MovieChat Forums > Who Killed the Electric Car? (2006) Discussion > Who profits more on gasoline: government...

Who profits more on gasoline: government or oil companies?

posted 13 years ago by bbagnall
11 replies | jump to latest

Here's a question: who makes more profit per gallon of gasoline sold, the oil companies or the government? And what ratio do you think it is?

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Government makes more profit. Exxon made a profit of 0.02 per gallon, while the government makes on average about 0.48 per gallon. That's about 24x more profit for the government versus profits for the people who actually do the work, take the risks, invest the money, etc...

http://www.dailymarkets.com/economy/2011/04/27/gasoline-taxes-vs-exxon -profit-per-gallon/

[–] apeweek 13 years ago

Interesting stat, thank you. Of course, that assumes that every penny of tax collected on gasoline is somehow a "profit."

But it isn't profit. All that money is accounted for. It pays for road building and repair (autos need roads, otherwise nobody buys gasoline.)

See here: http://en.wikipedia.org/wiki/Fuel_tax

"In the United States, the fuel tax receipts are often dedicated or hypothecated to transportation projects so that the fuel tax is considered by many a user fee."

Government also pays to clean up and guard oil spill sites, and for military adventures to protect oil sources. Government helps pay for petroleum research and development, too.

If there were any money left over, I suppose you could call it profit, but who are the shareholders? Is it us? You think we get any of that money?

Just the opposite. We are expected to shell out big time so the oil companies can get billions and billions in subsidies and tax breaks.

No, the whole idea of "profit" for the taxpayers is just a cruel joke.

Look, even conservative Forbes magazine thinks these subsidies and tax breaks - on one of the wealthiest and most profitable industries in the world - are completely uncalled for:

http://www.forbes.com/2011/05/02/eliminate-oil-subsidies.html

"...Although the president hopes to eliminate eight specific tax breaks--which cost the Treasury $43.6 billion over 10 years--only three, accounting for $31.9 billion of that total, are particularly important. Conservatives have no business defending any of them."

Buy an EV instead. You won't have to reward these people with any more of your money.

[–] bbagnall 13 years ago

Dave, this idea you have that somehow the "subsidies" that gas companies get somehow compensates for all the money the government takes at the tax pump is quite laughable to me. The government is taking far more from gas profits/taxes than it is giving out in these questionable "subsidies".

Your tax breaks, by the way, are not subsidies. Those are just business write-offs--expenses that companies have that they claim for tax purposes. It sounds like in your head if the government doesn't get 100% of our wealth, we are somehow getting a subsidy. You have it ass backwards.

[–] apeweek 13 years ago

The government is taking far more from gas profits/taxes than it is giving out in these questionable "subsidies".

Gas taxes don't come from anyone's "profits", just like sales tax doesn't come from profits. It is collected at the point of sale, and simply goes to the agencies collecting it.

Gas taxes pay for roads and infrastructure. One way or another, we have to pay for this. So this money buys something that we all need if we are drivers. No matter what scheme you may wish to come up with for building roads, you will need a way to pay for it. This money comes from your pocket either way.

Subsidies is money that winds up in the profits of petroleum companies. If you believe this money reduces the price of gasoline, then it helps gas auto drivers only, not public transit, alternative fuels or EV drivers.

In any event it is unlikely that all the government welfare money petroleum companies get is delivered back to us in price reductions. Much of it simply goes to shareholders' pockets.

I see above that it's the gas companies' profits that you care about. Personally, its my own money I worry about. I don't like simply putting my money in other peoples' pockets. If you wish to volunteer to do this, go right ahead. Just don't ask me to do so.

Your tax breaks, by the way, are not subsidies.

So then, you are OK with $7500 tax breaks for EV purchases? Cause in the past, it sure sounded like you weren't.

Since tax breaks don't matter, how about some more of them? The base subsidies for gas/oil total about $4 billion per year, so let's give that same $4 billion in tax breaks to EV manufacturers and purchasers. If there are about 100,000 EVs made per year, that would come to about $40,000 in tax help for each one.

That sound OK to you?

Or maybe it is occurring to you that for every tax dollar rebated, more tax has to be paid by the remaining taxpayers?

Here's another explanation. Let's say the government sends you a $1000 subsidy check. Your neighbor complains about this, so the next year the government invents a $1000 tax break for you. Then sends you a $1000 refund check. Is there really a difference? You think the neighbor stops caring because I found a cleverer way to get my $1000?

