- The Washington Times - Tuesday, April 26, 2011


Obama says new task force will examine gas prices” (Web, Thursday) quotes President Obama saying, “We are going to make sure that no one is taking advantage of the American people for their own short-term gain.” The article goes on to say that Mr. Obama managed to sandwich this meeting between six fundraising events held during his three-day West Coast trip last week.

The fundraising events appear to target big-buck contributors and young people. Both of these categories could be key to the campaign for his 2012 re-election bid. That campaign is currently being projected to set both fundraising and spending records.

The article then postulates that with the 2012 campaign in mind, the White House is anxious to show the public that it is taking action to address rising gasoline prices. Those prices hit a national average of $3.84 on Thursday, about 30 cents higher than a month ago and almost $1 higher than a year ago.

Let’s examine what makes up that $3.84 average per gallon price on gasoline:

c Federal taxes: 18.4 cents per gallon.

c State and local taxes: 22 cents per gallon.

c Refining costs: 24 cents per gallon.

c Transportation costs: 26 cents per gallon.

c Gas station profit: 10 cents per gallon.

c Crude oil price: $2.67 per gallon.

c Oil company profit: 16.6 cents per gallon.

When you look at this breakdown, you must also consider a few of other facts. The gas station fees are not pure profit. Out of those fees, the retailer must pay his overhead, taxes and salaries, usually leaving him only 2 cents to 3 cents per gallon of actual profit.

Second, we must also consider the fact that compared to most other countries in the world, gasoline is cheap in the United States. Oil companies have made record profits during the last few years and most of the oil company CEOs make salaries (including stock options and benefits) in the millions of dollars each year.

Now, if we are looking at cutting the price per gallon on gasoline, where should we begin and which components of that $3.84 price per gallon can we cut?

First we must ask whether the price per gallon of crude oil can be controlled and who has the greatest influence on that price. Then we must consider the impact of exerting controls. Are the taxes charged by federal, state and local agencies exorbitant? What would be the impact of reducing any or all of those taxes?

Evidently, cutting the price per gallon of gasoline is not as simple as one might think at first glance. For any politician to take a stance against rising gas prices is a good political move, but how realistic is it and how much impact can that politician really have?

There is no question in my mind that the president would like to bring the price per gallon of gasoline down for U.S. consumers. There is also no question in my mind that he would do so if he could. But we must learn to interpret political doublespeak because the past 50 years or so should have taught us that U.S. politicians, regardless of party affiliation, have a strong aversion to stating the truth, the whole truth and nothing but the truth.


Harrisville, N.H.

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