T Nation

Profiting From Gas?


Care to guess who "profits" most?


With BP, Exxon-Mobil, and Shell reporting record profits, the Tax Foundation reminds us in its latest Fiscal Fact that the biggest beneficiaries of gasoline sales are federal and state governments, not the oil industry:


High gas prices and strong oil company earnings have generated a rash of new tax proposals in recent months. Some lawmakers have called for new ?windfall profits? taxes?similar to the one signed into federal law in 1980 by President Jimmy Carter?that would tax the profits of major oil companies at a rate of 50%. Meanwhile, many commentators have voiced support for the idea of increasing gas taxes to keep the price of gasoline at post-Katrina highs, thereby reducing gas consumption. However, often ignored in this debate is the fact that oil industry profits are highly cyclical, making them just as prone to ?busts? as to ?booms.? Additionally, tax collections on the production and import of gasoline by state and federal governments are already near historic highs. In fact, in recent decades governments have collected far more revenue from gasoline taxes than the largest U.S. oil companies have collectively earned in domestic profits....

[F]ederal and state taxes on gasoline production and imports have been climbing steadily since the late 1970s and now total roughly $58.4 billion. Due in part to substantial hikes in the federal gasoline excise tax in 1983, 1990, and 1993, annual tax revenues have continued to grow. Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues?more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.


I've been producing a lot of gas just lately, so I'm now waiting for the prophet...


This makes perfect sense. Just think, if local, state and federal governments weren't making a profit, do you really think that the price increases would continue? They get a percentage of anything sold. What makes gas sales any different? Uncle Sam and his relatives will always make money when consumers get the increases.


I think it's safe to say no one profits from your gas...


There's profit in that type of gas? Shit, I must be a billionaire!


Oh "profit", damn, it'll be a long wait then...