The Real Gas Price Gouger (Imagine you had to spend50c in taxes for every $1 you spent on groceries)

The American Prowler ^ | 3/16/2006 | Eric Peters

[nickcarraway]

When gas prices jump by 50 cents (or more) per gallon, many people get angry at "Big Oil" -- and decry what they consider "price gouging" at their expense. But how come no one gets upset about the 50-70 cents (or more) per gallon in taxes imposed by government?

Federal (18.4 cents per gallon), state (35-50 cents per gallon), and local motor fuels taxes (anywhere from 5-10 cents or more per gallon) account for at least one-third of the per-gallon cost of gasoline -- an outrageous levy in both absolute terms and as a percentage of the purchase price of the item being taxed. Imagine, for instance, if you had to fork over 50 cents in taxes for every $1 or so of groceries you purchased.

And gasoline is no less an "essential" than food for most people.

These taxes are also viciously regressive -- that is, they take more as a percentage of disposal income from the least able to pay. After all, most of us have no choice about driving, regardless of our income. People in areas outside of major cities (where there is no public transport system) especially. The "rich" (a frequent whipping boy of class warfare types) may be able to afford the exactions without it affecting their day to day lives. But what of the person of modest means?

Let's assume a gas tax (all levels) of 50 cents per gallon. (A lowball figure, by the way; in some states, e.g. Connecticut and New York, combined motor fuels taxes imposed by all levels of government can push $1 per gallon or even more.) A purchase of 15 gallons of fuel (the amount it takes to fill the typical new car's tank) would entail $7.50 in taxes alone. Most people burn a tank of fuel per week (at least), so that means $30 per month down the rathole, just for gas taxes -- or $360 per year.

How many people do you know who can afford to lose nearly $400 annually without it affecting their budgets?

The gas tax alone pretty much vitiates the Bush tax cuts all by itself -- and generates in excess of $50 billion annually in "revenue" for our friends in government.

And yet, they (our friends in government) hunger for even more.

Since 1997, 14 state legislatures have voted to raise their state gas taxes a total of 17 times; these increases ranged from 1 cent per gallon in North Dakota to 6 cents a gallon in Ohio. Many local (county/city) governments around the country tack on "inspection fees" and other nit-picky taxes -- including a "seawall tax" in Mississippi and a "special petroleum tax" in Tennessee. (Click here for more details.)

There is talk of adding a nickel (or more) to the federal gas tax, too. Some lawmakers want another 50 cents per gallon (or even more than that).

And yet, no one complains much about this endless, brazen highway robbery -- which comes after, let us not forget, federal and state income taxes which together snatch anywhere from 15-40 cents of every dollar we earn right off the bat. So with the change left over, we're compelled to pay yet again -- and then again. And at confiscatory rates, too.

Of course, we're supposed to be calmed by the rationale that all this money being extracted from us is used for the upkeep and expansion of our transportation infrastructure -- building new roads and maintaining existing ones. But our roads are in disrepair and increasingly over-crowded. Our money doesn't seem to be going very far. (Or perhaps it is merely going into the pockets of well-connected no-bid contractors?) At least part of that $50 billion extraction is diverted into "safety" programs -- whatever that means.

Regardless, there's little outrage, despite huge costs imposed with increasingly budgetel-looking results. Meanwhile, most of us are also paying those extortionate federal and state and local (and property and sales and annual decal and countless other) taxes... for, what exactly?

It's something to think about the next time prices rise -- and the Greek chorus begins anew about the supposed depredations of a chimera called "Big Oil."

Eric Peters is an automotive columnist and author of Automotive Atrocities: Cars We Love to Hate (MBI).

[poobear]

"Get a smaller car, get a smaller house closer to work."

Not everyone is 'metro' and able to live within city limits or 15 miles to work. Try being a Mechanical Contractor and dismiss any work outside of 15 miles from your home. Oh yeah and try hauling the equipment to be installed in a Prius.

Too early to rant. More coffee.

[wgflyer]

I think the point of this article was not so much that fuel price are high, but that government is a major source of the expense in fuels, as well as just about everything else in our lives, and when we do complain about the high price of fuel or other expenses we totally ignore (as we're meant to) that which government imposes on the price. And we're supposed to think even less about how government abuses those funds it confiscates.

Secondly, chastising a person who whines about confiscatory taxation because he had the nerve to buy a big house or lot is like blaming a rape victim for being raped or blaming a theft victim for leaving a door unlocked. It's a little off the point. Governments and other crooks love it when you blame the victim.

I always like to remember that "rich" and "poor" are very subjective concepts. Government rape of it's citizenry is pretty much demonstrable.

See fairtax.org if you haven't already.

[Zon]

Consumers pay business taxes. For a business, taxes are a cost of doing business. They are factored into the selling price. A business that makes an after tax annual profit of 5% made 7% profit before taxes. Where did the company get the 2% profit to pay its tax bill? The buyer. When it's a grocery store the tax comes from the consumer. When it's the baker the baker's 2% tax comes from the grocery store. Thus, the grocery store not only collects 2% from the consumer for it's corporate tax, it also collects the 2% tax the baker charged the grocery store. So the consumer is paying the grocery store's tax and paying the baker's tax.

It's called embedded tax. It is embedded throughout the chain of manufacturing and production. In the case of a loaf of bread the taxes are included by and passed up from the seed producer, to the wheat farmer, to flour mill, to the baker, to the wholesaler, to the grocery store, and paid by the consumer at the cash register. Each stage in the chain of production includes it's own tax in its selling price. The consumer is paying a tax on a tax on a tax etc., for as many stages there are in the production chain.

