Quit Griping About Gas Prices -- It's All in Your Head!

The sun is out, temperatures around the country are soaring, and white dresses are all the rage -- summer is officially here! However, suntans and sweltering heat aren't the only things that typically accompany the start of summer.

Rising prices at the gas pump are another common occurrence in the summer, as people take more time off from work and refiners produce a pricier blend of fuel for summer driving months. Between the combination of heat and high prices, you're bound to hear a complaint or 20 about the high price of petrol while filling up your vehicle.

Today, I plan to tackle the complaint that gas prices are too high and simply show you the other side of the argument.

Gripe No. 1: "High oil and gas prices are all OPEC's fault."
The Organization of Petroleum Exporting Countries is made up of 12 Middle Eastern, African, and South American countries -- many of which aren't on the best terms with the United States, politically. It has been the subject of finger-pointing for pretty much the last half-century.

At one time in OPEC's history, it could indeed control oil production and affect prices. In the mid-1970s, Iran and many other Arab nations spearheaded an effort to cut off exports to Israel's allies, effectively driving up the price of gasoline in the U.S.

However, as time has passed, OPEC's production capabilities haven't improved by much. Perhaps this is due to the unstable political structures in many of these countries, or it could have to do with limited land and technology resources available; either way, production has stagnated. In 1980, OPEC was able to produce close to 30 million barrels per day. From 2005 through 2012, production ranged between 30 million and 33 million barrels per day -- a very small increase from 30 years prior. At the same time, non-OPEC production, which includes finds in Russia and the U.S., has soared and now constitutes the majority of oil produced today. Non-OPEC nations supplied 57% of all oil in 2011, compared with just 43% for OPEC nations.

Simply put, OPEC doesn't have the pricing control it once had, so stop the finger-pointing!

Gripe No. 2: "The U.S. Government's gas tax is nickel-and-diming us to death!"
Everyone is probably well aware that the U.S. government is taxing us on each gallon of fuel that we pump into our cars. But most people fail to realize just how lucky we are relative to the rest of the industrialized world when it comes to paying taxes on fuel.

Although there are people out there paying as little as $0.09 per gallon for fuel, U.S. citizens should be thanking their lucky stars that gas prices have only been as high as $4 per gallon.

Source: Bloomberg.

The disparity in this graph is huge. According to a recent survey by Bloomberg of 55 countries, the U.S. paid the 44th-highest price for gas. The reason we rank so low is that the U.S. government subsidizes a good portion of what we pay, and the final tax is only $0.184 per gallon. Now compare this to Germany and France, which tack on taxes of $4.88 and $5.40 per gallon, and you should begin feeling a bit more grateful for what we pay at the pump. Such comparatively high taxes can mean huge social benefits, such as the taxes completely subsidizing citizens' college educations in Norway, but they can also be a significant financial hindrance to citizens.

Gripe No. 3: "I spend too much money on gas already for it to move even higher!"
Gas prices are elevated -- no doubt about it! "Sticker shock" has a lot of people at least contending that they'll drive less this summer in order to conserve money. But let's dig a bit deeper than just nominal gas prices, and I'll show you why this gripe also doesn't hold water.

One key factor often overlooked when tracing gasoline's exponential climb higher is inflation:

Source: U.S. Energy Information Administration.

Over time, things get more expensive, including gasoline. Although the nominal price of gasoline has risen by nearly 600% since 1976, the real price (adjusted for inflation) is up by roughly 40%. That's not menial by any means, but it's also not the backbreaker some people have made it out to be.

Another factor that drivers overlook is that cars are considerably more fuel-efficient than they were just 30 years ago:

Source: U.S. Energy Information Administration.

You can see that although the inflation-adjusted price of gasoline is similar now to what it was in 1980, fuel efficiency has drastically reduced the cost we as drivers incur per mile in inflation-adjusted dollars. This effect is only bound to get more pronounced as General Motors (NYSE: GM  ) , Ford (NYSE: F  ) , and Toyota Motor (NYSE: TM  ) agreed in July 2011 to double fuel efficiency to an average of 54.5 miles per gallon by 2025.

You're probably now wondering, "Then why do I feel like I spend so much on gas at the pump?" The answer to that question is simple: real wage growth stinks!

Source: St. Louis Federal Reserve; Data360.org. Based on private-sector hourly earnings.

Although nominal wages have tripled from $6.57 to nearly $20 per hour since 1980, the negative effects of inflation have reduced that 200% gain to a measly 1.51% real wage increase -- in 32 years! Compare this 1.51% real pay raise to gasoline's 40% bump, and there's your answer to why gas feels like it costs more.

Gripe No. 4: "Gas companies are making too much!"
There has long been a perception that gas companies are making too much and are "inherently evil." I actually may hear this gripe more than any others combined. And as with the previous gripes, there really isn't much substance to this complaint.

In January 2012, the average tax consumers paid on gasoline in the U.S. (federal plus state taxes) was $0.488 per gallon. According to ExxonMobil (NYSE: XOM  ) , in fiscal 2010 the oil and gas giant only made -- get this -- $0.02 per gallon on gasoline! In addition, between 2006 and 2010, ExxonMobil paid $59 billion in corporate taxes to the U.S. government. Chevron (NYSE: CVX  ) similarly makes only about $0.02 per gallon in profit from its gasoline sales. Now tell me this: Who is really making the big bucks off of gasoline? Federal and state governments, which are taxing citizens at 48.8 cents per gallon, or oil companies paying billions in corporate taxes while making about $0.02 per gallon?

The last time I checked, capitalism wasn't evil, and neither are these giant oil and gas companies.

Foolish roundup
Are there those of you out there who are going to vehemently disagree with me? I don't doubt it! But I hope this presents the other side of the argument -- that neither OPEC nor oil companies are the direct cause of your pain at the pump. It's really a combination of poor wage growth and a disassociation with the effects of inflation that have people on edge about gas prices. We really don't pay very much for gas relative to other industrialized countries, and we should be thankful for the current level of gas prices.

Agree? Disagree? Want to throw water balloons at me? Tell me and your fellow Fools about it in the comments section below.

One thing you don't have to gripe about is that with energy prices as high as they are, there are plenty of investing opportunities in the oil and gas sector. Our team of analysts at Motley Fool Stock Advisor has hand-picked three stocks they expect to outperform if oil tops $100 per barrel again. Find out the companies' identities by clicking here to get your copy of this free report.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of General Motors, Ford, and Chevron, as well as creating a synthetic long position in Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's fueling the charge in transparency.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 26, 2012, at 3:25 PM, BigAl321 wrote:

    In the summer of 2008 the price of WTI was around $147. Gasoline prices were around

    $4.20 at that time. Now the price of WTI is down

    over 35%. Gasoline is down less than 25%.

    Why the difference?

  • Report this Comment On June 26, 2012, at 4:26 PM, Sukker wrote:

    Great article! I live In Denmark and gas prices are very high as you write... And so are taxes on cars. You wouldn't belive it. A car costs almost twice as much as a simular south of the border (Germany).

    I've been in US a couple of times... And I find your gas prices very low... I rented quite a big car (cadillac v8) and couldn't believe how low the price was every time I filled it up...

    Thanks

    Sukker

  • Report this Comment On June 26, 2012, at 4:42 PM, garifolle wrote:

    "oil companies paying billions in corporate taxes while making about $0.02 per gallon?"

    And who get the subsidies so that taxes amount to only $0.184 per gallon?

    Who should be more grateful: the oil companies or the citizens?

    The citizens who do not drive have nothing to be grateful, their taxes are used to subsidize the oil companies and the drivers.

    In a true capitalism, oil would not be subsidized.

    It seems that everyone finds normal and good capitalism that the administration uses tax payers money to put gas in everybody's car.

    But the same administration becomes terribly "socialist" to take money to secure everybody's health.

    Driving a car is a choice, health or illness is not!

