by E. Manning

Created on: July 31, 2008

Perhaps at no time in recent history has more emotion and contention erupted over the demand for gasoline and fuel during a time of record high prices. Government, business and citizens struggle to cope with the stress as personal and fiscal budgets strain to meet the need. High fuel prices have changed the climate of business and daily life of Americans in a very real way. High fuel and the resulting high food prices are impeding the goals of many government and humanitarian organizations on a global basis. The high cost of gasoline is not about environmental issues or even a real lack of resources, as some would proclaim. High gas prices are not necessary for consumers as far as necessity is concerned. However, high gas prices have become a "necessary" symptom to sustain a hierarchy of investors, speculators, businesses and government infrastructure that have been empowered around an important staple of modern life with the goal of generating income.

Currently, the federal government plays both sides of the fence, producing, storing and selling on the business side, while taxing and regulating on the government side. The government has a massive stock of oil called the Strategic Petroleum Reserve. The Department of Energy fills this reserve from a percentage of oil taxed on oil pumped from federal lands by oil companies in addition to the cost of any leases to these same producers. This is all coordinated through the U.S. Interior Department through the royalty-in-kind program. The government trades the oil for suitable oil in stockpile as needed and rotates the Strategic Reserve on a regular basis, selling the "old oil" on the open market.

In much the same way, the federal and state governments also have a "use tax" on gasoline that varies from state to state. This tax is to provide additional revenue, typically for anything from highways to special projects. This is the same federal tax that drew such hot debate as the "summer tax holiday" in early summer election rhetoric.

Government has been envious of large oil company profits for some time. This year, a combination of record price hikes and record profits led to Congressional investigation. The reality is that Big Oil doesn't make money on gasoline based on production for a barrel of oil. Each barrel produces roughly 21 gallons of gasoline, which is half of the yield of the barrel. The remainder is used for other profitable products from jet fuel to lubricants. The fact is that the other products being

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