(This is the first installment of a two part series)

Guest Editorial

By Suzanne Walters
Part 1

CSW 08-11

Even with the minute by minute update on the rising price of gas, I seldom get worked up about it because I know that I could reduce my personal consumption of gasoline the minute I finally begin to feel it is pinching too much. This is a conservative viewpoint; personal decisions and behaviors often dictate outcomes, and certainly choosing to pay or not to pay for something if one thinks the price is too high falls under the category of a personal decision. The issue that does get me worked into a frenzy 100% of the time is the issue of taxes because there is virtually no choice involved, with the exception of sales tax. (See the previous sentence.)

I also admit that any time I hear the general public screeching about an issue, I usually find myself, upon further investigation, in almost complete disagreement with the public’s position. Such is the case with the gas prices and the evil Big Oil Companies, henceforth referred to in this essay as BOC.

After a minute amount of research, I was able to ascertain some very reasonable and logical explanations for the high price of gas. But first one must acknowledge the fact that the BOCs, in fact any company, are in business to make money. This is a fact that the Democrats simply cannot stomach. To a liberal, the word profit is one of the dirtiest words out there simply because it means that someone else is getting more money than perhaps they are. This line of thinking will be revisited later in the discussion of taxes, but it basically boils down to an attitude of class envy and a penchant towards socialism as the solution.

However, liberals fail to make the connections between companies making a profit, the employment rates, and the health of the economy in general. I am about as ignorant of economics as anyone walking around, but I can grasp and embrace a simple economic principle of “profits are good.” If I were the government, I would really think profits were good because of a little goodie called the capital gains tax, but that is another article entirely.

In my very quick research, I was able to find the following interesting data:

In 2006, ExxonMobil’s profit margin was only 10.7%. This hardly qualifies as “obscene” as certain government leaders have said.

BOCs do not set gas prices. Their profit on a gallon of gas is 10 cents. The federal tax on a gallon of gas, however, is 18.4 cents. The individual states tack on yet more taxes. In New York, the state tax on a gallon is 68 cents!! If the BOCs are gouging people at 10 cents per gallon, what word shall be used to describe the government’s take?

Exxon and other BOCs must compete against one another, and they spend literally billions on exploration, development of new and more efficient technologies, refining, and transportation. For all of this expense, they get 10 cents per gallon. What does the government do to get almost twice that amount?

It is imperative for the good of the economy that all companies remain profitable for the sake of their employees and investors. We constantly hear government officials and presidential candidates talking about jobs, yet they want to punish providers of jobs! They will criticize stockholders who benefit from companies’ profits, but fail to point out that owning stock is something that anyone (and everyone) can do! Everyone can share in the health of the economy!

Another Econ 101 concept that virtually everyone should be able to understand is supply and demand. The global demand for oil is increasing with the rapid development of countries such as India and China. However, there are not new sources of oil being found. In addition to the whole discussion of whether to drill in ANWR, don’t forget about the destruction of oil processing sites around the Gulf of Mexico from Hurricane Katrina. Obviously this increased demand drives the price up.

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Next issue, Part 2- Taxes