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The Platters from the "50's

http://worriersanonymous.or...

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THE CONSERVATIVE REVIEW
May 16, 2008 

Gas Prices and the Blame Game
By Ed Feulner

With fill-ups routinely costing $60 or more, cost-
conscious drivers naturally look for someone to blame.
And just as naturally, politicians are happy to blame
others.

Enter "Big Oil," the demagogues' favorite villain. Gas
prices soaring? It's because oil companies want "excess
profits," as Barack Obama puts it. Right?

Wrong. The truth is more complicated.

Let's look to California, driving capital of the world.
Officials there watch gas prices carefully. During March
and April, a state analysis found that "distribution
costs, marketing costs and profits" made up about 10 cents
of the cost of a gallon of gasoline, which ranged from
$3.46 to $3.89. Notice that that dime is less than 3
percent of the total retail cost, and profits account
for only part of it. So those "excess profits" are actually
well below 3 percent of retail costs.

Of course, that's little comfort to tapped-out drivers.
And the big oil companies are certainly making big money
-- Exxon Mobil alone earned $40.6 billion last year. But
such profits follow naturally when a company sells a
product that so many people want to buy. Some recent
history offers us a bit of perspective.

In 1998, a recession in Asia created an oil glut. Prices
plunged to historic lows (near $10 a barrel), and
American drivers reaped the benefits, with gas dipping
below $1 per gallon. So how did Exxon fare in those days
of low prices?

According to Forbes magazine, Exxon earned more in
profits than any other American company in 1998. Sales
increased 3 percent over 1997 and profits jumped 12.6
percent, to $8.4 billion. Again, remember: Oil was
remarkably cheap that year, yet Exxon earned double-digit
profits. Few complained then.

The lesson is simple: When a company sells a product
people want, it tends to make money, in good times and
in bad. For years, oil has remained a product that
Americans want -- and today's high prices have done
little to change that.

It's also worth noting that oil companies are probably
the most investigated companies in America. Every few
years, outraged legislators demand that the Federal
Trade Commission determine whether oil companies are
colluding to inflate prices. Repeatedly, federal
regulators find that they aren't.

A few months ago the FTC said this about high gas prices:
"All of the increase can be attributed to increased crude
oil costs, because gasoline inventories are as ample as
they have been for several years, gasoline consumption
is declining to a near-record extent, and refining
margins -- the difference between the cost of crude oil
and the wholesale price of gasoline -- have fallen."

So who's making the big money? The countries that produce
crude oil. Crude represents more than half of the cost
of each gallon of gasoline sold. Federal, state and local
taxes represent another fifth.

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While the U.S. beats it's brains out and adds to food cost and shortages using corn, Brazil seems to have a better solution.  Not only is it cheaper but more efficient. (see link below)

http://en.wikipedia.org/wik...