Higher Gas Prices
But Who Is To Blame?
By Daniel Muniz

Whenever gas prices go up, plenty of ordinary people lash out at oil companies. After all, paying a higher price at the pump means that the money has to come from somewhere. And yet, the oil companies are posting record profits and their top executives are enjoying gargantuan salaries.

Unfortunately, the press has never been a good source of information about economics. And sadly, for far too many people the mainstream media is their only supplier of news and current events. And besides, the press loves extremes because that is what sells newspapers and generates much bigger audiences for news broadcasts as well as bringing in more traffic to their home pages. It doesn’t matter that key pieces of information is left out of news stories because the facts are boring and mundane which does not make for juicy drama.
 

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Left-wing politicians don’t help any either. They capitalize on the biased extremes that the media provides to the public. And through the lenses of class warfare, they simply see the rich as getting richer while the poor are getting poorer. After all, fat cat oil executives must be using one hundred dollar bills to light their Cuban cigars while the hoochie koochie girls dressed only in g-strings are dancing around their desks.

So what is the answer to high gasoline prices?

The natural response is to take away the profits from the oil companies. After all, this profit has been called obscene, immoral, corrupt, and plenty of other words that I will not print here.

But who really benefits from these gigantic profits?

Either through journalistic carelessness or perhaps through malicious intent, the press refuses to mention that the country’s biggest benefactor is all of us.

Now how can that be so? People are already getting hosed by the oil companies so how can the ordinary person possibly be a recipient of this windfall?

Well, record profits mean record tax receipts.

For example, Exxon alone paid an eye-popping $27.9 billion in taxes for 2006 which left it with a remaining $39.5 billion in after-tax income. In fact, the press goes to great pains to gloss over the brutal truth that profitable companies provide enormous tax receipts not only to our federal government but to other local and state taxing entities. And taxes are the lifeblood of any and every governmental apparatus.

Now let’s contrast that scenario with a large corporation that is dealing with huge losses and teetering on the brink of bankruptcy. Lack of profitability not only means a greatly diminished tax base but possibly the loss of the goose that lays the golden egg if the company goes belly up.

However, Joe Sixpack is probably incredulous over the fact that the government is raking in a lot of tax money.

How does it help me if I am still getting hosed at the gas pump? And besides, where is the benefit because the federal government as well as states and cities are always running deficits and they constantly need more money?

If you are upset, then you have every right to be but don’t get mad at the wrong people.

Governmental entities are awash in tax receipts whenever companies do well but it is our political leadership that goes ahead ands wastes our tax money on idiotic bureaucracy and on programs that don’t make any sense. In addition, there are a lot of special interest groups and lobbyists who feel that our politicians are nothing more than giant ATM machines in which they can tap into to fund their outrageous pet projects.

But more importantly, if we want lower gasoline prices, then we also have to be even angrier at our government because it all boils down to the economic laws of supply and demand. The tight supply of crude oil and our extremely limited refining capacity is purely artificial because it was created by Congress and state legislatures.

There are vast oil reserves off the coasts of California and Florida. The Gulf of Mexico is also loaded with untapped reserves and so is Alaska but there are too many laws preventing their extraction. It is also next to impossible to build new refineries because of bureaucratic red tape and frivolous environmental lawsuits.

In fact, eco-warriors are hard at work from not only preventing this country from harnessing our available natural resources but they also want to ban us from using alternative petroleum sources such as the gigantic tar sands in Canada that could possibly rival the reserves of Saudi Arabia.

For lower gasoline prices, we have to allow market forces to solve our problems instead of holding them hostage to burdensome governmental regulations and to radical environmentalists who want us to consume very expensive energy. We also need to have more independent exploration and refinery companies so that we can have a greater competitive environment instead of only relying on the remaining consolidated oil companies. It is not a free market if the government constantly shackles entrepreneurs and prevents them from entering into these industries.

The anger over gas prices is justifiable but please direct it to the right culprits.

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