Gas taxes?...Who is gouging?

[island911]

Originally posted by cegerer
In Michigan, every time a gallon of gas goes up 10 cents, the State collects an extra 30 friggin' million dollars in sales tax! This is what is called a Tax Windfall This is money the bureaucrats were not planning on and did not budget for, but once it's in their greedy little hands, it's as good as gone.

Exactly

.. or States taking more from a pack of cigerettes than the wholesale cost . .. and THEN suing "the deep pockets of big tabacco."

Government is the biggest "Big Business" of all. --but, hey; at least it's getting bigger.

[widgeon13]

From a WSJ article 4/25

"With heavy hitters like Exxon and Chevron due to report profits later this week, Occidental Petroleum said that its earnings jumped 45% during the first quarter, though BP's profit was knocked down by 15% amid lower output and tax charges."

I heard an expert quoted today on Bloomberg radio (sorry, I didn't get the name) that gas consumption has not increased in the first three months of 2006. Supply and demand driven commodity, China's demand and speculation of Iran and Venezuela interruptions are the basis for increasing price. Just enough to make billions in profits.

So if consumption has not increased my simple mind tells me that the oil companies are just increasing margins on existing sales. Perhaps that is an over simplification.

Gee, let's give those oil compaany execs a big bonus and stock options because of the brilliant businsess decisions they have made in recent months.

[pwd72s]

Here we go again...the Commies vs. the Capitalists...

[Jim Richards]

that's the wrong argument, but a convenient one. Do we have an energy policy that goes beyond "letting the market decide on its own?" I think the prices are making us all think about and talk about alternatives. And taxes are not an energy policy.

[jyl]

Federal gasoline taxes (18 cents/gallon) are used to fund highway and transportation spending, some of it by the federal government but most of it by the states using federal dollars.

State gasoline taxes (in California, 18 cents/gallon) are used for various purposes, sometimes for highway and transportation spending, sometimes for general fund spending. There are often also taxes for other specific purposes (e.g. in California, 1 cent/gal to clean up leaking underground fuel tanks), sales taxes, and sometimes local taxes.

If you suspend or eliminate federal gasoline taxes, then either the federal budget deficit grows or the states receive less or no transportation funding from the federal government. If you suspend or eliminate state or local gasoline taxes, then some state/local spending has to get funded from other revenue sources (read: taxes).

Bottom-line, when a politician says we should reduce gasoline taxes to give consumers relief, he is basically proposing to buy your vote using dollars borrowed on the account of you (the taxpayer). Neat trick, to buy your vote with your own money.

If that politician happens to be the President, then he's basically saying the federal government will divert money from your state (and your roads, bridges, etc) to buy your vote.

For more info go here http://www.fueleconomy.gov/feg/gasprices/FAQ.shtml

[widgeon13]

it's not the wrong argument, it's just a multi-headed dragon. it all depends on your perspective.

if you are speaking of my comments, get a proxy statement from Kinder Morgan, it's top five highly compensated execs each received $200,000 in salary for the reported years, bonuses were sig. but under $1M. That's what you call ethics in business.

[ChrisBennet]

Something for the capitalists:
Suppose for minute that a report came out that blamed the record costs for new homes on "profiteering developers". While construction materials only went up 5% home prices went up 25% in the last X years. (I'm just making those number up.)
Would you agree with the report's findings or would you say "Hey, it's not that simple. Housing prices are set by the market as well as materials costs." ?


Something for the socialists:
The oil companies do have some control over the market by manipulating the supply of refined fuels. By just not building more/extra refinery capacity they can artificially (but completely legally) reduce the supply of refined fuels. Throw in a natural disaster that takes some refineries off-line and the law of supply and demand will cause the price to go up.

Something for the conspiracy theorists:
Now if company "A" reduces or fails to expand refining capacity, company "B" could take advantage of this and increase their capacity and take market share away from company "A". To avoid this sort of thing, company "A" needs to either have a monopolistic market position or be in collusion with company "B". A couple of oil company executives playing golf on the grassy knoll perhaps?

-Chris

[Moneyguy1]

Fellas...

The US still pumps out a considerable amount of domestic crude, agreed?

So....Has the price to pump a domestic barrel increased over the last year or two? Assume that the cost to pump domestic crude is $20 a barrel. Now outside sources force the rest of world price to $70, and the domestic producer foloows suit. Did the domestic oil company just make an additional profit on that barrel of $50?

In the world of business, there is nothing wrong with this, except the ROW price is being artifically raised. In China, a gallon of gasoline costs the equivalent of $1.39. In Venezuela, the price at the pump is $0.12 per gallon. Adding a tax domestically maintains prices high in places like Nederlands ($6+ per gallon). Addidng a tax to US gasoline does nothing to reduce the profits of domestic producers, except that it may have a very minor effect if people reduce their driving.

