The Black Informant | African American Commentary, News and Community Building

It’s always a good idea when authoring an op-ed piece to use up to date information in your factoids. That’s IF you mean to persuade someone to supporting your argument.

According to Figure 1 in the above link, the portion of a gallon of gas that covered Federal & state excises in 2005 was 19%. The price of crude accounted for 53%. In real dollars and cents that’s about $.46 of the $2.27 average cited by the EIA. This compares to approx. $.54 in Federal and state taxes on a $1.35 gallon of gas for 2002 — the last year you cite.

Correction: the amount in dollars and cents of Federal and state taxes on a gallon of gas in the U.S. in 2002 was approx. $.40.

See? Even I try to check and re-check my numbers.

It’s always a good idea when authoring an op-ed piece to use up to date information in your factoids. That’s IF you mean to persuade someone to supporting your argument.

I persuaded you to do your homework on the issue (THE main goal of this site) and as far as I can tell, my original point in this post still stands (however I will admit that using recent data is always best ) Let me post what you linked to:

“In 2005 the price of crude oil averaged $50.23 per barrel, and crude oil accounted for about 53 percent of the cost of a gallon of regular grade gasoline (Figure 1). In comparison, the average price for crude oil in 2004 was $36.98 per barrel, and it composed 47 percent of the cost of a gallon of regular gasoline. The share of the retail price of regular grade gasoline that crude oil costs represent varies somewhat over time and among regions.

Federal, State, and local taxes are a large component of the retail price of gasoline. Taxes (not including county and local taxes) account for approximately 19 percent of the cost of a gallon of gasoline. Within this national average, Federal excise taxes are 18.4 cents per gallon and State excise taxes average about 21 cents per gallon.”

Now add the average Fed and State taxes and you end up with .39 cents per gallon (I’m assuming this does not include local fees). So let’s think about that for a minute. When I was paying close to $3.25 per gallon last summer, the idiots in DC and in my own state could have brought that price down to at least $2.89. Now couple that with the fact that the gas panic of ’06 only lasted for a few months and I doubt very seriously that both the federal and most state budgets would have been destroyed–because as I pointed out in this post for the state of California it was already determined to borrow more money with the voter’s blessings this last election cycle.

And here is some more information that I missed:

“Even when crude oil prices are stable, gasoline prices normally fluctuate due to factors such as seasonality and local retail station competition. Additionally, gasoline prices can change rapidly due to crude oil supply disruptions stemming from world events, or domestic problems such as refinery or pipeline outages.”

Again, thanks for the correction. All we are left with now is the original point that our politicians still are willing to raise all kinds of hell over oil corporations while not A. taking the second excerpt above into consideration and B. purposely avoiding to propose some sort of tax suspension when they feel that the cost of gas is too high. I saw neither during the last political dragnet.

P.S. The reason why your first comment did not post was because anytime a commenter includes a link, this site will hold it until I verify that is is not spam. I was out most of the day so that also explains the delay. Just wanted you to know in case you thought I was trying to bury it or something.

“… as far as I can tell, my original point in this post still stands.”

Let’s put it to the Pepsi challenge, . You said,

“… the actual cost of crude oil and the tax rate (In numbers of states, the tax rate has gone up since this graphic was created) are about the same.”

But the information you originally provided was out of date. The actual cost of crude oil had increased from approximately $.60/gal (in ’02) to $1.14/gal in the ’05 EIA survey. Over the same period, the total Federal and state taxes had also increased — about $.06/gal. However, it’s important to note the portion of Federal and state tax excises on a gallon of gas has shrunk from 31% of the total ppg to 19%. Quite obviously, either sales tax rates have been cut, actual excises (~ $.40/gal) are fixed, or some combination of both has occured during the past few years. Under any reasonable scenario, excise taxes on gasoline aren’t the burden on consumers that you’ve suggested. If anything, they should be at least 50% higher than they are presently (but I’ll table policy arguments for now).

If your concern is how gov’t spends the taxes it collects, then your analysis should start with… well… how gov’t spends money in order to determine if public dollars are being wasted and to what degree. For example, that portion of a gallon of gas that’s paid as a Federal excise supposedly goes to the maintenance of Federal highways. Given the advanced deterioration of the Interstate and U.S. highway systems, I’m curious to know if urrent revenues sufficiently capitalize maintenance and new construction, and if all revenues raised are properly directed to the highway fund.

Under any reasonable scenario, excise taxes on gasoline aren’t the burden on consumers that you’ve suggested. If anything, they should be at least 50% higher than they are presently

LOL! Then I tell you what…you can help me by paying my gas tax. I would not mind going down to $2/gallon.

Again, .40 cents is .40 cents. If the market (as indicated in the link you provided) has the tendency to fluctuate based on a number of factors, either cutting down the tax rate further or calling for a temporary suspension altogether would not break the bank.  With the increase of terrorism in places like Africa and the middle east (where most oil deposits are located) and the advanced level of the war in Iraq since 2002, it does make sense that the actual cost of crude oil has gone up. As I mentioned earlier, California had already determined to go with plans to ask taxpayers for additional loans to cover highway/transportation issues. Not only that, the state also made as a ballot initiative a promise (again) that tax funds gathered from the sale of gas would only be used for their original intent. If the state would have kept that commitment like it was supposed to, this would be a non-issue out here.