But as to tax breaks not being subsidies, here's a quote from an article at:

http://www.nytimes.com/2010/07/04/business/04bptax.html

"...And for many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated by various credits. These companies’ returns on those investments are often higher after taxes than before."

If you make more from an investment AFTER applying taxes to it, that is a GOVERNMENT HANDOUT masquerading as a tax break (actually it's both a tax break and a handout.)

[–] bbagnall 13 years ago

Gas taxes don't come from anyone's "profits", just like sales tax doesn't come from profits. It is collected at the point of sale, and simply goes to the agencies collecting it.

It doesn't matter if the government taxes a product on the back end invisibly (which causes the seller to have to raise the price of his product) or if it is collected at the point of sale. It still raises the price and causes distortions in demand. There is a special gas-only tax that goes into the government's general revenue--not a good situation but it totally demolishes your idea that gas companies reap more in subsidies than they give back.

Gas taxes pay for roads and infrastructure. One way or another, we have to pay for this. So this money buys something that we all need if we are drivers. No matter what scheme you may wish to come up with for building roads, you will need a way to pay for it. This money comes from your pocket either way.

The problem with that is, where I live, we're lucky if 5% of the gas tax collected goes to roads. The rest goes into general revenue where the government pisses it away.

The other problem is, say 100% of it went to roads. Well, who is to say what the proper amount is to tax at the pump and where it should be spent? The free markets should decide these things because there is a natural tension between supply and demand that causes the money to flow to where demand is greatest, but with the government handling these decisions it all becomes politicized and favors special interest groups like construction firms that build roads.

Long story short, I prefer free market privately owned roads. Libertarian dream, highly possible with today's technology, but doubtful we could ever topple the private interests who have a vested interest in the system currently in place.

So then, you are OK with $7500 tax breaks for EV purchases? Cause in the past, it sure sounded like you weren't.

Again, you are a bit ass-backwards on this issue. That is a $7500 credit, not a tax break. That $7500 is taken from tax revenues and handed out to special interests--the EV enthusiast, plus the EV manufacturer also benefits by an artificial situation of the appearance of a lower cost product that actually costs a lot to make.

Bottom line, we're both in favor of no subsidies for EV or gas companies (or any company for that matter). Market manipulation is a bad thing and ends up causing unintended side effects that nobody but the special interests like. But will politicians get rid of subsidies? That would be like asking the fox to make a plan to end this mysterious rash of chicken coop murders.

[–] apeweek 13 years ago

It still raises the price and causes distortions in demand.

I agree with you here. This is nonetheless still not really a gas-versus-EV problem, as electric bills sport a litany of taxes as well.

I prefer free market privately owned roads. Libertarian dream...

While I have (as you know) libertarian leanings, I don't think this is a better solution for something (roads) where there aren't very good ways to have competition with the road holders.

That is a $7500 credit, not a tax break.

As are the petroleum subsidies we are talking about. Look at the quote and link I provided in my last post, it talks about tax credits, not just write offs.

All costs of doing business are exempt from taxes anyway. So it's pretty hard to give away $4 billion just by changing the way things are written off - it has to be done with tax credits and similar tricks.

Market manipulation is a bad thing and ends up causing unintended side effects that nobody but the special interests like.

Again, I agree with you here.

[–] MomentaryParticle 13 years ago

Long story short, I prefer free market privately owned roads. Libertarian dream, highly possible with today's technology, but doubtful we could ever topple the private interests who have a vested interest in the system currently in place.

Then why don't you move to Afghanistan or Somalia where local militias charge exorbitant tolls to drive down local roads?

Assuming that you're not a billionaire, why are you such a shill for the upper class, spouting Faux News-style "government is the root of all evil" propaganda? Don't you get that the class war is mostly over, and the Upper Class hugely won? (but yet their stooges on Capital Hill press for even more)

When did the idea of a public commonwealth become anathema? Libertarians curse the commonwealth, and dream their dreams of pure self-sufficiency, but these small minds have no qualms about driving a car made by other members of society - on public roads - to the store to buy goods made by other members of society; all possible due to the spirit of cooperation that is the foundation of human society.

And then there's this: "the private interests who have a vested interest in the system currently in place" only differ from the private interests that would charge you to drive down their road, in that the former are regulated and paid by the government for the work they perform on public infrastructure, while the latter are essentially unsupervised thugs.

