Oil Company Profits

2006-05-09

I have just a quick note for those who think that Oil Company Profits are the cause of all our gas price woes. There?s a lot more to the story, even if the gas people make huge sums.

Typically, the profit on a gallon of gas is a dime. The rest is the cost of the petroleum, refining, storing, transporting, marketing, and all the other business expenses. Then, of course, there are the huge taxes, both state and federal.

If you don?t believe me, let me demonstrate. The normal daily consumption of gasoline in the US is about 320,500,000 gallons. There are, of course, 365 days per year. Now, let?s assume a profit of ten cents on each one of those gallons. Let?s do the math.

How about that. Just gasoline alone at ten cents per gallon results in over eleven billion dollars a year. Of course gasoline is not the only product made by petroleum companies. There are profits from other lubricants. Plastics are another source of income. There are plenty of places for petroleum companies to make money.

Before you gripe at me, let me make something clear. I am not pro-oil company. They have not paid me off (though I might entertain offers.) My dedication is to rational discourse. That means I want people to think and act accordingly.

It?s easy to direct frustrations toward big oil companies; feel free to do so. However, if you really want to do something to reduce the price of gasoline, you must reduce the consumer demand for the stuff. Stop driving big vehicles. For that matter, stop driving. Try not to use your car for everything. The principles of supply and demand will work best. (Please note, emailed plans for everyone to buy no gas for one day are inane if everyone just buys the same gas the next day.)

As is always the case, if you want to argue something, try to be rational. Do the math.