    Let's drive cheap, and let the poors die younger then in most civilized countries: the best way I guess to fight poverty is to let the poors die.

  • Report this Comment On June 26, 2012, at 4:53 PM, rhealth wrote:

    Ride a scooter like me, $6 per week, better yet ride a bike, walk, join a car sharing service, get someone to give you a piggyback.

  • Report this Comment On June 26, 2012, at 5:32 PM, steves22 wrote:

    Hey havvey, that's a pretty convincing rebuttal

  • Report this Comment On June 26, 2012, at 5:34 PM, dawgnine wrote:

    Go ahead and hate big oil for being the most efficient producers in history. Liberalism is as frustrating as a cancer that cannot be cured. They are very useful idiots.(voters)

  • Report this Comment On June 26, 2012, at 5:34 PM, 48ozhalfgallons wrote:

    I recall the early '60's; gas @ 29¢; a station on every corner; and a $5 fill-up came with a clown and a case of coke. You peed while getting your windshield cleaned.

  • Report this Comment On June 26, 2012, at 5:37 PM, buyn2hold wrote:

    It also deserves to be mentioned that the gasoline you buy today is cleaner than that of the '70s. Emissions from the refineries and the gasoline itself have been greatly reduced because of EPA mandates. Lead is gone and sulfur is processed out of most gasoline to prevent acid rain. U.S. refineries produce much less in particulates, benzene, and other pollutants than they did 30 years ago. This is largely the reason for the 40% increase in real dollars that you mention in the article. The EPA has been effective in regulating the industry thus far, but it does add to the cost of production.

  • Report this Comment On June 26, 2012, at 5:37 PM, stimepy wrote:

    .02 cents a gallon seems small... until you realize the number of gallons we are talking about.

    Now I am far from stupid, and I understand what is being said here. They COULD be taking 1.00 or more per gallon if they wanted to, and who would stop them? No one.

    @havvey Care to expand on that statement? Or you just trolling?

  • Report this Comment On June 26, 2012, at 5:41 PM, CairnDad wrote:

    I don't think that comparing what we pay to what Europe pays is adequate justification for saying that US gas taxes are not too high. I think that every gas pump should list the amount of taxes per gallon so that consumers know how much they are paying in taxes.

  • Report this Comment On June 26, 2012, at 5:42 PM, idiotisk wrote:

    Subsidies! Good Lord you've been listening to the Democrats. I'm a small independent producer. So I get percentage depletion that Exxon or Apache doesn't get. Big deal. I'll reimburse the government 15 cents on every dollar I get, as long as the stripper well makes a little profit. IDCs (Intangible Drilling Costs). Big subsidy huh! This is money I pay out of pocket to drill a new well, which might be a dry hole. The government didn't write me a check to drill the well. Go cry and gripe in your Starbucks and quit repeating the crap you hear. It's getting old.

  • Report this Comment On June 26, 2012, at 5:44 PM, bugahamike wrote:

    I think what we just read through, and the grafts we just looked at, was a fine example of the smoke and mirrors math right out of the White House.

    Forever Hold

  • Report this Comment On June 26, 2012, at 5:44 PM, AASooted wrote:

    Maybe ExxonMobil is only making $0.02 per gallon of gas. How much are they making on a barrel of oil they drilled themselves when they put it on the books as an expense? The amount it cost them to get it out of the ground, or the whatever the price of oil is on the world market that day? The only way for them to be making record profits when the price of oil is high is for it to be the latter method. In no other business do you make more profit when the price of your raw materials goes up.

    If it costs, say $50 per barrel to get, and you can claim on the books it was $100, that leaves you with a pretty good profit margin.

  • Report this Comment On June 26, 2012, at 5:45 PM, idiotisk wrote:

    By the way ... Good Article. Count yourselves lucky to be living in the USA and quit whining people.

  • Report this Comment On June 26, 2012, at 5:49 PM, georgetag wrote:

    So which is it. Are we paying $0.184 a gallon or 48.8 cents a gallon tax. And who cares what other countries are paying. Our government charges too much taxes on everything else. $12 to drive over the George Washington Bridge! Our government needs to be fired.

  • Report this Comment On June 26, 2012, at 5:53 PM, midnighteye wrote:

    The oil companies are doing a great job. There is always gasoline available for me any time I want to fill up. The raw product is extracted from almost impossible places in huge quantities, transported, refined and distributed to a convenient location near me, and all they make on it is a few cents/gallon. Then they pay enormous amounts of tax at an effective rate of about 40% (Exxon) despite the nonsense I hear idiots like Donald Trump talking about them not paying tax. It's a pity the government wastes most of it, but that's not the fault of the oil companies.

    Sure, they make a lot of money. That's normal, they make a lot of investment, sell a vast amount of excellent product that has never once let me down and make a profit of just 9% (XOM).Well done!

  • Report this Comment On June 26, 2012, at 5:59 PM, bkruse59 wrote:

    I don't disagree with you. Most of these points are the same ones I make when trying to explain this to my less well-informed friends. But I am confused about the how the government subsidizes the price we pay for gasoline. Can you expand on that and quantify it? What would our price be if government were not subsidizing it?

  • Report this Comment On June 26, 2012, at 6:02 PM, xetn wrote:

    garifolle: The corporations do not pay taxes, they just pass them though from the consumers.

    But, this really begs the question, why are we paying taxes on fuel in the first place? And the biggest tax of all is the fact that all oil prices are in US dollars and we all know that the Fed has been inflating the hell out of the currency since 2008 (a few trillion) so that ends up reducing the purchasing power of the dollar or any fiat currency.

    With a free market currency (gold coin standard) prices would still be about the same as in 1960s.

    (As Ron Paul used to say, on silver dime would still buy a gallon of gas.

    Georgetag: Exactly right!

  • Report this Comment On June 26, 2012, at 6:06 PM, QuandoInQuando wrote:

    Two more graph that I would like to see are:

    1. The price of gasoline vs the price of a barrel of crude.

    2. The price of gasoline vs the price of an ounce of gold.

  • Report this Comment On June 26, 2012, at 6:18 PM, venturen wrote:

    Who wrote this a lobbyist? You mean oil companies make $.02 per gallon gas...does that include the price of the oil which is $3 or just refining component? They seem to make a lot of money with only 2 penny profit. Most other countries have small areas...so they don't really need cars. If they only make 2 pennies now...how much did they make when gas was 50% of the price. Just because you are rich doesn't mean the other 98% can afford this. Have you noticed people are running out of money...they got fleeced by wall street who stole their life savings on their houses. Bad times are coming and they government just keeps deficit spending. basic commodities are going down!

  • Report this Comment On June 26, 2012, at 6:25 PM, jimkata2000 wrote:

    About 15 years ago I spent time in Germany and Greece on business. It was the first time I realized how much more Europe paid for Gas then the US. What I also realized, as a result of high gas prices they had more diesels that were getting better mileage, smaller cars and smaller semi's.

    I often thought if we paid more for gas, it would force car makers to make more efficient vehicles and people would buy them. I believe the article to be fairly accurate.

    As others have commented we need to take some responsibility to drive more efficient cars, motorcycles or scooters and just use less gas, not gripe about the price.

  • Report this Comment On June 26, 2012, at 6:46 PM, michaelkm8 wrote:

    If the companies are only making .02 a gallon then what makes it go from $2.20 to $4.00 a gallon in a couple of months? It doesn't make sense that they keep that steady, or are actually able to. When you still have gas in the tank under the gas station and in the two or three days before the refill truck gets there it goes up .50 how do you explain that?

  • Report this Comment On June 26, 2012, at 7:02 PM, jcrschroed wrote:

    The people who complain the most about gas prices are driving vehicles that get the poorest MPG. Some have no choice but most could drive something other than SUV's or trucks. The idea that gas prices are the problem is nothing more than blaming someone else for your poor choices. In the 80's cars were getting terrible MPG needed more service and tires didn't last neerly as long.

