Into the Archives: Government Glad for Gas Guzzlers
Blogging was light today, mostly because I spent some time getting caught up on other tasks I’ve let slide lately. Also, I went to my first ballgame of the year tonight. The home team lost 10-6, but the fireworks were pretty sweet (though short).
Our trip into the archives tonight goes back two years. I’ve found a post where I actually did some math and figured out that when it comes to windfall gasoline profits, no one outdoes our Federal government.
Did you know that the federal gas tax, per gallon is 18.4 cents?
ConocoPhillips’ 9 cent profit was right around the industry average last year and wasn’t any larger than that of its competitor, Exxon Mobil. That company just posted a record quarterly profit that has caused Congress to hop into their gas-guzzling SUVs and drive a whole block to grandstand and generally lie about excessive corporate profits.
That means that the government is getting at least twice what the oil companies get every single year. Economics being what it is, those profit margins float up and down depending on the market and the costs the company incurs. The government, on the other hand, is guaranteed 18.4 cents per gallon no matter what.
Something to remember when they talk about corporate greed.
Other Posts of Interest:
Category: The Economy and Your Money, The Shack, Thinking About Energy
Yeah, but Conoco Phillips doesn't take that money and use it to build roads. And neither does Exxon Mobil. The government does. When the oil companies build a replacement for the Interstate Highway System, they will deserve extra profits. As for the government, it spends a little more in road construction than it takes in from those taxes. In the end, highway transit is still subsidized. And that's an indirect subsidy to the oil industry. Now, if you'd rather have that 18 cents go to the oil companies and have your income tax raised so the government can build roads, that's fine with me. I'll get more in extra dividends from Exxon Mobil than I'll pay in extra income taxes. As for the 9 cents they get, that's about a 4.5% profit margin. That's somewhat typical of mature, commodity based industries. It's a little higher than normal, but I'll cut them some slack so long as they cut me dividends.
Take a look at the next Transportation Bill, where the money for all that road-building is supposed to be happening. There is surprisingly little construction going on there. There is, however, a lot of vote-buying pork. The fact of the matter is that the Federal government takes far too much for what it gives back.
See also the debate over infrastructure when that bridge in Minnesota collapsed and the Democratic reluctance to give their pork project money to infrastructure. I'll hear no lecture about public spending from folks on your side of the aisle.
Also, there is no such thing as "extra profits". Not in this country.
"Economics being what it is, those profit margins float up and down depending on the market and the costs the company incurs."
Economics being what it is, that's utter nonsense. It's true that margins go up and down, but they move a lot less than you'd expect, and with a considerable (and random) delay. The oil companies buy more financial hedges than they buy oil. They set up their purchasing, extraction, and futures trading in such a way as to always guarantee a certain profit regardless of what the price is. Granted, these hedges aren't completely linear, and they have price limitations on their effectiveness, but profits are pretty much guaranteed if you can guess the price of oil within 50% error.
"Take a look at the next Transportation Bill"
Umm, it hasn't been passed, so it's not like it means anything yet. Maybe you have some special knowledge of how the Republicans will change it, but I don't. But the idea that there's no construction in it is absurd. It will be like all bills: mostly construction on locally popular projects, with some graft added in on top. What's new? It's not like Obama is the Messiah conservatives insist he is. Remember, you call him the Obamessiah, not me.
As for the Minnesota bridge, well it's been rebuilt on an accelerated schedule and on budget. You have a problem with this? Would you prefer that it had been delayed or gone over budget? Or would you just prefer that it had not been rebuilt? Either way, I don't get it. Whatever the Democrats might have done with the project, it's better than you'd normally expect from the government. But ahhhh, that's the problem, isn't it? If government actually works right, the Republicans have no argument against government. So just admit that you want government to be deliberately mismanaged so you can claim the government mismanages things.
"The fact of the matter is that the Federal government takes far too much for what it gives back."
Given that it loses money doing it, I have a hard time seeing how that's true. Yes, a lot of money is lost in graft. But do you honestly think us private guys don't lose money in graft as well? Give me a break. The only difference is that we hide any graft in "miscellaneous business expenses." Back when I worked for a corporation, I hired prostitutes and procured illegal substances for important clients. We call that "doing business." And as bad as the government is, private industry is just as bad. In fact, we're the same meta-organization. Who do you think are bribing our politicians? It ain't poor people, for sure. That's the thing about bribes, you need money to pull it off.
In the end, Jimmie, we'll talk about business when you enter it. As long as you keep working for our government, I have a hard time believing you're some kind of free market guru. As for myself, I've been advising people for money for most of my life. I've been the free market businessman that you worship. You can blog what you want, and the Republican Party surely pays you. But if you want to make real money, you have to work in the real world. And you have to cross your beliefs to do it. There's a good reason I own oil stocks: they're a hedge against the reality I want. If the world goes in the right direction, I lose money, but if the world goes in the wrong way, I make money. I can explain my evil nature (it's just profit), but can you explain your incompetence?
You know something, I'm editing my own comment because it was simply more mean than I feel like being to you, man. You have your ideology and no fact on Earth can get you out of it. I'm sorry you choose to live that way, but it's your gig. All I ask is that you don't actually fib about me (like you did in your last post).
I am not paid by the Republican Party and you have exactly no evidence to show otherwise.