I believe most consumers understand and accept certain exigencies affecting prices at the pump, i.e.; ‘security’ premiums, catastrophic events, environmental concessions, etc., as part of the cost of doing business. Ditto for the premise behind excise taxes; if you give a dance, you gotta pay the band. So I believe consumers generally expect a degree of price volatility with gasoline. And few begrudge a business making a profit.

But as the concern is price gouging (or worse, profiteering), the matter of excise taxes is a straw man. The gov’t doesn’t set the price for a barrel of crude; neither does it determine the market (supply & demand) for petroleum refining or retail gasoline. These issues are heavily directed by a vertically-integrated oligarchy pretending to function as a free market. The oil industry’s practice of artificially restraining supply — even through emergencies like Hurricane Katrina — is evidence of their exploiting American consumers.

I believe most consumers understand and accept certain exigencies affecting prices at the pump, i.e.; ’security’ premiums, catastrophic events, environmental concessions, etc., as part of the cost of doing business.

I beg to differ here. Most of the bellyaching that you heard (or at least I did) from both the media and the regular man on the street was surrounded by the non-substantiated theory that the price of gas was being controlled by a small group of White men in a boardroom . When the retirement package of the former CEO of Exxon was made public, it only gave added shrill to their rhetoric.

These issues are heavily directed by a vertically-integrated oligarchy pretending to function as a free market. The oil industry’s practice of artificially restraining supply — even through emergencies like Hurricane Katrina — is evidence of their exploiting American consumers.

So I guess the fact that refineries in that region were shut down and in some cases heavily damaged was in your estimation just a lame excuse for gas prices to have gone up during that time. Sorry, but like any other industry, oil is subject to SUPPLY and demand. So unless you are privy to some secret documents to justify your claim that oil companies “artificially” restrained supply, I would keep the hearsay out of what has turned out to be a very interesting conversation.

One point you fail to mention here is that while prices were going up here in the US, the same was happening worldwide–particularly in countries throughout Europe. Couple that with the fact that the US only controls a very small percentage of the world’s oil supply, it does not make sense that cost would go up both here and abroad at the same time.

“… oil is subject to SUPPLY and demand. So unless you are privy to some secret documents to justify your claim that oil companies “artificially” restrained supply… “.

Yet, there’s actually no competition among producers as I’ve outlined. Plus, OPEC has regularly (and openly) manipulated what are otherwise production ceilings and price controls since the early ’70s that in turn influence the market. Presumably non-OPEC petroleum producing countries simply follow suit.

“… it does not make sense that cost would go up both here and abroad at the same time.”

It would if you understood how the petroleum industry operates.

Most petroleum, regardless of its point of origin, is put up sale OTC with the price pegged to exchanges like NYMEX. So, even if additional refineries were to be built in the U.S. or domestic ‘ production increased — items industry analysts say are both possible — the resulting increases would be put up for sale on the world market. But the catch is both producers and (wholesale) consumers are mostly subdivisions of the same conglomerates, e.g.; ChevronTexaco, ExxonMobil. Hence… no actual competition exists.

“…there’s actually no competition among producers as I’ve outlined.”

“…if you understood how the petroleum industry operates.”

Remember this?

May 22 (Bloomberg) — The U.S. Federal Trade Commission cleared the oil industry of price gouging accusations after last year’s Hurricanes Katrina and Rita, saying a nine-month probe showed fuel providers didn’t manipulate the market.

Gasoline soared above $3 a gallon last summer as the hurricanes shut down U.S. Gulf Coast production and refineries. Prices would have gone higher if companies had failed to raise imports or increase output at unaffected refineries, said Louis Silvia, assistant director in the commission’s bureau of economics.

“When you see them responding to prices going up by producing more, that’s a hallmark of competitive behavior,” Silvia said in an interview. Evidence of companies cutting back supplies “would have been a bad sign.”

The report found that 15 companies, including seven refiners, two wholesalers and six independent retailers, charged prices that exceeded limits set by Congress. Further investigation determined that prices charged by all but one of the companies, a retailer, were similar to prices charged by regional competitors.

“You don’t have a one-size-fits-all market here,” Silvia said. “They were charging prices similar to other firms who were facing comparable market conditions.” (source)

So let’s see, the government whom you believe is justified in maintaining fuel taxes and fees during a time of great volatility in the market concludes that despite all the hype there were no signs of price gouging or artificially witholding supply to increase prices. Again, unless you are privy to some info that the rest of us are not, the hard core evidence to back your argument just is not there.

The FTC report cited in the study was, by the agency’s own admission, so limited in scope as to not serve as a reliable comment on the entire petroleum industry. In fact, the report is qualified as applicable only to the behavior of and between U.S. refineries and retailers over a two month period of 2005; petroleum production and exploration was not examined. Furthermore, the report noted the effects of OPECs machinations on crude oil prices in the world’s markets.

So I guess I am to assume here that you are in fact privy to information beyond this 9 month study and the general public at large since you have yet to answer that question. If so, then I am very impressed that you would only reveal that information to a lil’ ol’ blogger like me

I can only walk you to the door, Duane. You’ll have to walk it through it by yourself.

The FTC’s report covered 2 months; August and September of 2005.

Other reports — by the FTC, GAO, and other gov’t and non-gov’t agencies — on the practices of the petroleum industry are freely available to the public.

FWIW, here’s an op-ed piece by partisan GOP pundit

Charles Krauthammer that makes a case for higher excise taxes on gasoline.