Reducing the pump price by forcing the domestic producers to reduce their profit margins will result in shortages. But, if the government were able to "force" the producers to give back to the government part of these additional profits, the price to the consumer would remain the same, but the money could be used for funding research into alternate sources and possibly reducing the growing national debt.

Chris...Very good points, especially the last one. Call it oligopoly, collusion, phases of the moon; it has been with us since economies were originally created. All one has to do is go back to the late 19th and early 20th century(think Teddy Roosevelt) and examine the anti-trust cases brought against big businesses.

[hoff944]

Everyone talks about oil company profits, but do people know what profit margins are?

[Jim Richards]

yes, I do.

[widgeon13]

These are the results for OXY derived by dividing profit by total revenue (Gross), net would be before taxes. (Not necessarily the way Enron did it but most conventional way of calculating)

Profitability
Gross Margin (1 year): 53.22%
Operating Margin (1 year): 44.56%
Profit Margin (1 year): 34.73%

What other industries rival these kind of results? Actually my ***** is not margin but the outrageous pay packages that are doled out in industry today and it ain't just the oil comapanies. I'm not bitter because of this I just feel it is unethical to pay someone more money than they can spen in 10X lifetimes.

[jyl]

What other industries rival these kind of results?

Software, pharma, some semiconductors.

[widgeon13]

Actually my ***** is not margin but the outrageous pay packages that are doled out in industry today and it ain't just the oil comapanies. I'm not bitter because of this I just feel it is unethical to pay someone more money than they can spen in 10X lifetimes. [/B][/QUOTE]

As I indicated my point is compensation not margin but thanks for answering my question.

[sammyg2]

Nice work pulling up Occidental's numbers, especially since they are not typical. Good way to try and skew the argument and make a point. Very effective but not entirely responsible. How many different oil companies did you look at before you found numbers high enough to mak your point?
How about we look at Exxonmobil's profit margin of 10.87% ?

Or maybe ConocoPhillips profit margin of 8.33%

Valero posted a profit margin of 4.41% last quarter.

Chevron had a very high profit margin for the quarter of around 22%, but that number was affected by one-time factors. It is not expected to repeat anywhere near that high.

Not quite as impressive as your numbers, but they are realistic and indictitive of what is really going on.

[gaijindabe]

Who here is not free to buy oil company stock and share in these profits?

Go for it.

[island911]

So what does buying oil company stock do for us, as a whole?

I mean, I always think of investing as, say, buying equipment to go drill for oil somewhere.

It seems to me that speculative buying of oil stocks (esp right now) is only going to inflate the bubble more . . . we will pay more at the pump RIGHT up to the point when our 'investment" bubble POPs.

[gaijindabe]

Well if anyone thinks old companies are making too much profit - then buy shares and get your fair share when they pay out dividends. If you think if too risky and a bubble about to POP, then don't. My point is that these companies do not exisit in a vacuum. They are all publicly owned. And they are doing what companies do.

But us as a whole? I want no part. Not that I am not a loyal and patriotic American. But as far as energy consumption - let the suckers with the SUVs, monster trucks and zillion sq ft McMansions sweat this one out. Anyone with one eye open could see this coming a million miles off..

[widgeon13]

Originally posted by widgeon13
Actually my ***** is not margin but the outrageous pay packages that are doled out in industry today and it ain't just the oil comapanies. I'm not bitter because of this I just feel it is unethical to pay someone more money than they can spend in 10X lifetimes.

As I indicated my point is compensation not margin but thanks for answering my question. [/B][/QUOTE]

sammyg2 : I posted OXY because I happened to be doing some research on the company and the figures caught my eye. I did not search to find those results in contrast to other company's results. Obviously, it got your attention and if it encourages other folks to get off there a$$e$ and do some research, then the objective is achieved.

Sometime the best way to get people to search for answers is to ask questions as opposed to the endless preaching that seems to take place all to often in OTDiscussion.

No harm, no foul.

respectfully submitted.......

[Moneyguy1]

I would think that those who have waited to invest in oil until now will not see the same rise in value that has already happened. In fact, I would not recommend it, although I may be proven wrong.

Then again, I am a very cautious investor...

[CRH911S]

FWIW. The Alaska Legislature, consisting of majority conservatives, is currently debating changing the current oil tax structure to one that will increase taxes on profits. It's nice to point out that last years budget surplus was 1.2 billion and next year is looking pretty nice as well. Combine this with the 33 billion we have in the bank, the generousity of lower 48 taxpayers for the fine contribution of 400+ million for our bridges to nowhere.
Clinton