

Since 1993 the Federal Gas Tax has remained at 18.4 cents per gallon.  Neither a President nor Congress has raised or lowered this in nearly 20 years.  On inauguration day, Jan. 26th, 2009, a gallon of gas on average was $1.84* ($2.10 in Calif.).  That gallon of gas breaks down as follows for taxes:


April 2009 Gas Tax Rates**

California: 65 cpg (State / Local: 46.6 cpg, Federal: 18.4 cpg)

Washington: 61.9 cpg (State / Local: 43.5 cpg, Federal: 18.4 cpg)

US Average: 50.8 cpg (State / Local: 32.4 cpg, Federal: 18.4 cpg)

October 2012 Gas Tax Rates**

California:  68.9 cpg (State / Local: 51.5 cpg, Federal: 18.4 cpg)

Washington 55.9 cpg (State / Local: 37.5 cpg, Federal: 18.4 cpg)

US Average: 49.3 (State / Local: 30.9 cpg, Federal: 18.4 cpg) [DOWN 1.5cpg over 2009]

**Source: American Petroleum Institute



In 2009, Forbes list of most profitable companies includes #1: Exxon, #2: Chevron and ConocoPhillips sitting at #4, posting a combined profit of over $86 Billion dollars.  In 2010, Exxon was #2, Chevron #3 & ConocoPhillips dropping to #6 most profitable companies.  2011 has Exxon again at #2, Chevron at #3 and ConocoPhillips rising up 2 spots to land back at the #4 position.  2012 already has Exxon back in the number 1 position, Chevron & ConocoPhillips holding steady at #3 and 4 respectively and newcomer to the top 20, Valero coming in at #12.

It’s not the role of the President to limit profits.  They, along with Congress may be able to tax them, but no president can control the price of gas.  More drilling will not decrease the price, it will increase our supply and dependency on foreign oil, but no company is going to drop the price when they know they can get the higher margins.  The Mariners have a smaller payroll now than they did 5 years ago and yet ticket prices continue to rise.  Why?  Fewer people going to the games mean that the ones that do go must pay a higher price to offset the loss.  Same with oil companies.  More fuel efficient cars mean fewer gallons being pumped, so to offset the loss, we all pay a higher price to create equilibrium to keep profits high for shareholder dividends.  No different than any other company.  Red Robin can’t keep raising their prices, but they can make smaller portions so the cost is less.  Fortunately fuel is regulated and priced per standards, gallon & barrel so they can’t short sell their portions.

I’m not saying what they’re doing is wrong; we are a capitalist nation and more power to them.  We are founded on the ability to make a profit, obscene or not.  However those who believe the price of gas is a direct reflection of who is in office is a gross miscalculation and in direct conflict of most of their beliefs of a free market nation.

Keep all this in mind on Tuesday when you vote and make you understand the abilities and capabilities and maintain a realistic expectation of the positions that you’re voting for.  It never hurts to do factual research!

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.


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