On a basket of goods, 22% of the price is embedded tax.

Embedded taxes increase consumer prices by 22%. 

Solution: FairTax 

[ketelone]

You said it. Some would say someone who makes 50000$ a year is fairly well off. Others would say hes an absoulte plebian.

[Zon]

I think the point of this article was not so much that fuel price are high, but that government is a major source of the expense in fuels, as well as just about everything else in our lives, and when we do complain about the high price of fuel or other expenses we totally ignore (as we're meant to) that which government imposes on the price. And we're supposed to think even less about how government abuses those funds it confiscates.

Well said.

I've been posting on FR for almost eight years and I've never said this before. This forum has incrementally declined toward sheeple level. FR is a shadow of it's former self.

And we're supposed to think even less about how government abuses those funds it confiscates.

As your last sentence says, this forum is heading evermore toward complying with that.  Toward keeping up (down depending on how you look at it) with the sheeple/Jones'

[MediaAnalyst]

The people in the MSM, Libertarians, and others who bitch about high gas taxes are the first ones to support tolling and privatization of our highways and roads.

Right now, even at 50 cents/gallon, I pay a grand total of 2 cents per mile (above the market price of the gas itself) to drive my 25 MPG car. I can afford that.

In London it now costs $14 per day just to enter the city center. San Francisco and New York are looking at similar plans. We have a toll road in California that cost nearly $1.00 per mile (that's MILE, not gallon) during peak hours. We have new publicly-built toll roads around the nation that cost on the order of 20 cents per mile. We have privately operate roads in North America (including US) pushing 30 cents per mile (foreign-operated, I may add). We have the state governments of California, Texas, and many others looking for ways to use GPS to track and toll drivers for every inch that they drive (with a pilot program in Oregon already running). We have state after state looking to sell off their highways (for conversion to private tolling) for a short infusion of money (i.e., heroin fix).

This is what I face as the alternative to my 2 cents per mile.

As mentioned earlier, the fight should be to stop the DIVERSION of money away from roads and highways, not to give the government huge new ways to tax and track us.

Roads are expensive. We will get roads. But do we really want some way other than the gas tax to pay for them?

[Iris7]

If you study the oil business you will find it mercilessly competitive. The "Seven Sisters" are a bogyman.

Developing new reserves has become amazingly expensive. The Sakhalin Island project is expected to cost another $40 Billion. The entire Caspian area was recently drilled and the oil found did not cover 10% of the costs except offshore Kazakstan. The pipelines will cost billions and the bribes way more.

China is offering a lot more for the oil than the western firms can afford. The Chinese have an infinite supply of dollars and figure oil is going to get expensive pretty soon. They are doing a huge project in north west Brazil that will be a loss unless oil hits $100 a barrel. The Chinese are paying the entire bill up front, offering trade concessions and major technology, the rumor is nuclear weapons, aircraft, and long range missile tech for starters.

The Japanese offered the Russians a multi-billion dollar project for free and did not even ask for any oil later. The Chinese outbid them. The rate of increase in world oil consumption has been much larger than the rate of increase in reserves and production for decades.

[HungarianGypsy]

Or have less children. Actually our Explorer gets much better gas mileage than our 1973 Suburban did.

[Iris7]

Solution: there is not going to be one. Votes cost a lot of money. Somebody is going to pay for it.

[Iris7]

Free Republic was way different a few years back. In June 2002 my sister called Free Republic an "intellectual chat room" when I showed her the site. One can't say that anymore without lying.

Nowadays the word "sheeple" is very rarely used. "Sheeple" is what they are, resentful and cranky sheeple.

[robertpaulsen]

"That comes to about 34$ a month. I can see A LOT of people not even noticing it."

Geez, if the oil companies are making all this money, why not invest in them? Wouldn't take too much of an investment to make $34 a month in dividends and stock price increases.

[Mr. Lucky]

Try not to be so helpless.

[lewislynn]

It is the reason that most people have small cars, and do not drive great distances, as in the US.

Actually that's the reason your gas is expensive. So you won't and can't.

There's no reason a gallon of gas should cost more there than here. It all comes from the same source.

[manonfire]

Talk about unbeleivable.........

[litehaus]

Most folks driving those

S-upremely

U-nderutilized

V-ehicles

Have more dollars than sense...

[Rakkasan1]

you mean taxation is used for behavior modification, not raising revenue??? I'm shocked.

[kaktuskid]

Add to that gov't enforced requirements for "cleaner fuels"...taking out the small amount of sulfur; putting in then being forced to take out MTBE; ethanol; etc.

[38special]

Driving an economy car versus an SUV the tradeoff is economy versus safety. You are more likely to be killed or severely injured in an accident driving a small car than in a large car.

[bondjamesbond]

If I see one more person complain about "high oil prices" when they drive an SUV or commute more than 15 miles to work, I'm going to go postal on their a-s.

Where I work, we have all these green weenies who are out to save the environment. They'll berate you for five minutes for throwing a cardbord box in the garbage or leaving you computer in sleep mode overnight.

The funny thing is, all these green weenies live out beyond the exurban ring, and commute 50 miles a day to work, so they can commune with nature on their off-hours. I live five miles down the road on a quarter acre lot like a normal person. But when I tell them that I could leave my computer on for fifty years and not use as much energy as they burn driving back and forth in a week, they don't wanna hear about it.