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J Michael Kearney

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The Wrong Focus on Gas Price Woes
by J Michael Kearney   
     
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The current focus on targeting corporate entities to reduce gasoline prices overlooks the key component in all this - government.


Have you heard this proposal to reduce gasoline prices; “...We CAN have an impact on gas prices if we all act together to force a price war.

Here's the idea: For the rest of this year, DON"T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL.

If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit.”

This is a very flawed way to try and reduce gasoline prices. First, Exxon and Mobil are one Corporate entity now, have been since 1999, but did you know that, depending on locale, 30% to 40% of gasoline prices are federal, state and local taxes?

Everyone targets "greedy" corporations but no one wants to point the finger at "greedy" bureaucRATS.

These taxes DO NOT pay for the highway programs, that comes out of a general fund, just like Social Security (there is no "lock box," just a general taxpayer fund).

Two of the biggest problems are government created. The first is the excessive taxation, the second is the failure of the FTC (The Federal Trade Commission) to block a number of huge mergers that reduced competition within the oil industry.

Like it or not (and I don’t) we have a regulated market and the primary job of the FTC is to maintain a “competitive” environment within various industries.

They should never have allowed the mergers of Exxon and Mobil (‘99) and British Petroleum and Amocco (’98), Marathon and Ashland (’98) and Chevron and Texaco (’01) and Phillips and Conoco (’01), as well as BP-Amocco’s acquisition of Atlantic Richfield or ARCO (’01).

These mergers have reduced competition and put an upward pressure on prices.

Hey! Putting pressures on the corporate end is fine, but it's NOT enough. If "greedy" government isn't reined in, nothing will ever change for the better.

Imagine if those taxes were eliminated in California - instead of paying $1.97/gallon, consumers there would be paying around $1.18/gallon for their gas!

We need a two-pronged focus. It's fine to put pressure on corporate entities, but we must also put even more pressure on government to reduce or eliminate those unwarranted gasoline taxes.

Think about it, when the government taxes energy, they’re adding cost to everything else from distribution (trucking and shipping) to production (Petroleum taxes add to the costs of running machinery and heating and cooling factories and warehouses).

Petroleum taxes are the most anti-growth and anti-consumerist taxes in existence. If you looked closely at the dates of those mergers, most of them occurred toward the end of the Clinton administration, so it’s neither a Democratic or Republican agenda, it’s a governmental one.


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Reviewed by Lawrance Lux
Reviewed on August 20, 2002
Good review of the situation, but I think We need a complete reevaluation of tax policy in this Country. The Government has added so many Excise taxes in the last fifty years, no study can really determine the total detriment to economic performance.
lgl

Reviewed by Joe
Reviewed on August 5, 2002
How can a government be called "greedy" when it is a government put in place by its own citizens? I can see calling a Stalin, Mao, Napoleon, Ghengis Khan government "greedy" because it is one of autocratic makeup. Democratically elected governments are only as "greedy" as the people who put them there. Oh, but here's a problem: our American government is not as democratically elected as we might think or hope. The very oil companies whose mergers came about in a loosely-regulated, "New Democrat" administration, pretty much bought and paid for the election of the next administration (as well as the previous one), in order to create a more pro-oil governmental environment. So yes, blame government for high gas prices -- only to the extent of those in government who answer to Big Oil, instead of to the consumers who are paying out both ends (and who will be surprised when they find out that part of those big tax bills on petroleum are kickbacks in the form of corporate welfare for the oil conglomerates? I won't).

Reviewed by m j hollingshead
Reviewed on July 9, 2002
well said

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