Friday, May 16, 2008

Government is gouging, not oil companies

Neil Reynolds from the Globe and Mail's report on business says people who want government to do something about the price of gas should be demanding lower gas taxes. After explaining why the profit margins of oil companies are actually slightly lower than most S&P Industrials.

Whatever. Most people still think the government should do something.

Precisely. Here at home, the federal government alone collects an extra $100-million in windfall revenue from every 10-cent increase in gas prices. As the Canadian Taxpayers Federation observed earlier this week, in observance of its Gas Tax Honesty Day, one of the biggest costs in filling our tanks is the cost of government. Taxes account for 28 per cent of pump prices. Strip out the taxes (32.6 cents a litre) and you get back to the real price of gas: 86 cents a litre. All by itself, this honest-to-God price proves that there's no scarcity of oil. Which is obvious when you think about it. When – anywhere in the world – have we ever run out of gas?

1 comment:

raven4ns said...

Crude oil is approx $71.80 USF a barrel and that is more than a 50% decline from it's high. I wonder why Gasoline hasn't followed, could it be the increased tax revenues and profits that government and Oil companies enjoy? Why, if i didn't know better, I would think our government is greedy but everyone knows they are only looking out for our well-being. If we kept more of our money instead of paying it on taxes we might worry about what we were going to do with that extra money. We could get a worry complex, depression, any number of maladies, so now you can see how they are looking out for us. What a sweet bunch of people.
As for big oil companies, I realize they need profits to help fund further exploration and those costs are high. What I object to is gouging by them or government. When I see the profits of Exxon, Imperial Oil, PetroCanada and others I know they are not hurting. Please keep in mind who you are getting those profits from and how much is too much.

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