T Nation

Don't Blame the Oil Companies



So ExxonMobil is making a profit of roughly 7 cents a gallon, but we are playing and average of 48.1 cents a gallon in taxes. So who is gouging whom?

If ExxonMobil cut its profit in half, the price of gasoline would drop by a measly 3.5 cents. Are you beginning to get the picture?


Here's my issue. It's very basic and it does not require much knowledge on how gas prices are derived. When the price of oil, per barrel goes up gas immediately goes up, supposedly because of the price of oil per barrel. When the price of oil subsequently drops, all the sudden the economics behind the price of oil are really complicated and the price per barrel suddenly isn't the issue.
Somebody is full of shit. That much I am sure.

Yes, the taxes are to high.


Ha you think taxes are too high! We pay 80p+ in tax here per LITRE (where I am now It's roughly $10 a gallon). Three quarters of the cost here is tax at least, though a lot more people use railways/public transport here

I wouldn't mind so much if all the fuel tax/road tax/ whatever went into improving services for travelling/motorways/transportation etc but it so obviously doesn't and goes to fund governmental pet projects.

Here's my issue. 3 years ago when oil was $150 a litre it was 1.18 a litre. Now it's $110 and 1.38 a litre. It was 1.18 when it was 90 dollars a barrel. and I agree with what pat said.


Keep in mind that crude oil is just one component in the price of gasoline. Two good resources:



^^ This^^ People always forget this. Crude oil is NOT gasoline. It is it's own product that has it's own supply and demand schedule.

In fact - If you take the view that the supply/demand for the final consumer good is what drives the price for the inputs(as almost all economist do) then what we should really look at is the price of gasoline and from there "determine" the price of crude. ie - the price of gas has gone done ergo the price of crude should go down - not vise-versa.


Actually gasoline is made entirely from crude oil. Oil is refined then fractionally distilled and gasoline is one of the components that comes out of the fractional distillation process. They just add some cheap ethanol to it now-a-days to appease global warmers...er I mean climate changers and make our vehicle engines unhappy.

Also keep in mind what your first source says: 'On average more than 51% of money spent on gasoline goes to crude oil suppliers' - The largest crude oil supplier is the terrorist organisation OPEC: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.


He said it was one component in the price - not one component in the actually physical gasoline.
The price of crude is one of the hundreds of factors that would affect the price of gasoline ( look at the income statement of a refinery , they have more than just the expense of the crude oil....)


The iol companies are GREAT!!! $35 Billion in profits last Q and still fighting to keep their 4-7 Billion?yr in taxpayer dollars! They are REALLY serving the puplic interest!

Actually, ther fluctuation is caused by the same people who almost took doem the whole economy 2 1/2 yes ago: Wall Street!!

There is no oil shortage!!


You are right in that there is no shortage - but not in the sense of the word that I'm almost sure you mean to use.

Oil is a finite resource with roughly 3 billion more people trying to use it as we do; there is going to be upward price pressure.

Spelling -> Fail

Looking at absolute numbers and thinking they mean shit -> Biz/Econ fail.


of course just like every one else , it is my opinion that oil is getting harder and harder to obtain ,there will come a point that it is a glaring reality and it would be wise to prepare to a smoother transition.

A figure I have heard recently was that Corn right now is worth more than $3 a bushel , just to burn.

I looked for a youtube that took a Mathematician view on oil, his view was consumption is going up and discoveries are going down, he said %7 increase would translate to doubling of consumption every 10 years . With realistic discoveries going down , we are standing in a short line to be short of oil.


And our "economics expert" surfaces again....
A. It's not the taxpayers money, it belongs to the oil companies. The taxpayers have no more right to it then they do to the wheels off your car.
B. It's not the job of any corporation to serve the public interest. It is their job to maximize the return for their investors. They have done a fantastic job.

A large portion of the price fluctuations is due to the fluctuations in the value of the US dollar(which is driven by the Fed Reserve). So in part you are correct (amazingly enough).

Which contradicts the statements you made in another thread when you wnet on your peak oil thoery rant, but we don't need to go there.


And as the price increases, alternative sources will become economically viable, and and the problem will be solved. Of course this cannot happen if the gov't is manipulating the market by punishing one sources of energy while subsidizing another.


ok. What if we accounted for the TRUE cost of oil? The externalities?

  • 2 wars
  • damage to the environment in extracting, refining, transporting and consumption + all those plastics made from oil sitting in landfills

  • huge wealth transfer to islamic states and kingdoms who fund terrorism angainst the west
    get rid of the tax breaks/subsidies (ok reddog?)

Some estimates put the price of a gallon of gas at $13.

How do alternative fuels look now?


$13/gal? Which orafice did you pull that number out of?


Like I said, when crude goes up, so does gasoline. When crude goes down, gasoline doesn't. When crude goes up, we're told that it's because of price of oil per barrel. When the barrel drops, suddenly, there's a lot more components to the price of gas and the barrel is small issue. Just sayin'...
Somebody somewhere is full of shit. On one side or the other, but somebody is sandbagging.


When crude prices crashed in 08 gasoline prices DID go down. I'm not quite sure how you don't remember this as it was only a couple years ago.....

Here is a chart for Toronto gas prices - http://www.torontogasprices.com/retail_price_chart.aspx -

Looks like gas went from $1.40/liter (sry Canadian...) to $.66/liter. Hmmmmm this just so happens to coincide with the crash of crude that happened simultaneously.


The price of diesel is much higher than gasoline, all while two gallons of farm diesel are derived from the same stock that creates one measly gallon of unleaded gasoline. I personally agree with pat, someone is full of shit. Back in the '90s diesel was significantly cheaper than gas, now the inverse. Why?

Someone please explain to me why I must pay the same highway tax as an eighteen wheeler which obviously wears groves in the road surface. I would honestly like to understand these conundrums.


It's my understanding that gasoline futures play a lot into this as well.

Maybe somebody here knows more about commodities trading can explain this better?


I just want oil to be available until I die, I could care less about what happens after lol.


Farm diesel is significantly cheaper because it does not have as much taxes applied to it, primarily highway tax, because it isn't used on the highways. Diesel prices have been driven up by demand. How many diesel pick-ups did you see 20 years ago compared to today?
One example: http://www.nrdc.org/greengate/air/dieself.asp
Another: http://www.resourceinvestor.com/News/2006/9/Pages/The-Diesel-Dilemma.aspx

You don't. http://www.mackinac.org/8433