Let's say oil companies operate on a 7% profit margin after tons of expenses. Is that a reasonable profit? Knowing that the venture capital needed, all the risks involved, research and development, profits to millions of share holders in stock funds, refining and elaborate transportation costs before it gets to your local gas pump, is 7% a reasonable profit per gallon of gas?
This conservative says, yes!
On the other hand, my state and federal government grabs 34% of pure profit off each gallon of gas (diesel fuel a lot more) without lifting a finger and invests NOTHING!
Question should be: "Why does the government make excessive profits off the backs of consumers, workers and investors?
Try explaining to someone that the oil companies haven’t changed their profit by one percent and watch their heads explode.
After they calm down you explain to them that 10% profit at $100 barrel is the same percentage profit as 10% on oil at $20 a barrel. The 10% hasn’t changed, neither has the tax percentage on the gas at the pump price either.
You will get that “deer in the headlights” look and they will completely disregard you as nuts.
You forgot to add that the government takes fully one half of that pretax profit! The real gain is around three percent.