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Taxes aren't "added on" at each stage and they don't compound because there is no tax due untill the product is sold.

I suppose, if every transfer of oil is consignment, or if the supply chain is contained in one vertically integrated company, that makes sense. However, if the oil company is selling its oil to the pipeline company or to the refiner, do they not realize their revenues then, and not when the finished product is sold? Does they not incur their tax liability then, and thus have to figure that expense into the price they're willing to accept for their oil? When the companies down the line absorb that expense in the form of higher prices and then has to figure their own tax liability into their own prices, does that not mean the tax liability compounds at each stage in the supply chain?

Now, I'm not that well-versed in the oil industry, so perhaps I'm all wrong. But when you say that the oil company doesn't figure taxes into its prices because there's no tax due until its customers sell their gasoline at the pump, that just doesn't make sense.

As to your earlier question, about why prices didn't decrease across the board due to the Bush tax cuts, inflation dipped dramatically between 2001 and 2002, the time frame of the Bush tax cuts. Now, many other forces, both inflationary and deflationary, are at work that have much greater effect on prices than those rather modest tax cuts, but it's certainly possible that the tax cuts had something to do with that. Also, of course not all of the reduced cost is passed on to the consumer. Some are, rightly, kept as increased profits for the owners or shareholders of the company. Market forces will determine where that balance is, just as they always have with any other price shock.

When the companies down the line absorb that expense in the form of higher prices and then has to figure their own tax liability into their own prices, does that not mean the tax liability compounds at each stage in the supply chain?
Do payroll taxes compound at each stage, how about labor costs? After all they're added to the price at each stage too. What makes income taxes or "tax costs" so magic that they're the only costs that cascade/compound? Where's the logic?