2005-11-13

Behind the Big Oil Numbers


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OK, I've had it with the opportunistic grandstanding on Capitol Hill.

Let's see Barbara Boxer, how does this work? You throw out some seemingly HUUUUUGE numbers ... billions! Everyone's already tweaked over what they're paying at the pump and all of a sudden ... this it outrageous! These guys are modern day robber-barons. We need to fix this with some special taxes! Yeah, that's it. Taxes. That always gets things moving.

Now there are any number of ways that this is all ridiculous posturing. Adjust the price of gas for inflation and the argument ends right there. But that requires too much thought for the crowd to which Boxer panders. Actually anything beyond, "Oh man, $2.xx at the pump is ridiculous!" is too much thought for that crowd.

Anyhow, I took a look at some things and it appears to me that what is going on over at those oil companies is that they are ... trying to run a business. *gasp* Of course we know that Congress loves nothing better than to get in and muck things up for people who are trying to do that.

Check out Exxon's 3rd Quarter Report, McDonald's 3rd Quarter Report, or you can just look at my simplification.

Here's the long and the short of it. In Exxon's case, $9.9B sounds like a monster profit for the third quarter. But it's a monster coporation! Say I sell a product for $1 and make $.01 profit on each unit. But, one year I move 900 billion units. That's a profit of $9B! Does that make me greedy or hard-working?

Look at the summary. Say Exxon sells a gallon of gas for $2.50. Of that $2.50 they'll only take roughly a quarter - not a quarter of the $2.50 but a George Washington, $0.25 quarter, in profit. By comparison, when McDonald's sells you a Big Mac for $2.50, they'll realize $0.35 in profit on that sale, the greedy pigs. I don't see our obese nation complaining about that, or Barbara Boxer dragging McDonald's CEO Jim Skinner before Congress.

The biggest irony of all is this: Back to that $2.50 gallon of gas, while Exxon will keep $0.25 from the sale, assorted governments will keep $0.62 in the form of taxes and duties, $0.33 of which goes to our Federal Govt (details on excise taxes here). So, every time a gallon of gas is sold, Boxer and her cronies get more money to waste than Exxon does! Don't even get me started on the pork.

And finally, I have to wonder, as I look over the financials ... if you insert an additional tax (if Boxer, et. al. take even more of something they did nothing to earn, because that's what they do best ... nothing), that's going to drive the price of gas down, how?

Not that I'm loving paying what we are for gas right now. That doesn't mean I'm going to pick the first easy target that comes along for blame.

Once again, I beg Congress to stop trying to help, and quit piling on the oil companies. It's too easy and too misguided.

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