    These same people don't complain at all about the price of their I phone, I pad, unlimited data plan, cable with 200 channels and highspeed Internet because those are really important Right

  • Report this Comment On June 26, 2012, at 7:02 PM, kearneyb wrote:

    The comment about the gas companies making only 2-cents per gallon profit is probably true, but it ignores the fact that it is the oil companies accountants who compute what are costs and what is profit. My late wife was an accountant and she frequently pointed out that there are many ways of calculating/apportioning costs to make profits look smaller than they really are.

    Reminds me of the joke about people applying for a job as an accountant and when the interviewer asked how much was 2 plus 2, the winning candidate said, "How much do you want it to be?"

  • Report this Comment On June 26, 2012, at 7:04 PM, Laodicean wrote:

    Quite a petro-laden apologia. Makes one want to take a portion of their social security pension and donate it to Exxon.

  • Report this Comment On June 26, 2012, at 7:06 PM, somethingnew wrote:

    So Sean, I will gripe anyway however and it is not "all in my head." You successfully debunked 4 gripes and I was well aware of most of these anyway. I get reimbursed for all my work related gas use but I gripe anyway out of a purely economic standpoint. Speculators bet on oil futures and if I'm not mistaken this has contributed to higher prices that get added into the price of a gallon of gas. I have been griping about this for the past 4 years. I'm not worried about the cost of gasoline just that speculators seem to be adding to the bottom line and making it substantially and artificially higher even though I don't believe this will ever change as there will always be speculators. So Sean, if I'm wrong about this, please explain my error and I will humbly stop griping about this, otherwise I will continue my rant.

  • Report this Comment On June 26, 2012, at 7:19 PM, TSIF wrote:

    @georgetag, Federal is the $0.184, the $0.488 refers to STATE and FEDERAL, alhtough I don't know which state Sean is using. State tax variation is on reason that gas prices vary on the state borders.

    @michaelkm8 the price of gas is the cost of the oil, the refining, the transportation, and the gas station overhead. While the cost of refining can change the cost of the gas sometimes, especially during hurricane season and maintenance rotations, (both typically excuses), the biggest variable is the cost of the oil. While Exxon, Shell, etc produce oil, the price of oil is controlled by supply and demand and speculation. The price of a barrel of oil has varied by $30 just the last month or so, but the oil cost essentially the same to produce. The cost of oil allows the changes in markups along the line and of course there is the usual "mystery" of why gas responds faster on the upswing than on the downswing.

    Sean, the $0.02 per gallon of gas sounds about right, but is skewing the comment on the oil company's profits. Per some other comments, the bulk of the profits is made on the oil.

    Good comments overall, you certainly excited the conspiratists as you no doubt expected.

  • Report this Comment On June 26, 2012, at 7:35 PM, eldetorre wrote:

    1-Taking any figures that come from the industry at face value when they have a vested interest in keeping the appearance of slim profit margins for tax purposes is questionable at best.

  • Report this Comment On June 26, 2012, at 7:46 PM, Wade32ru wrote:

    Good read. The real "subsidies" that the US Government should be focusing on is the ethanol subsidy. What a disaster! It raises the price of corn and we spend more tax dollars on it than we collectively benefit from lower fuel costs. Then we take it in the shorts at the grocery store. And this is after the we subsidize corn!

    The "subsidies" that the Obama admin continually balk about shutting down are nothing more than tax breaks and accounting regulations that are designed to keep production jobs in the US. They amount to pennies, really.

    The government really has no idea what it is doing. If it stayed out of spending tax payer dollars on fuel - gas prices would be exactly the same and we would have more of our tax money in our pockets to spend.

  • Report this Comment On June 26, 2012, at 8:00 PM, DrKin wrote:

    The truth of the matter is that the oil companies make much more on each barrel of crude from turning it into Viagra, linoleum, plastic, nylon, paint, dyes, fertilizer, insecticides, and every other imaginable substance which builds our "modern" world. Meanwhile it still only costs about $10 to produce a barrel. Thank the Rockefeller and Carnegie endowments among others for changing the modern globe into oil dependent junkies in nearly every industry and home! Ole' J.D spent the last 20 years of his life "recreating" the world to be an oil man's "dream" of dependency.

  • Report this Comment On June 26, 2012, at 8:15 PM, HarryCaraysGhost wrote:

    Anyone gripeing, I would argue that their time would be better served investing in oil companies. Those yields are pretty safe and sweet. If you had enough capital to invest the dividend would be enough to cover your gas bill.

    Now for someone more risk tolerant, you could try some of the oil funds out there. I'm partial to UGA- tracks the price of gas rather nicely( disclosure did this twice for summer driving season, but no activity this year)

    Cheers.

  • Report this Comment On June 26, 2012, at 8:17 PM, marvinlerner wrote:

    So, they only make 2 cents per gallon. I wonder if anybody took the time to divide backward, and come up with the same low profits. Let's see -- qtrly profits were in the billions as I recall. Does anyone realize how many gallons thay'd have to sell, at 2 cents, to make this kind of profit!

  • Report this Comment On June 26, 2012, at 8:22 PM, TopAustrianFool wrote:

    "At one time in OPEC's history, it could indeed control oil production and affect prices. In the mid-1970s, Iran and many other Arab nations spearheaded an effort to cut off exports to Israel's allies, effectively driving up the price of gasoline in the U.S."

    I have heard this before, but this is false.

    "Simply put, OPEC doesn't have the pricing control it once had, so stop the finger-pointing!"

    OPEC did not have pricing control. The US govt controlled prices in the 1970 in order to keep oil cheap. Because of this people wasted the resource and OPEC and refiners would have no need to increase production when scarcity was afoot. Then you would have scarcity.

    Although I agree that there is no need for gripping about gas prices its hard to read an article filled with innacuracies.

  • Report this Comment On June 26, 2012, at 8:23 PM, Chontichajim wrote:

    I am long on both BPT and MVO (Alaska and Texas oil trusts). Companies may claim only $0.02 per profit on the gasoline profit, but the OIL profit goes up exhobitantly as the price increases. The payout on BPT is on everything over $17/bbl (the cost to produce) and Alaska tax (which has a windfall component when oil goes high). MVO in Texas is similar but without the windfall tax so it is actually a worse investment being too dependent on oil price.

    The tax difference may be due to states which vary from less than $0.10/gal (like Florida) up to $0.38/gal (I think that is Washington, but not positive).

  • Report this Comment On June 26, 2012, at 8:25 PM, TopAustrianFool wrote:

    "They seem to make a lot of money with only 2 penny profit."

    Actually, Oil companies have the lowest margins out in the market. 4-5% margin compared to APPL of 45% or WMRT 15%.

    Politicians who always talk about record profits are demagogues looking for more power. Liers who never mention that Oil companies invest records amounts of money to get low margins.

    Thugish politicians...

  • Report this Comment On June 26, 2012, at 8:42 PM, frankwindes wrote:

    You could have mentioned that the largest foreign suppliers of oil to the USA are Canada and Mexico not OPEC, and that part of the increasing cost of oil on the international market is competing demand from China, India and Brazil, whose economies are producing a growing number of people who can afford cars. As for the low $0.02 profit from a gallon of gas I think it would be useful to show this in the context of the profit growth of the big oil companies over the same period. If my calculations are correct EXXON's profit last year was 15% and Chevron's close to 18%, which are great for share holders and executive bonuses but perhaps could be a bit lower and still great with a lower price at the pump, which would help the image of big oil during a nasty recession. And if people don't like the pump price now, watch what will happen as the once cheap extraction costs of easy oil climb upward as we move into oil that is harder to extract and more costly to refine predominates the market. There are good reasons to be developing alternate sources of energy.

  • Report this Comment On June 26, 2012, at 8:56 PM, woolibulli wrote:

    idiotisk, I don't remember anyone talking about Independent drillers making huge profits, so don't tell us to shut up. And man, where do all of these stats come from? Some partisan think tank? I contend that speculation has been responsible for the price in the near past. If only the oil companies were buying futures, it would be on a more even keel.

