Journal editorial, 4-27: Law of supply and demand

Rapid City Journal ^ | 27 Apr 06

[rellimpank]

President George W. Bush joined the gas-prices-are-too-high chorus in Washington by calling for an investigation of possible price-fixing by oil companies. He also suspended shipments to the Strategic Petroleum Reserve and relaxed environmental regulations that require fuel additives such as ethanol. The latter two moves should reduce gas prices temporarily but what good is a price-fixing probe? Every time the price of gas goes up, politicians pander to constituents by demanding a gas-gouging investigation.

Crude oil prices have soared recently to more than $73 a barrel, so is it any mystery why gas prices are nearing $3 a gallon? According to the Energy Information Administration, 55 percent of the cost of a gallon of gasoline is the crude oil price - and that was earlier this year when oil was selling at $58 a barrel. Oil prices have increased about 25 percent since January, and so has the price of gasoline. According to AAA South Dakota, the average price of regular gas in South Dakota reached $2.85 per gallon Tuesday, up from $2.49 a month ago

[rellimpank]

Historically, the highest average gas price, when adjusted for inflation (2000 dollars), was $2.49 per gallon in 1981, according to the EIA. Today's average of $2.85 per gallon translates to $2.47 per gallon in 2000 dollars.

--what would Reagan have done?

[Flyer]

--what would Reagan have done?

"Drilling starts in 5 minutes"

[thackney]

LOL

[ClaireSolt]

The government is the big gouger, the elephant in the room which claims to be looking out for the little guy. Let them revise taxes by taking useless pork out of the transportation bill. Maybe someone like the Heritage foundation or AEI shoud hold hearings on the gouging by Congress. They spend 2.7 trillion to Exxon's $300b, and they want to bully and push the corp around. Give me a break.

[yoe]

It is too costly to produce the EPA demanded blends from the too few refineries in this country. One blend should do for the entire country. Seems to me that if each state would cut their gas tax a few cents, it would make a big difference AND the Federal Gax Tax should also be cut.

(state gas tax)

"Government levies include a federal 18.4 cents-a-gallon tax on gas; and the states tax on top of that. In Massachusetts, the gas tax includes a 21-cents-a-gallon excise tax and a 2.5-cents-a-gallon fee to reimburse gas stations for environmental cleanup."

Check your state - call for a government roll back of their tax on gas! It ain't entirely the oil companies that are gouging; it seems to be our voracious Federal Government dipping their greedy fingers into your pocket. Don’t spend time and money investigating the gas companies; ask the Feds to roll-back their take from taxes on gas nation wide.

[lfod1776]

While price controls are a terrible idea, a "windfall profits tax" would not hurt much of anything. In theory it might lower reinvestment, but in actual practice that doesn't seem to be where the money is going. Perhaps the primary bad effect is that Exxon would have to reduce their executive retirement packages from $400 million to say $200 million. Exjoy it in good health Mr. retiring executive! It's hard to understand why rising oil proces should lead to ballooning profits for refined products in an efficient marketplace.

[You Dirty Rats]

While price controls are a terrible idea, a "windfall profits tax" would not hurt much of anything. In theory it might lower reinvestment, but in actual practice that doesn't seem to be where the money is going. Perhaps the primary bad effect is that Exxon would have to reduce their executive retirement packages from $400 million to say $200 million. Exjoy it in good health Mr. retiring executive! It's hard to understand why rising oil proces should lead to ballooning profits for refined products in an efficient marketplace.

68% of XON's profits come from non-US operations. Most of their US profits come from upstream operations, not downstream operations.

Also, the $400 million retirment package is not accurate. Read the shareholder proxy to get the real facts, because the media reports are distorted.

And as far as where the money is going -- some goes to reinvestment and some goes back to the shareholders that invested in the company. Returns on XON stock are better than the average for US Equities, but well below other investments -- such as Hillary's commodity investment.