Price of gas is high? /Cost of oil stupes

[deziloooooo]

US Gasoline price at the pump definitly linked to the cost of a barrel of oil..over 71 % of the retail price is attributed to the actual cost of the product, raw material, not manufacturing, shipping profit. One of , if not the highest , commodity cost reflection in a Finished consumer product.
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What makes up the price of U.S. gasoline?
January 13, 2011 | Posted by Ken Cohen
I talked earlier this week about how crude oil prices have increased about 15 percent over the past year, which reflects a trend in rising commodity prices across the board in 2010. Not surprisingly, this means that gasoline prices are also up, because crude oil is the single-largest factor in determining the price at the pump in the U.S.

As I mentioned on Monday, the price for crude oil is set in worldwide markets where many buyers and sellers react to market fundamentals, including assessments of current and future supply and demand factors.

But just how much does the price of crude impact U.S. gasoline prices? In November 2010, when the average retail gasoline price was $2.86 a gallon, crude oil accounted for 71 percent of that price.

So what makes up the other 29 percent of gasoline prices? According to the Department of Energy, combined federal and state taxes on gasoline accounted for 14 percent of the average price. The remaining 15 percent of the price on average covers the costs of refining, transportation and marketing. The DOE chart at left shows this average price breakdown.

There are very few consumer products whose price is driven so overwhelmingly by the price of the commodity behind it, as is the case for gasoline and crude oil. Consumers see this correlation everyday on gas station signs that display the fluctuating price of gasoline. In fact, as you can see in the chart below, gasoline prices have closely tracked crude oil prices over the past 10 years

[floridayankee]

There are very few consumer products whose price is driven so overwhelmingly by the price of the commodity behind it, as is the case for gasoline and crude oil.

What am I missing here? I'd imagine the retail price for a lot of products is driven mostly by the cost of the raw materials used to produce them.

IE: If corn tripled in price, wouldn't one expect the cost of corn flakes to reflect that increase?

[BeenThere...DoneThat...]

...well, what does McD's put in their Big Macs, anyway... the price has been fairly steady, considering... but a can of green beans, wow...

[jkapp]

Jan 21, 2011 9:56:01 GMT -5 BeenThere...DoneThat... said:

...well, what does McD's put in their Big Macs, anyway... the price has been fairly steady, considering... but a can of green beans, wow...

Some questions are best left unanswered...

I think that gray matter McD's calls a "burger" is not something I would want to know the chemical composition of

[ugonow]

I am begining to wonder if it might be time to implement a tax on companies based on the price of the resources used to make the product, and the proceeds didtributed to citizens in a yearly check like Sarah Palin implemented in Alaska. This could help offset the burden of inflation on our people.

[Savoir Faire-Demogague in NJ]

I am begining to wonder if it might be time to implement a tax on companies based on the price of the resources used to make the product, and the proceeds didtributed to citizens in a yearly check like Sarah Palin implemented in Alaska. This could help offset the burden of inflation on our people.

Commodities such as grains, cattle, hogs, metals, etc., are grown/raised privately, yet priced on the world commodity exchanges. Corps do pay income and other taxes that are already distributed to the population through govt services.
Someone can correct me, too bad Investor Bob is not here, but I do believe oil companies extracting oil in Alaska are doing so on govt land and paying royalties....

[ugonow]

Someone can correct me, too bad Investor Bob is not here, but I do believe oil companies extracting oil in Alaska are doing so on govt land and paying royalties....

Alaska's Clear And Equitable Share Program has nothing to do with leases or royalities.It ios a tax based on the resource oil's price that is put on oil companies and redistributed to citizens to pay for the fact Alaskans own the resource. The higher oil prices are,the bigger the checks are.

[Savoir Faire-Demogague in NJ]

Alaska's Clear And Equitable Share Program has nothing to do with leases or royalities.It ios a tax based on the resource oil's price that is put on oil companies and redistributed to citizens to pay for the fact Alaskans own the resource.

Call it what every you want. Oil companies are drilling and extracting natural resources. Nothing earth shattering here.
I cannot say I know this for a fact, but companies mining precious metals and timber are also extracting natural resouces, could also be paying extrication levies.

[ugonow]

No companies extracting resources are paying a tax based on the resources price and is being distributed to citizens other than Alaska.If the people own the resource,why are we not getting checks for it like Alaskans do?

[Savoir Faire-Demogague in NJ]

No companies extracting resources are paying a tax based on the resources price and is being distributed to citizens other than Alaska.If the people own the resource,why are we not getting checks for it like Alaskans do?

Because it is a state tax. Per gallon federal tax levied on retail gas purchases are distributed to the states.

[ugonow]

In Sarah's own words when advocating her plan nationaly----- "And Alaska—we’re set up, unlike other states in the union, where it’s collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs. … It’s to maximize benefits for Alaskans, not an individual company, not some multinational somewhere, but for Alaskans." --- Is the time right for a simular plan nationwide?