  • Report this Comment On June 26, 2012, at 9:01 PM, Darwood11 wrote:

    Good article!

  • Report this Comment On June 26, 2012, at 9:01 PM, dgmennie wrote:

    This "quit griping" article and all the various comments reminds me of a dozen blind men trying to describe an entire elephant just from touching one or two of its various body parts. The truth is that NOBODY knows how much money the oil industry rakes in annually worldwide or where the loot actually goes. What is obvious is that the US and many other "advanced" countries are now fully ensnared by the need for oil. Not just to push SUVs or motor scooters around, but as feedstocks for all manner of vital industries from farming to plastics to medicine. But there is also a complementary worldwide lack of political resolve to deal effectively with the situation. Perhaps our first real taste of the consequences was the oil embargo of the early 1970s when the average US driver could no longer buy the gas he/she needed for weekly commutes and other transportation needs at any price. I personally remember folks lining up in the middle of the night waiting for a closed gas station to open so they could fill their empty tanks. Genuine political leadership then (and at many opportune moments since then) could probably have solved the problem by now. But what do we have instead? Endless articles like this one and a boatload of comments that clearly illustrate a severe lack of public perception and understanding about oil. Today, misunderstanding or ignoring the key issues (on purpose?) has become enshrined as a cultural icon.

  • Report this Comment On June 26, 2012, at 10:06 PM, jersmom wrote:

    One thing to point out about our gas prices vs. European gas prices. Most of Europe has mass transportation. So on average, Europeans likely fill their gas tanks a lot less often than we do. Their cities are also much better planned for walking as opposed to the urban sprawl scenario in the U.S. Americans keep getting told that we should be grateful that we pay a lot less. However, our consumption is a lot more because of the way our communities are set up.

  • Report this Comment On June 26, 2012, at 10:07 PM, Rolin4ward wrote:

    Some things are left out that I read about subsidizing Big Oil-granted this is for 1995 but it brings up a lot of questions relevant to today:

    -Reduced Corporate income taxes for the oil industry-11% compared to 19% industry average(1995-What is it today?)

    -Lower than average sales taxes on gasoline

    -Government funding of programs that primarily benefit the oil industry

    "Government directly subsidizes oil consumption through preferential treatment in tax codes. A multitude of federal corporate income tax credits and deductions results in an effective income tax rate of 11% for the oil industry, compared to the non-oil industry average of 18%. If the oil industry paid the industrywide average tax rate (including oil) of 17%, they would have paid an additional $2.0 billion in 1991. Our results are consistent with a report by the Alliance to Save Energy that estimated the benefits of individual federal corporate income tax provisions. Their results showed that in 1989 preferential treatment yielded $1.8 billion to $4.6 billion in individual income tax benefits to the oil industry (Koplow, 1993).

    At the state and local levels, sales taxes for general revenues on petroleum products are lower than the average sales tax rates, and consequently, motorists underpay for general government services. (Sales taxes are charges on petroleum products above user fees [highway fuel taxes, tolls, and fees earmarked for infrastructure and services] that are used for general revenues.) Another study by the Alliance to Save Energy found that state and local governments taxed gasoline at about half the rate as other goods -- approximately 3% versus 6% (Loper, 1994) -- resulting in an estimated $2.7 billion revenue loss from gasoline sales alone in 1991. When home, industry, and office petroleum products are included, the total state and local revenue loss sums to $4.1 billion.

    www.ucsusa.org/clean_vehicles/smart-transportation-solutions...

  • Report this Comment On June 26, 2012, at 10:15 PM, Roth100 wrote:

    Iran is not an Arab country.

  • Report this Comment On June 26, 2012, at 10:16 PM, Rolin4ward wrote:

    P.S. And that was in 1995.

    Now consider "The Hidden Cost of Oil",:

    In 2006(And ask, what is it now in 2012?):

    "• U.S. oil imports: $309.4 billion in 2006, over three times the 2001 level.

    • Cost of oil-related defense expenditures: $137 billion in 2006.

    • Loss of current economic activity outflow: $117 billion in 2006. The money Americans spend on oil imports is not repatriated through international trade.

    • Loss of local, state and federal tax revenues: $43 billion in 2006. • In 2003 it was estimated that our import dependence deprived the U.S. economy of

    828,400 jobs.

    • Economic toll of periodic oil supply disruptions over the past three decades: between $2.3 trillion and $2.5 trillion.

    • Amortized costs of supply disruptions: $133 billion annually.

    • The grand total of all oil-related external or “hidden” costs stands on $825 billion per year. This total is nearly twice the figure authorized for the Department of Defense in 2006.

    • To put the figure in further perspective, it is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil, making the cost of filling the gasoline tank of a sedan $214, and of an SUV $321."

    www.setamericafree.org/saf_hiddencostofoil010507.pdf

  • Report this Comment On June 26, 2012, at 10:26 PM, hasty1982 wrote:

    Yes, Germany and some European countries may have high taxes. They also have well developed public transportation systems, so they have a choice of weather or not they need to buy gasoline. Here in Lebanon, MO there is ZERO public transportation other than a pair of walking shoes, and it's miles, not blocks, to go to the store for most people.

    I understand the points of the author, but I really don't think that a lot of people that are barely getting by would agree that "It's all in their head".

  • Report this Comment On June 26, 2012, at 10:56 PM, Rolin4ward wrote:

    And there are even more hidden costs to oil not brought up here in a 2007 article. I'm wondering what the 2012 cost are? :

    • U.S. oil imports: $309.4 billion in 2006, over three times the 2001 level.

    • Cost of oil-related defense expenditures: $137 billion in 2006.

    • Loss of current economic activity outflow: $117 billion in 2006. The money Americans spend on oil imports is not repatriated through international trade.

    • Loss of local, state and federal tax revenues: $43 billion in 2006. • In 2003 it was estimated that our import dependence deprived the U.S. economy of

    828,400 jobs.

    • Economic toll of periodic oil supply disruptions over the past three decades: between $2.3 trillion and $2.5 trillion.

    • Amortized costs of supply disruptions: $133 billion annually.

    • The grand total of all oil-related external or “hidden” costs stands on $825 billion per year. This total is nearly twice the figure authorized for the Department of Defense in 2006.

    • To put the figure in further perspective, it is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil, making the cost of filling the gasoline tank of a sedan $214, and of an SUV $321."

    www.setamericafree.org/saf_hiddencostofoil010507.pdf

    If this blog repeats, It's because it didn't show up after 15 minutes the first time.

  • Report this Comment On June 26, 2012, at 11:05 PM, buyn2hold wrote:

    @marvinlerner,

    Good question. From Exxon's 10K, they made about 5 million barrels of gasoline and other products per day last year. A barrel is 42 US gallons, so that's 210 million gallons per day or 77 billion gallons per year. 2 cents would be about $1.5B of their profit. They actually made $4.5B in downstream profit, so the 2011 number was closer to 6 cents.

    They made $41B in net income, so the majority comes from the crude oil and natural gas production. A good chunk of this ($37B) went back into cap ex and will be depreciated off over time.

    Oil companies make a good profit, but not the obscene numbers most people think. It they operated at break-even it still wouldn't swing gas prices enough to satisfy most people.

    @michaelkm8 - the 2 cents is an annual average after all of the market gyrations. Some days they will make 20 cents a gallon or more, other days they will lose money (yes, margins do go negative). Most oil companies would love to make x number of cents per gallon on a regular basis, but that's just not the way it works.

  • Report this Comment On June 26, 2012, at 11:34 PM, TMFUltraLong wrote:

    BigAl321 writes,

    "In the summer of 2008 the price of WTI was around $147. Gasoline prices were around

    $4.20 at that time. Now the price of WTI is down

    over 35%. Gasoline is down less than 25%.

