This is an excellent tutorial on how the gas our cars use gets from the ground to the pump and how it’s all priced along the way. At least you’ll know the right places to put your anger while unloading your wallet at the pump.
Why Is Gas So Freakin’ Expensive?
Did you know that gas price gouging almost never occurs as prices rise? Rather, it’s most often when dealers keep prices artificially high even as their costs fall.
As gas costs rise to $4 a gallon and oil companies earn around $100 billion each year, it’s a good time to question what really goes into the price of gas.
The numbers on the gas station sign hide a complex set of transactions. Before gas can power your car, it must be discovered as crude oil, traverse three markets, and be refined from crude into gas.
Inside, we’ll explain the three markets, walk you through the role of refineries, and show how oil companies use creative tactics to manipulate gas prices…
Here’s an idea, why not let the free market economy decide whether gas prices are too high, whether production costs are too high due to use of fuel inefficient trucks and whether public transportation is more desirable than automobile travel? Instead of adding yet another tax, let the market work its way through. Market adjustments are always painful. Eventually, truck manufacturers will get that making fuel efficient trucks will sell well. It is already happening in California where there is concern that transportation tax revenues will drop as more people buy fuel efficient vehicles.
#31 – Thomas, you bring up yet another interesting point. Various gov’t entities who tax fuel have a vested interest in keeping consumption up.
This is why any tax scheme aimed at getting the public to do something is a bad idea. What happens if they actually do it? The tax revenue goes down, but wait, that money was aleady marked for something, so now the gov’t has to find something else to tax to make up the shortfall. (Don’t forget that no gov’t actually has any money. It all starts out as our money.)
#32 – The problem with your argument is the complete lack of pragmatism. Part of coming up with meaningful public policy is analyzing the current political scene, establishing a consensus, and drawing up legislation that will pass into law. I would consider myself a libertarian at heart, but given the confines of the current political scene, those true libertarian ideas would rarely, if ever, materialize.
As a person who opposes “social engineering” how would you solve the situation in Mexico City where high levels of pollution are causing a majority of children to develop severe asthma problems? Mind you that these increased rates are well outside the bell curve of a Gaussian model.
You claim that the Pigou Club would lower the standard of living. Would you care to elaborate on how you came to this conclusion? Is it not feasible that such a plan could be accomplished alongside a comprehensive tax policy?
“Example, in Minnesota, every Friday over 1 million people jump in the car, drive 2-4 hours north to the lakes (cabins and resorts) and drive back again on Sunday.”
Put in some numbers now as a little math goes a long way. So their total cost increases $50-70 upfront on account of the pigovian tax. Plus another $10 for the increased cost of inflation, whatever food at the local shop, bait for fishing, boat rental, ice. So the goal becomes lowering other taxes by $60-80 for this family. Perhaps this family makes $60,000 – 70,000 a year, say %15 of that wage is devoted to taxes. ($60,000 * .15 = $ 9,000 than into weeks is ($9,000/52) therefore this family pays $173 a week in taxes. I can find plenty of resources to lower to make that initial $60-80 increase manageable. So let us say that the income tax, for example, is lower $60-80. The family is not worse off in terms of wealth. However, the family that chooses to buy a new Prius, instead of an SUV to make their weekly cabin expedition will find that they actually generate money, and that they are, in fact, better off. The family’s consumption of gasoline has fallen, and their income tax has been lowered.
What is affected by a Gas Price increase.
ALL food, and stres.
Farmers, and their equipment.
Every employee, that lives over 1 mile from work.
Every Shipment/package you order to be delivered.
Every Airplane, with or without Passengers.
Inter city travel, by Bus, and some trains.
Every small business Owner and the products he sells.
Every retail store and the deliveries made to it, so you can have a NEW TV/WASHER/DVD/Computer/Shoes/Pants/……
Your Costs to Drive to a store, EVEN if you save money.
#33 – smaller car. smaller house, not free to live far away from work – by definition these are lowered standard of living. Also, being essentially forced to live near where you work removes a lot of freedom of looking for a new job, unless you like moving all the time, and selling and buying houses isn’t easy anyway.
Looking at your numbers, you think the gov’t will lower my taxes 60.00 per week?!? I’m sorry, I’m discussing the situation in the real world.
35.
AND this limits the Types and number of people that can SHOP at that store.
I said it before…
We should ALL call in 1 day and tell them, it Costs to much to go to work.
#31 – Here’s an idea, why not let the free market economy decide whether gas prices are too high…
Market adjustments are always painful.
Because the free market isn’t the one stop shop for answers that some of you think it is. You are right, market adjustments are always painful. But the rest of that staement is …always painful to the working poor and lower middle class. They are rarely if ever painful to the very class that benefits most from a free market economy.
#35 – I’m sure you have something insightful to say, but instead you said this:
smaller car. smaller house, not free to live far away from work – by definition these are lowered standard of living. Also, being essentially forced to live near where you work removes a lot of freedom of looking for a new job, unless you like moving all the time, and selling and buying houses isn’t easy anyway.
Do you work at a paper mill or something? What is the problem with living near where you work? To me, that is an advantage.
Plus, if you don’t care about how far you drive, why should the distance to your current job impact your ability to look for new jobs?
Further, its really sad to define your standard of living by the amount of conspicuous spending you are able to achieve. Some of us are happy, even prefer, smaller cars, houses, and a reduced burden of possession. How much crap to do you need to pollute your life with? Why do you place more value on your testosterone powered SUV than on the health and well being of your existing or eventual grandchildren?
I’m glad your life is easy. It’s hard for most everyone else. You’ve won. You can lay off the salt now.
OFTLO my friend, you’re missing my underlying point. I’m not trying to make everyone else live the way I want to, but I want to give them that chance if they want it. I get pissed when someone else intentionally tries to make it harder for me to live the way I want to. My life certainly is not easy and gets harder every day.
My loathing of the GW crowd stems purely from their seeming need to impose sacrifice on others.
My distance point simply says if it’s too expensive to travel, it severely limits the area in which you can job hunt unless you’re willing to move. People finding opportunities and changing jobs is one the things that keeps the economy vigorous.
Instead of going regressive and trying to make people drive less, let’s go progressive and promote this: http://shrinkster.com/pj2
#37
> …always painful to the working poor and lower middle class.
> They are rarely if ever painful to the very class that
> benefits most from a free market economy.
That would forever put the government in the role of always trying to outguess the markets to “ease the burden of the poor” which is impossible to achieve and will always make things worse. Look what happened in the 1970’s with gas prices. Everyone, even the poor, benefit by letting the market work itself out. If a poor family is so poor that increases in gas prices would create great hardship, then they will find alternate means of transportation such as public transit that lower their costs. If those costs are still too high, then they have a choice to move to location where they can find work and transportation costs are lower.