[ugonow]

Because it is a state tax. Per gallon federal tax levied on retail gas purchases are distributed to the states.

Gas is a product of oil.We are talking about citizens owning the resource that makes the product and being compensated for it in the form of a yearly check.

[Savoir Faire-Demogague in NJ]

In Sarah's own words when advocating her plan nationaly----- "And Alaska—we’re set up, unlike other states in the union, where it’s collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs. … It’s to maximize benefits for Alaskans, not an individual company, not some multinational somewhere, but for Alaskans." --- Is the time right for a simular plan nationwide?

Yeah? Point? Any state has the right to levy what ever taxes it wants and can legislate. Alaska has vast oil reserves, and they have the right to tax the extrication there of.
New Jersey has vast stretches of beaches at the shore, which is visited and patronized by citizens of other states. Localities require beach tags at significant costs.

[ugonow]

So,is it time to consider having companies pay a tax based on the price of the resourse used,and have it distributed to citizens to help offset the effects of inflation?

[fairlycrazy23]

Jan 21, 2011 10:17:41 GMT -5 ugonow said:

I am begining to wonder if it might be time to implement a tax on companies based on the price of the resources used to make the product

This new tax being an expense will just be passed on to the consumer.

How much the raw materials effect the price of product is directly related to how much of the cost the raw material is. So something like a Big Mac might have labor and other factors that have more of an effect.

Taxing american oil companies is only go to go so far since we import so much of our oil, the only real effect would be to make them less competitive than foreign companies, and probably make it cheaper for domestic refiners to buy foreign oil than domestic oil, of course i prefer to move the taxation to the POP so it doesn't matter if it is a domestic or a foreign product they all pay the same federal sales tax.

Beyond simple supply and demand on the price of oil, you also have the fact that it is tied to th e dollar and as the value of the dollar falls the price of oil relative to the dollar rises.

[Deleted]

The price of gas is not high, merely what it should be for current worldwide demand.

[Savoir Faire-Demogague in NJ]

So,is it time to consider having companies pay a tax based on the price of the resourse used,and have it distributed to citizens to help offset the effects of inflation?

They already do pay taxes, levies, royalties, etc., on extrications. Not all commodities are on govt owned land or can be subject to levies. I noted a handful already.

[Savoir Faire-Demogague in NJ]

Taxing american oil companies is only go to go so far since we import so much of our oil, the only real effect would be to make them less competitive than foreign companies, and probably make it cheaper for domestic refiners to buy foreign oil than domestic oil, of course i prefer to move the taxation to the POP so it doesn't matter if it is a domestic or a foreign product they all pay the same federal sales tax.


Back in the late 70s/early 80s, congress passed the Windfall Profits tax on oil companies. Following passage, I believe 40% of US production was moved overseas. Not only did the US lose domestic oil production and associated jobs, we became more dependent on foreign sources.

[Deleted]

Jan 21, 2011 11:11:10 GMT -5 Savoir Faire-Demogague in NJ said:

Taxing american oil companies is only go to go so far since we import so much of our oil, the only real effect would be to make them less competitive than foreign companies, and probably make it cheaper for domestic refiners to buy foreign oil than domestic oil, of course i prefer to move the taxation to the POP so it doesn't matter if it is a domestic or a foreign product they all pay the same federal sales tax.


Back in the late 70s/early 80s, congress passed the Windfall Profits tax on oil companies. Following passage, I believe 40% of US production was moved overseas. Not only did the US lose domestic oil production and associated jobs, we became more dependent on foreign sources.

Not to mention that more taxes just get passed on to the consumer until the oil company finds a way around it. As in moving production overseas.

[Savoir Faire-Demogague in NJ]

Historical Perspective: The Windfall Profit Tax -- Career of a Concept
by Joseph J. Thorndike
Date: Nov. 10, 2005

www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/edf8de04e58e4b14852570ba0048848b

(please click link for full article)
Below are some excerps:

Last week, amid much grumbling about record profits, Congress summoned oil executives to Capitol Hill. Democratic lawmakers warned darkly of a tax on windfall profit, and even a few Republicans endorsed the idea. It's enough to give a petrocrat pause. (For related coverage, see Doc 2005-22918 and 2005 TNT 217-3.)

Not so very long ago, lawmakers made good on that sort of threat. From 1980 to 1988, the nation levied a special tax on domestic oil production. Given the unhappy results, a repeat seems unlikely. But it's still a tale worth telling.

Let's get one thing straight: The oil levy imposed in 1980 was called the "crude oil windfall profit tax" (WPT). Note the singular "profit," a useful reminder that this tax should never be confused with the "excess profits tax" imposed during World War I, World War II, and the Korean War. "The windfall profits tax has nothing to do, in fact, with profits," observed The Washington Post in 1979. "It is an excise tax -- that is, a tax on each barrel of oil produced."
In 1980 Congress enacted the WPT when it ended oil price controls. The controls were a remnant of President Richard Nixon's general wage and price freeze, implemented in 1971. While most of Nixon's price controls expired in 1973, Congress extended oil regulation through 1981. Worried over the rising cost of home heating oil as well as a general run-up in world petroleum prices, legislators decided to keep a lid on domestic oil prices.