    Why the difference?"

    BigAl321,

    That's the hardest "easy" answer you could ask.

    The thing to remember is that West Texas Intermediate prices (i.e. the $147/barrel) only make up about two-thirds of the cost of what we pay at the pump. The remaining costs are made up of refining and distribution costs, corporate profits, and Federal/State taxes. We also can add some bit of speculation in there as well, especially when WTI was at $147. Because of these other costs it's possible for WTI to rise or fall by more than gas prices.. just as you've pointed out.

    Thanks for the comment,

    TMFUltraLong

  • Report this Comment On June 26, 2012, at 11:37 PM, TMFUltraLong wrote:

    Buyn2hold writes,

    "It also deserves to be mentioned that the gasoline you buy today is cleaner than that of the '70s. Emissions from the refineries and the gasoline itself have been greatly reduced because of EPA mandates. Lead is gone and sulfur is processed out of most gasoline to prevent acid rain. U.S. refineries produce much less in particulates, benzene, and other pollutants than they did 30 years ago. This is largely the reason for the 40% increase in real dollars that you mention in the article. The EPA has been effective in regulating the industry thus far, but it does add to the cost of production."

    Great, great point that I truly did not think of... but yes... safer fuels have added to gasoline costs and probably do make up a meaningful portion of that 40%. Now I'm curious and want to know how much... I'll get back to you on this...

    TMFUltraLong

  • Report this Comment On June 26, 2012, at 11:40 PM, TMFUltraLong wrote:

    CairnDad writes,

    "I don't think that comparing what we pay to what Europe pays is adequate justification for saying that US gas taxes are not too high. I think that every gas pump should list the amount of taxes per gallon so that consumers know how much they are paying in taxes."

    It'd be nice if they posted those taxes for public viewing at each gas station... but to my knowledge it can vary state to state and isn't often a requirement. We know the federal tax is $0.184 and it varies from state to state beyond that with the AVERAGE of all states being $0.488.

    Thanks for the comment.

    TMFUltraLong

  • Report this Comment On June 26, 2012, at 11:41 PM, Junster wrote:

    is this kind of arguing any use? people will live their own way anyhow, which means human being is doomed to do whatever it pleases. so please get a life for the sake of yourself.

  • Report this Comment On June 26, 2012, at 11:46 PM, TMFUltraLong wrote:

    AASooted writes,

    "Maybe ExxonMobil is only making $0.02 per gallon of gas. How much are they making on a barrel of oil they drilled themselves when they put it on the books as an expense? The amount it cost them to get it out of the ground, or the whatever the price of oil is on the world market that day? The only way for them to be making record profits when the price of oil is high is for it to be the latter method. In no other business do you make more profit when the price of your raw materials goes up."

    That's a good point. Oil companies like ExxonMobil don't strictly make profits from selling gas. It drills and transports oil, has natural gas assets, refines, and is responsible for countless other products. Overall profit margins are 9% over the trailing 12-months. But truth be told these integrated oil companies really do only make $0.02 per gallon.

    TMFUltraLong

  • Report this Comment On June 26, 2012, at 11:48 PM, TMFUltraLong wrote:

    georgetag writes,

    "So which is it. Are we paying $0.184 a gallon or 48.8 cents a gallon tax. And who cares what other countries are paying. Our government charges too much taxes on everything else. $12 to drive over the George Washington Bridge! Our government needs to be fired."

    $0.184 is the federal tax rate, $0.488 is the AVERAGE tax incurred by American's when Federal and state taxes are added together. Some states have minimal gas taxes, others are more than double.

    Thanks for the comment.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:03 AM, catoismymotor wrote:

    FYI: In Tennessee this past weekend along I75 I saw 87 octane gas advertized at $2.95 and $2.97 a gallon. At home it is $3.19 a gallon. I can't help but wonder about the difference in price.

  • Report this Comment On June 27, 2012, at 12:04 AM, TMFUltraLong wrote:

    bkruse59 writes,

    "I don't disagree with you. Most of these points are the same ones I make when trying to explain this to my less well-informed friends. But I am confused about the how the government subsidizes the price we pay for gasoline. Can you expand on that and quantify it? What would our price be if government were not subsidizing it? "

    Excellent question.. which I really don't have an exact answer to.

    Actual oil industry subsidization figures are all over the place. From $10 billion annually, up to more than $50 billion. According to a New York Times article in January, the government subsidizes the oil industry with $95 million per day, or about $34.7 billion per year. Considering that in 2004 we used 140 billion gallons of fuel (and i'm sure this figure has gone up), I'd say we're getting about $0.20-$0.25 per gallon in government subsidies.

    Now for the actual subsidization, it's not free cash at all.. it's in the form of tax breaks. Oil companies are allowed to write off certain types of capital expenditures which act as a sort of "subsidy" to their bottom line.

    Thanks for the comment.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:10 AM, sliderw wrote:

    Cost per mile is down, but are Americans on average driving more miles or less?

  • Report this Comment On June 27, 2012, at 12:20 AM, TMFUltraLong wrote:

    Venturen writes,

    "Who wrote this a lobbyist? You mean oil companies make $.02 per gallon gas...does that include the price of the oil which is $3 or just refining component? They seem to make a lot of money with only 2 penny profit. Most other countries have small areas...so they don't really need cars. If they only make 2 pennies now...how much did they make when gas was 50% of the price. Just because you are rich doesn't mean the other 98% can afford this. Have you noticed people are running out of money...they got fleeced by wall street who stole their life savings on their houses. Bad times are coming and they government just keeps deficit spending. basic commodities are going down!"

    Nope... not a lobbyist at all. My third point pretty much sums this up. It isn't the oil companies that are gouging you at the pump... it's the lack of real wage growth that's making it appear like gas companies are gouging you.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:25 AM, TMFUltraLong wrote:

    michaelkm8,

    "If the companies are only making .02 a gallon then what makes it go from $2.20 to $4.00 a gallon in a couple of months? It doesn't make sense that they keep that steady, or are actually able to. When you still have gas in the tank under the gas station and in the two or three days before the refill truck gets there it goes up .50 how do you explain that?"

    WTI crude makes up 2/3rds of the price we pay so chances are its a quick rise in the price of oil. I discussed a few comments previously the other components that can affect costs.

    Thanks for the comment.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:27 AM, TMFUltraLong wrote:

    somethingnew writes,

    "So Sean, I will gripe anyway however and it is not "all in my head." You successfully debunked 4 gripes and I was well aware of most of these anyway. I get reimbursed for all my work related gas use but I gripe anyway out of a purely economic standpoint. Speculators bet on oil futures and if I'm not mistaken this has contributed to higher prices that get added into the price of a gallon of gas. I have been griping about this for the past 4 years. I'm not worried about the cost of gasoline just that speculators seem to be adding to the bottom line and making it substantially and artificially higher even though I don't believe this will ever change as there will always be speculators. So Sean, if I'm wrong about this, please explain my error and I will humbly stop griping about this, otherwise I will continue my rant."

    You are correct that speculation can move gas prices higher (similar to what we witnessed in 2008) and is not something I specifically address in my gripes section. You have my permission to gripe away regarding speculative trading.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:31 AM, Risky88 wrote:

    look at the graph and the 40% increase was largely in the last 12 years!

    the amount of taxes they pay is pointless when your already giving them trillions in subsidies!

    I will give you a dollar if you give me three back! Since you the congressman are my employee, better do what I say!

    You also forget to mention a large part about Europe!

    They freaking drive less!!!!!

    everything is not spread out like in the united states! People live in apartments not houses! They eat differently, they walk more, the drive smaller cars, they ride more mopeds etc, they actually have PUBLIC TRANSPORTATION that works!

    There are vast differences in life styles.

    I haven't added the numbers obviously and don't know how you would.

    But you never took any of this into consideration!

    Shame on you!

