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| Yes | 68% | 328 votes | Total: 479 votes | |
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This April Fools day, appropriately, the Congress of the United States invited the management of the five largest oil companies to come to Capitol Hill to give testimony about the significant increase in the profitability to their bottom lines. Some rhetoric called these gains obscene. Inflamed oratory spoke to the plight of the ordinary citizen, who suffered mightily from this windfall profit that oil companies were reaping mainly on the backs of the people. So much for the American dream! How do we haul our business leaders before committees to justify making profits, which happens to be their job? We need to examine in depth the "gouging" characterized so vociferously by several committee members.
The Exxon Corporation's $40 billion profit for 2007 was the largest in corporate history. Yet they paid $100 billion in taxes and royalties. Exxon's profit margins are slightly under 11%. This compares with about 26% profit margin by Microsoft Corp. Are we going to pass a windfall profit tax on Bill Gates and his gang? I really doubt it. Exxon employs over 107,000 people. And it pays out about 20% of earnings in dividends. Much of this dividend goes into 401K plans and IRAs for retirement.
Let's examine a mythical gallon of gasoline. For illustrative purposes, we shall assume a $3.00 cost per gallon. The approximate breakdown for 2007 was:
Oil companies $1.65
Refiners .66
Gas stations .12
Federal & State taxes .57
TOTAL $3.00 per gallon.
The average oil company makes ten cents (.10) per gallon on gasoline. Yet our champions in government who are always fighting for the working man charge us fifty-seven cents (.57) in taxes. So to whom can we attribute "gouging"? Ten cents a gallon to Exxon or fifty-seven cents a gallon to the federal and state lawmakers to line its coffers! If Congress wishes to help Joe or Mary Everyday, then cut federal spending and cut the tax on gasoline.
America is addicted to oil. The USA imports more than 10 million barrels of oil daily. Likewise, our demand for gasoline, jet fuel and diesel is equivalent to about 10 million barrels. So transportation fuels encompass every barrel we import. At $3.00 per gallon, we can safely estimate that, using 140 billion gallons each year, our bill from imported oil is $420 billion yearly. Not included in that huge amount is our budget expenditures allocated to trying to secure the Middle East and its vast oil reserves.
One has to wonder if we, as a nation, could make a commitment like President John F. Kennedy did with the lunar program, to find an alternative source of fuel just to feed our transportation needs. There are many articles about the elusive heavy oil and the "tar pits" which hold 50% of the world's reserves. We could and should emphasize research and development for the exploitation of this fossil fuel. Pair this with a comprehensive alternative energy policy, with environmental issues at the forefront, and conservation programs for America, we just might break the oil cartel that has our way of life threatened.
Most of our world today is synthetic. Let us make a synthetic transportation fuel. Be it ethanol from our plant life, a fuel from processed coal or the oil shale that we possess in abundance. We can and should turn our energy companies loose to accomplish this. We would need to guarantee a minimum price per unit, but it would not be $100 a barrel or even $50 a barrel. And it would be ours. OPEC s sudden windfall profits and huge trade surpluses would disappear, and maybe the liquid dollars being passed out like candy to those who would threaten our lives and our freedom vanish along with it. The energy companies, with their dwindling reserves, would welcome a new and guaranteed source of profit.
Just consider the three candidates advancing themselves and their platforms in the upcoming election for President. Think back to the gasoline tax issue. The state of Arizona fifty-four (.54)cents per gallon tax, Illinois sixty-five (.65) cents per gallon and New York (.64) per gallon.. Our national average for federal and state tax is forty-two (.42) cents. The government has a huge stake in the continuance of the status quo. Our stake is larger, the continuation and preservation of a society, where a group of visionaries came together and demanded of all their everything in the pursuit of life and liberty.
Learn more about this author, Ralph Lawrence.
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No
Americans are not stupid. We are not dependent on gasoline as much as people claim we are. Sure we like to drive, and we used to like our gas guzzling SUV's that were big and powerful and were an indication on sight that you were to pull over and let me pass. However, lets be real for a second, as Americans we are smart enough to realize that oil will not last forever, and as little as we have done over the past few decades to actually confront the problem, when confronted with the cost of gas we adjust accordingly.
When gas prices reached a record of 147 dollars per barrel, analysts were screaming that 200 dollars a barrel was almost a lock, and that we should be ready for even higher gas prices. The cost of gas was already affecting almost every other sector in America, whether it be businesses that relied on trucks to transport gas, or the airlines, or the multitude of industry that relied on oil products. The higher costs were leading to higher costs of business, therefore accelerating labor cost cuts, and this was on top of the credit crisis and the fact that homes were losing value and so was the dollar.
However, this proved not to be the end of the world. As I said, Americans adjusted. We decided that we could do without SUV's if it meant we would have enough gas to drive to work and to take the occasional trip. We also decided that the occasional trip couldn't be across the country, but if it could get us a good day trip or a weekend vacation close by then so be it. Local economies adjusted to the fact that people were staying in town for holidays and trips, and began to exploit the fact that the very towns and cities that people lived in were full of exciting adventures.
What happened? Not an economic depression, but a nine percent drop in oil consumption, and a drop in oil prices to almost 3.65 a gallon for the national average, down from 4.11 a gallon in July. Americans adjusted to having gas supplies shortened in the 70's and we have adjusted to the rising cost of a limited resource once again. Not only have gas prices dropped, but reserves of natural gas have been raised as new technology has allowed natural gas to be taken out of shale beds that just a few years ago were unusable. Hopefully we can use these types of advances to spur the development of oil sands, such as the massive field in Canada.
Humans have always had to adjust to meet the current reality in the world. We have done it for almost two million years, so to think that something as simple as a resource being in short supply will effect us that much, well that is to defy the human element.
Learn more about this author, Cody Hodge.
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