Who wins with high Gas Prices?

Discussion in 'Economics' started by 5yrtrader, Apr 28, 2008.

  1. Do you know that the US government gets more of the money from gasoline sales than any of the oil companies? Let me walk you through this:

    Exxon's profit margin is 11.23%, so at $3.50/gallon Exxon gets 39 cents, this is after the US government taxed their profits; $29 billion from Exxon alone, 41% of their profits. The US government earned 27 cents per gallon off Exxon

    Then there is the federal tax of 18.4 cents per gallon. State taxes average 28.6 cents per gallon, so in direct taxes on your gas, 47 cents goes to the government.

    Add in the taxes on oil companies and 74 cents goes to the US government versus 39 cents to Exxon, almost double. So who should the "windfall" profit tax be on? The entity that produces and delivers the gas or the one that does nothing at all? Who is really "gouging" you at the pump? This is after the US and State governments have taxed your income, made you pay for a drivers liscenes and tabs for your car, among many other things.

    ****Please note the numbers on Exxon assume that all they do is sell gasoline. I still beleive the argument is valid.

  2. Are you taking into account all the tax losses from individuals and corporations that make less money because costs are much higher?

    Just for example, let's say my company sells chicken wings. People have less income to buy my chicken wings because they spend more on gas. I get less sales, and my taxes are lower. Now that's just my little chicken wing business, but think of every business in the US and all it's citizens as well.

    Don't just do your math in a vacuum.
  3. Thanks
  4. At this point when the world is pretty well using all the oil that it makes it would hardly matter if the American government lowered the gas taxes. If taxes were lowered, Americans would use more gasoline but India and China are now competing for the same oil so that would push the crude oil price up. If the crude oil price went up the gas prices would go up and the US would be sending more money overseas. They may as well keep the tax up or even raise it and keep the money in the country.
  5. The world is not using all the oil it produces.

    There are massive reserves yet to be even tapped. Those fields that have been tapped are all over the board - some declining, some not.

    Make no mistake about it - oil bulls have made the bloodiest racket ever about 'peak oil' at a time when, even with China, India, Brazil, Russia's growth, yada yada yada, oil consumption has grown at 3% per year.

    If a Democrat takes the White House in '08, watch the oil bulls cash out and run for cover before the requisite congressional hearings on commodity market manipulation.

    In the interim, Bush has decided to buy massive amounts of oil at an all time high price to further expand the strategic petroleum reserve. Funny timing.

    There's plenty of oil in the pipes. There's just a dumber public and more 'peak oil' bullshit than ever before.
  6. I get less sales, and my taxes are lower

    You could end up with less sales but higher gross sales, paying more in sales tax (collected from the customer).

    Credit card cos profit from higher fees on higher dollar gasoline sales (even with less volume, they are fee based on dollars charged per transaction) and would pay more in income tax.

    Regarding the windfall profits: I haven't heard any politicians suggest oil cos use their windfall profits to fund "unfunded" pension or health care liabilities in their own companies, think politicians give a shit about that? The number is in the billions.
  7. buy lo sell hi: really? the last 7+ years of gwb should tel you all you ned to know....gas 1.50ish a gallon...now 3.75ish a gallon...do you really think this guy has it in him to START drilling anywhere else?
  8. If people buy less, you're going to end up with less Gross Sales. Your net sales are only minus your discounts and returns. Your costs have nothing to do with Net Sales (though you didn't say they did).
  9. If income tax collections fall from lack of business, this is tax from one source (income), the govt should see tax receipts from other sources increase to compensate. People are still spending the same amount of money, they aren't saving.
  10. If people buy less, you're going to end up with less Gross Sales.

    If you increase your profit margins to compensate for future inflation (or for whatever reason, forecasting some rise in expense) and raise your current price to compensate for current inflation, you could have a scenario where you sell less units and have greater gross sales receipts.
    #10     Apr 29, 2008