    You cannot play opposite and not give all sides.

    very disappointing because I think the number could be very different if you actually put all things into consideration which you did not.

    shame

    If this was college paper, I would ask if this was your first draft and why is it so short

  • Report this Comment On June 27, 2012, at 12:32 AM, TMFUltraLong wrote:

    Marvinlerner writes,

    "So, they only make 2 cents per gallon. I wonder if anybody took the time to divide backward, and come up with the same low profits. Let's see -- qtrly profits were in the billions as I recall. Does anyone realize how many gallons thay'd have to sell, at 2 cents, to make this kind of profit!"

    There were 134 billion gallons of fuel consumer in the U.S. in 2011 according to the latest figures I could find which equates to about $2.68 billion in oil company profits. Remember that these companies have plenty of other products and business operations outside of gasoline.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:34 AM, bobs111 wrote:

    Gas doesn't cost too much, Government does!

  • Report this Comment On June 27, 2012, at 12:35 AM, TMFUltraLong wrote:

    TopAustrianFool writes,

    "OPEC did not have pricing control. The US govt controlled prices in the 1970 in order to keep oil cheap. Because of this people wasted the resource and OPEC and refiners would have no need to increase production when scarcity was afoot. Then you would have scarcity."

    I'd have to disagree. The U.S. could exert some pricing control, but in the 1970s OPEC still exerted 50%-55% of the entire world's supply and could control prices much better than the U.S. The oil embargo proved this.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:39 AM, TMFUltraLong wrote:

    Frankwindes writes,

    "You could have mentioned that the largest foreign suppliers of oil to the USA are Canada and Mexico not OPEC, and that part of the increasing cost of oil on the international market is competing demand from China, India and Brazil, whose economies are producing a growing number of people who can afford cars. As for the low $0.02 profit from a gallon of gas I think it would be useful to show this in the context of the profit growth of the big oil companies over the same period. If my calculations are correct EXXON's profit last year was 15% and Chevron's close to 18%, which are great for share holders and executive bonuses but perhaps could be a bit lower and still great with a lower price at the pump, which would help the image of big oil during a nasty recession. And if people don't like the pump price now, watch what will happen as the once cheap extraction costs of easy oil climb upward as we move into oil that is harder to extract and more costly to refine predominates the market. There are good reasons to be developing alternate sources of energy."

    You have some good points here, and I agree with most. ExxonMobil's trailing margins were 9%, so they are already reasonably "low" by market standards.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:41 AM, TMFUltraLong wrote:

    woolibulli writes,

    "idiotisk, I don't remember anyone talking about Independent drillers making huge profits, so don't tell us to shut up. And man, where do all of these stats come from? Some partisan think tank? I contend that speculation has been responsible for the price in the near past. If only the oil companies were buying futures, it would be on a more even keel."

    Even if I'd like to, I can't just create figures out of thin air. If you check out the smaller print underneath each chart you can get the reference where I found the data at.

    Thanks for the comment.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:46 AM, TMFUltraLong wrote:

    Sliderw writes,

    "Cost per mile is down, but are Americans on average driving more miles or less?"

    Data on this varies pretty wildly. From what I found on Business Insider, a rough guestimate is that between 1980 and today average miles driven per year has increased by 25%.

    TMFUltraLong

  • Report this Comment On June 27, 2012, at 12:53 AM, missbaysdaddy wrote:

    The only thing that is taking the sting out of gas prices for me is the fact that I own the mineral rights under the land I own and lucky for me the oil companies are drilling gas wells so I am reaping the benefits from that to offset the price I have to pay for gasoline. I still do a double take when it takes $50.00 to fill my tank but with a couple of hundred a month coming in from royalty checks I grin and bare it. The bad news here is that the tax folks have doubled the value they placed on my land so now instead of the land being valued at $17,000.00 it is now valued at $32,000.00 so my taxes have gone up again.

  • Report this Comment On June 27, 2012, at 1:14 AM, Foolme2x wrote:

    @Wade32ru - I concur with your conclusion that "The government really has no idea what it is doing." However, your preceding paragraphs indicate that you, like many commenting here, are equally clueless.

    The so-called subsidy for the fuel ethanol industry that you rail against is a tax break, just as those you seem to endorse in your second paragraph. Further, you seem oblivious to the fact that it is the fuel ethanol industry that receives the favorable tax treatment - not corn growers. While a significant portion of the current US corn crop does get used by the fuel ethanol industry (which does provide a significant number or US based jobs), the revenue to the corn grower is the same regardless of how the corn is used.

    I am a farmer, but I don't grow corn. My land is not irrigated and without irrigation corn in this area is just too risky for me. There is no doubt that corn growers have benefitted from the growth of the fuel ethanol industry and the associated increased demand for corn - but not due to government subsidy for growing corn, which does not exist.

    You claim "we" get no benefit from the tax break provided to the fuel ethanol industry. You couldn't be more wrong. While each requires some arguable assumptions to quantify, there are two important aspects in which the American consumer and taxpayer benefits from the development of the fuel ethanol industry.

    Due to significant investment in the late '90s and the first half decade of this century (some of which was substantially tax incented), the fuel ethanol industry now has the capacity to supply nearly 10% of US gasoline consumption. Since the US imports more than half of its total oil requirement, and about half to the total requirment is used to make gasoline, without the output of the fuel ethanol industry, we would need to import about 10 percent more oil than we do today. Who knows what that increased demand would do to the price of oil.

    Between mid-2000 and mid-2008, US oil imports increased about 20%. During this time, the US price of crude went from about $10/bbl to $130/bbl (while maybe not the numbers you will find in some references, I also have a very small oil royalty & those are the actual prices paid at the local refinery in 2000 & 2008). Simple extrapolation would suggest that without the fuel ethanol industry, US oil prices could be over $300/bbl vs less than $70/bbl that the local refinery is paying this month. Certainly simple extrapolation is not appropriate in this case. But at the same time, it is just as certain that without the availablility of fuel ethanol, US oil and gasoline prices over the past 5 years would have been higher. The US consumer has reaped the benefit of whatever that difference has been.

    Secondly, 25 years ago when the fuel ethanol industry was still in its infancy, the price of corn was chronically depressed, going below $2/bu most of the time. The US Department of Agriculture used to make "deficiency" payments when grain prices were depressed. Those payments could be legitimately called a subsidy and did go directly to farmers. However, even then the true subsidy was to the American consumer, as this was part of the cheap food policy that has been core to US goverment ag programs for a century or more. With improved crop prices, USDA has not made any deficiency payments for corn in recent years (or for wheat, milo, etc that are also used interchangably with corn in fuel ethanol production).

    Since I've never been a corn grower, I don't know the exact amount of the deficiency payments on corn, but based on wheat deficiency payments I used to receive, with current input costs if corn market price was still $2/bu (and without the demand from the fuel ethanol industry it could be), it seems likely that the deficiency payment could be in the range of $0.50 to $1/bu. With a current US corn crop north of 13 billion bushels, the US taxpayer is getting a "benefit" of something in the range of $10 billion/yr through the elimination of the need for USDA deficiency payments.

  • Report this Comment On June 27, 2012, at 1:27 AM, WiseChoice4u2 wrote:

    Thanks for this article. Shows that the gripes continue. But we are so blessed to be enjoying the lifestyle we have. I lived with the poor in other countries for 25 years who don't have a car. Sure happy that I have one and can afford fuel. I agree with the theme!

  • Report this Comment On June 27, 2012, at 5:38 AM, wax wrote:

    How utter clueless!

    Regardless of who does what, or what taxes there are, or the price of figs in the Ukraine, American's cash is ever flowing into the gas tanks of their vehicles.

    So please spare me the editoralization and either lower fuel prices or increase my wages.

    Wax

  • Report this Comment On June 27, 2012, at 8:54 AM, Darwood11 wrote:

    Good article, and generally good comments. I don't agree with all of what was written, but it's interesting to see what's going on between the ears.

    Some of the comments is the stuff of urban legends.