Libertarian types mouth all this Upper Class propaganda about the evils of government, when in actuality, the government has been progressively hobbled by "free market" capitalists since the Reagan era, methodically sucking the prosperity out of the commonwealth, through the perversion of regulatory statutes and tax law by their minions in Congress, and through the outsourcing of operations to foreign countries, and through pure, willful greed.

Your support - witting or unwitting - for the Upper Class agenda has resulted in the ballooning of economic inequality to unprecedented levels in this country, which is immoral, and does not bode well for the stability of our society.

So keep on voting for the Repugs - the party of the Upper Class - and you will reap what you sow.

[–] bbagnall 12 years ago

Didn't see this one when it was posted but I'm still going to reply a little late.

Then why don't you move to Afghanistan or Somalia where local militias charge exorbitant tolls to drive down local roads?

Um, say what now?! We have many toll roads in the US. No militias are involved. Private companies competing for your business are not the same as third world militias. Not sure where you came up with this nonsensical idea but whatever propaganda rag you are currently listening to, you need to change it.

Assuming that you're not a billionaire, why are you such a shill for the upper class, spouting Faux News-style "government is the root of all evil" propaganda? Don't you get that the class war is mostly over, and the Upper Class hugely won? (but yet their stooges on Capital Hill press for even more)

I don't even watch Fox News, other than seeing clips here and there on the Internet. The ironic thing is that I despise those crony establishment people as much as you, but the thing is they got there by buying their influence in the government. In a constitutionally limited government that restricts the power of government to a few key things (defense, law, police) the influence these people enjoy now wouldn't even exist and people would have to deserve everything they earned. Society would actually be more just than it currently is.

When did the idea of a public commonwealth become anathema? Libertarians curse the commonwealth, and dream their dreams of pure self-sufficiency...

I'll cut you off right there because you couldn't be more wrong. Libertarians are all about voluntary exchanges. This quite often means groups of people banding together for mutually beneficial projects. Nothing should be coercive, and therefore the enterprises people pursue are *always* things that "society" wants (I hate that word, let's just say free people living in a geographic area).

Anyway, I need to start my day but I think you can see where you've gone wrong. We need the same set of rules for everyone, and the rest takes care of itself. Things like wealth increase enormously under such a system, old companies can't buy influence and when they cease to satisfy their customers they go away rather than getting bailed out by the rest of us. Unemployment falls and demand for workers becomes huge, therefore wages become huge, and as an added bonus, wealth is NOT "spread around evenly" to even people who sit on their asses doing nothing, over-reproducing and causing problems for the rest of us (idle hands are the devil's work). It goes to people who deserve it the most.

[–] aleque2000 13 years ago

Try watching Zeitgeist, and you'll find out how interwoven Corporations and the Government really are.

[–] bbagnall 13 years ago

I try to stay away from cult beliefs.

[–] ColorPicks 13 years ago

Exxon wasn't far off making a billion dollars a week net for the first three months of this year.

That's nearly 120 million net per day.

They also make 3/4's of their profit overseas. So the U.S. gas pump isn't the main way they make money.

The 2cents that Exxon makes is after all costs, the 48c the govt takes is not, it's apples and oranges.

"Exxon Mobil Corp. (XOM), the world’s largest company by market value, posted its biggest first- quarter profit increase in eight years as surging energy demand and supply concerns pushed crude prices to a 30-month high.

First-quarter net income rose 69 percent to $10.7 billion, or $2.14 a share, from $6.3 billion, or $1.33, a year earlier, Irving, Texas-based Exxon said today in a statement. Per-share profit was 10 cents higher than the average of five analysts’ estimates compiled by Bloomberg.

http://www.bloomberg.com/news/2011-04-28/exxon-mobil-s-first-quarter-p rofit-rises-amid-oil-price-surge.html

[–] bbagnall 12 years ago

Exxon wasn't far off making a billion dollars a week net for the first three months of this year.

That's nearly 120 million net per day.

Yeah. And...? It's like you are accusing Exxon of doing something wrong, only I can't quite figure out what it is you think they did wrong. They worked like dogs, made a product, sold it voluntarily to people and made a profit. That's what entrepreneurs who create valuable goods for us are supposed to do!

The government made 24x as much as you listed above, and all they did was leech off people who actually do productive work. You can see why the government is so interested in oil companies because it's a major source for them to plunder the wealth of the common people who buy gas, yet you don't seem miffed at that.