From the start, opponents worked tirelessly to abolish oil price controls. Most plans for repeal included some sort of windfall profit tax, either as a sop to disaffected lawmakers or as part of a genuine effort to balance the scales of economic justice. In 1974 President Gerald Ford proposed such a compromise, and the Senate Finance Committee approved a version of the WPT in 1975. Ultimately, however, it fell to President Jimmy Carter to make the bargain stick. In April 1979 he introduced plans to lift price controls gradually over the subsequent 18-month period. In tandem, he offered a new tax on oil production. "Unless we tax the oil companies, they will reap huge and undeserved windfall profits," Carter declared in a nationwide address. Americans had a right to recapture some of that windfall and put it to good use. Carter suggested that the revenue be earmarked for mass transit, oil price relief for poor families, and the development of alternative energy sources.

Worse, the tax had yielded less revenue than anticipated throughout its existence -- and none at all in its later years. Oil prices had failed to continue their dramatic rise; between 1980 and 1986, they had fallen from $30 to just $10 per barrel. Meanwhile, the WPT's "base price" -- used to calculate tax liability -- had continued to rise with inflation, as required by law. Squeezed from both sides of the equation, the tax had become a negligible source of revenue.

Meanwhile, domestic oil production had fallen to its lowest level in 20 years. While demand had continued to rise, domestic producers had fallen behind in the search for new oil reserves. As a result, the United States had increased its reliance on foreign oil supplies. According to the American Petroleum Institute, the United States had derived about 32 percent of its energy from foreign sources in 1983. By 1986 that figure had climbed to 38 percent. Some analysts expected the trend to continue, although not everyone believed that taxes were driving the dynamic.

[ugonow]

Ask any Alaskan how they feel about that yearly check from the Clear and Equitable Program. Or any state legislator on the extra revenue----www.juneauempire.com/stories/121009/opi_534186921.shtml

[Savoir Faire-Demogague in NJ]

Ask any Alaskan how they feel about that yearly check from the Clear and Equitable Program. Or any state legislator on the extra revenue----

No one cares. It is a legitamate tax.
Really, get over yourself.

[ugonow]

Get over myself? I just think we all could use an extra 4 thousand bucks or so a year to help make up for inflation.

[Savoir Faire-Demogague in NJ]

Get over myself? I just think we all could use an extra 4 thousand bucks or so a year to help make up for inflation.

It would be more than offset by the increased cost of energy, and more dependence on foreign oil, and less domestic exploration. Kind of elementary stuff here.
You can always move to Alaska. I mean, the US is still a free country with freedom of movement.

[b2r]

You can always move to Alaska.

It'll cost you more than a $1200.00 check from the Govt. will offset.

[Savoir Faire-Demogague in NJ]

It'll cost you more than a $1200.00 check from the Govt. will offset.

IT is always something, isn't it....

[ugonow]

Alaskans checks have been running over three grand the last few years. With current oil prices,it should be pretty decent this year.

[Savoir Faire-Demogague in NJ]

Alaskans checks have been running over three grand the last few years. With current oil prices,it should be pretty decent this year.

Alaska also has a high cost of living.
You still have not indicated what your point is, if there is one.
Alaska collects various taxes from the oil industry and distributes it to it's citizens. Other states collect taxes from industry and don't.

[b2r]

Alaskans checks have been running over three grand the last few years.

Only for a family of three or more.
Year Amount
2010 $1,281.00
2009 $1,305.00
2008 $2,069.00 + $1,200 Alaska Resource Rebate
2007 $1,654.00
2006 $1,106.96
2005 $845.76
2004 $919.84
2003 $1,107.56
2002 $1,540.76
2001 $1,850.28
2000 $1,963.86

[deziloooooo]

Jan 21, 2011 12:21:02 GMT -5 b2r said:

Alaskans checks have been running over three grand the last few years.

Only for a family of three or more.
Year Amount
2010 $1,281.00
2009 $1,305.00
2008 $2,069.00 + $1,200 Alaska Resource Rebate
2007 $1,654.00
2006 $1,106.96
2005 $845.76
2004 $919.84
2003 $1,107.56
2002 $1,540.76
2001 $1,850.28
2000 $1,963.86

Does Alaska keep any of these funds for the State itself, yas to spend by politicians, but I don't feel ALL bad.
Wxample , "Rainy Day Fund ", that has helped soften down times for many states in the past.
To give to certain communities who might need help because of revnue problems yet the quality of life is suffering.
Example: Possibel for sewage and waste treatment plants, needed but just not affordable by the community, things like that, or are all the funds sent back to the citizens.

Just curiouse.