    We do have the right to our opinions, but I'd like to remind everyone that living out of our financial opinions can be dangerous to one's financial health.

  • Report this Comment On June 27, 2012, at 10:12 AM, thfp wrote:

    ANOTHER interesting article with a political slant in a financial web site I pay to belong AND the slant leans different than I. If I wanted political slants I would go to a political site. The title of this article is in and of itself offensive. This is America and if I want to Gripe about the price of gas, I can. I can also choose not to belong to fool anymore.

  • Report this Comment On June 27, 2012, at 10:24 AM, swiver wrote:

    Haven't seen too much above regarding the exploration and production costsThese are high anf getting higher..

  • Report this Comment On June 27, 2012, at 12:16 PM, edtrain wrote:

    As I drive around and especially on the Interstate I notice that people really don't care what the price of gasoline is. Their driving habits sure show this, driving at 80mph, making quick stops at the red light, really speeding up when the light turns green. If they really cared about the price of gas they would pay attention to their driving habits and the total cost of what they pay for gas would sure do down.,

  • Report this Comment On June 27, 2012, at 1:30 PM, cowboycalvin wrote:

    I don't care what the price of gas is in Denmark. I live in America. If Denmark jumps off the cliff...

    I'm with the guy that compares the price of oil to the price of gas. Last time oil was at 147 before gas prices got to 4. This time oil never got near 147. Someone is making the money whether it's the oil companies or the government, I don't care. I think T. Boone and others are right in saying we need to switch cars to natural gas. It would become readily available at stations (just like diesel did) whenever there is enough demand.

  • Report this Comment On June 27, 2012, at 2:21 PM, 48ozhalfgallons wrote:

    Does anyone remember the artist sketch drawn in the late '70's of a future concept car which pulled a gasoline tender? That was a scary concept of our energy future.

    With every oil shock automobiles become 10-20% more efficient within a couple of years. My 40mpg zippy standard Focus is a superior auto compared to the Opels, VWs, Renaults and Yugos of the '70's. Ford will soon introduce 100mpg ecoboost diesel hybrids. Prius is a proven auto getting 50mpg for the last 14 years. Two more oil shocks and we won't need much gas at all to power autos available in the near future.

  • Report this Comment On June 27, 2012, at 2:23 PM, outoffocus wrote:

    I agree with your overall argument but the title leaves much to be desired.

  • Report this Comment On June 27, 2012, at 3:07 PM, amg378 wrote:

    This is MOSTLY a good article except for one major flaw:

    Did the author really perpetuate the misconception that Exxon Mobil and other oil companies "only" make $0.02 off of each gallon of gasoline it sold? That's simply pure BS...in fact, the profits earned from the extraction of that oil from the earth, plus the profits from the refinement process are not reflected in that $0.02 which is only the retail profit earned from the wholesale price of a gallon of gasoline. (Um, in other words, Exxon only indicates it's final profit margin and cuts out the profit to all the various intermediate levels, even though Exxon fulfills the roles of those various intermediate levels and gains profit at each of those levels).

    Nonetheless, this misinformation fed by oil companies and hounded upon by Americans (educated and otherwise) defines so much of what is wrong in America...a blatant carelessness to conduct business and oneself with integrity in all situations; if Capitalism is based on deceit, it will be sure to fail like every other human concept.

    Then again, maybe that's the universal point: humanity is inherently flawed and deceitful, and despite whatever gripes and attempts at contrived explanations, we're densely doomed. After all, the premise of Economics is the utilization of SCARCE goods (meaning that at some point they cease to exists and are not endlessly abundant).

    That's my two-cent rant...

  • Report this Comment On June 28, 2012, at 9:48 AM, WHY103 wrote:

    Without getting in over my head here, it seems that some folks trying to square Exxon's annual profits and the .02 per gallon of gas margin are forgetting that Exxon sells a lot besides gasoline.??

  • Report this Comment On June 29, 2012, at 8:14 AM, 0taojones wrote:

    there are 83 million cars on the road in america we collectively carry around about 14 gallons per car .

    if we all bought only 1/2 a tank of gas instead of a fill up all those millions of gallons of gas would still be counted in the inventory of the gas companies in stead of cutting our gas milage with the extra weight we carry (8 pounds per gallon)

    the gas companies lacking storage would be overflowing with excess gas in a couple of days with no where to put it prices would go down pronto

  • Report this Comment On June 29, 2012, at 11:53 AM, whyaduck1128 wrote:

    IMO, the main reasons people gripe about the cost of gasoline are that (a) it's easier to gripe than to either change their habits, either driving or fiscal, and (b) they secretly enjoy griping.

    Personally, I bought a more fuel-efficient vehicle, try to combine trips, try to drive more smoothly, and pay what the pump says when I need gas. I find my life easier and less stressful when I cut down on the griping and avoid those who indulge in it excessively.

  • Report this Comment On June 29, 2012, at 12:39 PM, dw69129 wrote:

    Gasoline is much cheaper in urban areas where public transportation or even walking are alternatives. Prices are MUCH higher in rural areas where there is no alternative to driving and all of our food is produced. Because of agriculture, demand for fuel is MUCH higher in rural areas and if the laws of supply and demand were being adhered to fuel would be FAR cheaper in rural areas. But then all the urbanites who only buy a tankful every couple of weeks would holler and scream. Farmers must refill their tractors every single day at a cost of $300 - $400 every single day. So don't whine about having the cheapest food in the world to go along with your cheaper fuel.

  • Report this Comment On June 29, 2012, at 1:10 PM, CBeagle wrote:

    While not debating the overall concept behind your article, I think the $0.02 per gallon profit on gas is a highly dubious number. The use of that number without explanation essentially puts the whole article into the "tripe" section of what I read. You sound like an apologist for the industry.

    First basic question: Where did it come from?

    If you got it from the industry, throw it out the window. If you got it from public financial reports, it is equally questionable since you would likely have to have access to the accounting behind it.

    Even if it is true, it is only because the industry uese gasoline to absorb costs and as a loss leader. I don't fault any corporation for being profitable. But whining that oil companies "only" make $0.02 per gallon sounds awfully close to Marie Antoinette.

  • Report this Comment On June 29, 2012, at 3:38 PM, donvesco100 wrote:

    Tripe and drivel. (article and most responses). Terminology such as "subsidies" expose bias toward pop / hip liberal groupthink, since

    "not charging a tax" is not a subsidy. It borders on liberty.

    All taxes on raw materials and fuel for production is counterproductive.

    Now that we can be taxed for NOT buying some product, the divergence of liberty from life is even greater than even wartime rationing. A tax on fuel is a tax on everything.

    And Marie Antoinnette never said what you think she did, and it didn't mean what you think it does anyway.

  • Report this Comment On June 29, 2012, at 6:08 PM, InflationEditor wrote:

    On June 26, 2012, at 6:06 PM, QuandoInQuando wrote:

    Two more graph that I would like to see are:

    1. The price of gasoline vs the price of a barrel of crude.

    2. The price of gasoline vs the price of an ounce of gold.

    You can find a Gold vs. Oil chart Here:

    http://fintrend.com/charts/gold-vs-oil-chart/

    Gas vs Oil Chart

    http://inflationdata.com/inflation/Inflation_Rate/Gasoline_v...

    The inflation adjusted price of gasoline is a bit misleading starting at the peak in 1980. Here is the chart starting in 1918.

    http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_I...

  • Report this Comment On June 29, 2012, at 7:08 PM, CapnObvious wrote:

    @Rolin4ward -

    In 2010, COP paid 8.3 B on 19.8 B earnings.

    CVX paid 12.9 B on 32 B earnings.

    XOM paid 21.6 B on 51 B earnings.

    Subsidy? Where? That doesn't look like anywhere near 11-19% to me. Looks more like 40% or so. I went to the (decidedly left-wing) Washington Post for these figures; Exxon's SEC filings are just a little slow to come up on my computer and I'm impatient.

    I'm really disheartened by the polarization here. Either the oil companies are the worst thing since Hitler, or those who oppose them are flat out stupid.

    Many years ago, I helped develop the software on which the Internet is based. I'm sort of sorry I did. It's being used to split what used to be a united nation into a set of factions that will never agree with one another. May God save us, somehow. We could never fight WW II, for example, again ... we'd kill ourselves before we took out the Nazis. Or maybe what I'm seeing here is just ignorant opinion on display, with no foundation in economics or technology.

  • Report this Comment On June 29, 2012, at 10:07 PM, jonesericr wrote:

    I live in Japan and when I hear people, even those here from the states, complain about the price of US gas I want to smack them. I work on a military base and we pay less than the regular population. Drive around town and look at the prices at the pump and convert the numbers back to US dollars and that generally opens eyes but not necessarily minds.

    I don't want to pay $5.00 a gallon in the US when on vacation, cuts into beer money, but I'm still making out like bandit compared to here paying by the liter.

    ej

  • Report this Comment On June 30, 2012, at 5:22 PM, fooljaggie wrote:

    "U.S. citizens should be thanking their lucky stars that gas prices have only been as high as $4 per gallon.....

    .......According to a recent survey by Bloomberg of 55 countries, the U.S. paid the 44th-highest price for gas. The reason we rank so low is that the U.S. government subsidizes a good portion of what we pay, and the final tax is only $0.184 per gallon."

    Would someone please illuminate me and others here how it is that "The US government subsidizes a good portion of what we pay."

  • Report this Comment On July 01, 2012, at 12:13 AM, esotericevets wrote:

    Clamor not for the Venezuelianization of our oil products lest you get just that. In Venezuela the gas is the same price as it was a half century ago. With our ever more facile fossil fuel finding and a legislature always intent on achieving a double digit approval rating, nationalization and bureaucratic fiefdomization of the oil patch is a possibility. Our current public flailing of the bad company ceo of the week and the occasional jailing of a financial big wig tides us over for the time being. Long term, got over death technology will irreleventalize all this.

  • Report this Comment On July 01, 2012, at 6:04 PM, TMFGortok wrote:

    If the federal government 'subsidizes' some of that cost, where do people think that subsidy comes from? The Government cannot create wealth. It can tax people, print money, or borrow it. All three affect the tax payer (taxes mean less money, printing money means that the money is worth less, and borrowing it means eventually you have to pay it back through either 1) taxes or 2) inflation.

    I'm paying for it, whether it's a subsidy or not.

  • Report this Comment On July 01, 2012, at 7:55 PM, BogusGuy wrote:

    Your forgetting the Carter Energy Crisis was actually caused by the new Dept. of Energy which was allocating gasoline by market which didn't account for almost all cars in American ran at less than 1/4 tank full at the time with 18+ gallon capacity. On top of filling all those tanks, gas cans and 5 gallon Sparklett's bottles were also used to peak out refining capacity. Just like Nixon's price controls (or Obamacare's) it failed to provide politically, or "expertly" what market adjustment could have easily accomplished with minor transitionary inconveiniances. Price per barrell of oil now, adjusted for dollar value, isn't much more than as early 60's. What we're doing is driving much much much more on commutes, necissities and fun with a larger population and many more vehicles in consumer and commercial use. The price of Gas, with dollar value adjustments, is about the same as The Carter Years, if not lower.

  • Report this Comment On July 01, 2012, at 10:03 PM, foolspud wrote:

    I'm not buying it!

    Gas cannot be substituted by anything else at at this time realistically. Oil provides the chemicals needed for most of the consummable products we use. There aren't enough trees to substitue for the plastic we use not too mention the fuel.

    The oil in this country belongs to the people. The government is in their pocket and let's them have free reign to the expense of our enviroment and pocket book. We make more gas than we use and sell it on the open market while we pay artificially high prices.

    I won't go into the loss of American lives and billions spent "helping" the middle east develop an oil rich despotism.

    Your arguement has to be based on a free market that is not the case.

  • Report this Comment On July 02, 2012, at 5:19 AM, kcod wrote:

    This is a comment from the UK.

    It is really interesting from a socialogical point of view that, I think, all of the preceeding comments have totally avoided responding to the main point of the article.

    This main point is that wages in the USA have failed to increase at a rate consistent with the increase in GDP.

    My understanding from other sources (the Economist magazine) is that, in the last 30 years, there has been an ENORMOUS transfer of wealth in the USA from the less wealthy to the more wealthy (who mostly source their wealth from other means than wages). It is quite likely that the more wealthy look with equanimity upon the current price of petrol; but there are many many many fewer of the more wealthy than the less wealthy.

    It is this greatly increased disparity in income which leads the majority to be so concious of the price of petrol.

    How has it come about that the most wealthy have become greatly more wealthy while the least wealthy have become even poorer?

    Why do none of you address the main point of the atricle?

    ****************

    With regard to the large taxes on fuel in the UK (similar to those in "Europe"), they were claimed to be instituted, partly, in order to make the price of fuel less volatile as perceived by the end user - a not unreasonable aim. In theory, and actually in practice to some limited extent, the tax may be decreased when the international price of oil increases.

    Of course, just as Income Tax was first introduced as a 'temporary measure' to pay for a war, we find that Government gets attached to any source of revenue and is reluctant to reduce (let alone cease) its dependence upon any source once that source is introduced.

    *************

  • Report this Comment On July 02, 2012, at 10:37 PM, esotericevets wrote:

    kcod: Here is my answer to your query about why there is no response to your perceived theme of this article in the comment section.

    I believe that there is a sliding scale of opinion of the rich in this country. That scale would range from the view of the rich as being a malign cancer all the way to the view of the rich as a vital organ on the body of America. Notice that across the whole scale, the rich are an integral part of America. Some Americans might imagine the rich as a monkey on the back of America, but I consider this naive. As a possibly highly benign part of America, it might just be a fools folly to spend much effort attacking the rich. People in this forum might understand that when comparing people with means and circumstances, that it is like comparing apples to aardvarks and to come up with an effective means of equalizing wealth in this country by soaking the rich, you might as well try to throw a rock to the moon. The rich were easy prey in the last century and were hung up to dry with high taxes, but it would be a tough task these days. These wealthy people become geometrically wealthier because they have the keys to everything that matters. They have the knowledge, the capital, the ears and guns of the government, the admiration of the little people and who knows what else. Luckily they don't move in concert and crumbs keep falling down to the less enfranchised and a clever or industrious peasant can worm his way on up.

    Enough of this rambling. The real reason for this issue not being addressed is that I don't think that the changing wealth distribution was the main point of this article. The main point of this article is that the cost of gas hurts because wages have not risen as quickly as the price of gas. From there, it is up to every reader to decide what action to take to deal with this issue. You have decided that a discussion of wealth inequality is in order. I have decided to use less fuel than I have used in the past. All of those who have written have decided to share their take on this matter, and I consider it to be a well written informative article because it has drawn out a great bunch of comments. Having just mildly criticized you, I have to add that your writing is easy and pleasing to read and you added interesting information as well.

  • Report this Comment On July 03, 2012, at 4:26 PM, shsscar wrote:

    filled my tank at $2.76/gal yesterday here in S.Car.

  • Report this Comment On July 03, 2012, at 8:12 PM, Bigfrankie wrote:

    Like the previous post, my wages have not kept up with the cost of gas. My wages have also not kept up with the cost of a college education, but thats another topic. Our economy is based on transportation, so...the cost of fuel hurts. Even thought the oil companies are only making .02 per gallon, aren't they making record profits? Finally, isn't diesel a by-product in the manufacture of gasoline. Why is the price higher than premium?

  • Report this Comment On July 13, 2012, at 5:03 PM, thidmark wrote:

    "weather or not they need to buy gasoline"

    Well, at least I know why the oil companies are running those ads on our embarrassing education results.

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