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Gas Prices

It’s very popular right now to look at the price on the pump after a fill-up and curse those eeeevil greeeeedy Big Oil Companies and their selfish “Big Wigs” for making so much money. Hell, it costs me just under 50 bucks now when it was only $13 when I bought my car in ’03.

And with the recent news that ExxonMobile just posted the nation’s largest-ever quarterly profit of $11.68 Billion, it’s gotten to the point now where everyone — left and right, from Obama to O’Reilly — is talking about how the oil companies should be giving some of that money back to the people. The methods they advocate differ wildly — from Obama’s plan to take the money at gunpoint to O’Reilly’s method of simply calling on oil companies to voluntarily give back 2% of their profits — but the underlying principle is the same . . . and it’s equally dangerous and un-American!

To understand this, you need to understand one simple, basic fact: The job of the oil companies — nay, any company — is to make money. Period! They have no obligation to care one whit about your pain at the pump or whether you can even afford to put food on your table. They exist to make money for themselves and their share-holders (and if you have any mutual funds in your 401(k), you’re likely a share-holder). Oil companies exist to make money specifically by selling . . . wait for it . . . OIL!! Not solar power, not wind power, not power harvested from the gastro-intestinal processes of the African or European swallow, nor any other pipe dream envisioned by a certain segment of our society. No, their job is to sell oil and make a profit. And guess what . . . they’re really not making that much. What’s that you say, “But Clay, you just said that one of those companies just posted an 11 billion dollar profit. That sure seems like a lot of money to me.” And in terms of a raw dollar amount, you’re right, that’s a bunch of dough. But let’s look at the percentages for a moment.

Do you know how much revenue they brought in during that same quarter? Try $138 Billion. So they brought in $138,000,000,000 but only $11 Billion was profit. That’s roughly an 8% profit margin. Eight per cent. That’s hardly a windfall. It’s pretty crappy, actually. Not only that, but they paid over $32 Billion dollars in taxes during that same quarter. In fact, in the past 25 years oil companies have paid more than three times in taxes what they have made in profits. So who is really benefiting from your increasingly tightening budget?

And this is why I called the schemes to deprive them of their money dangerous. That measly 8% is actually being considered a “windfall profit” by our betters (just ask them) in Congress, and they want to grab a huge chunk of it by creating a “windfall profits tax.” Now when Congress can punish a company for making as little as 8% in profit, we’re all in trouble! I mean really, how little do we have to make before we’re not considered greedy by those who know what’s best for us (again, just ask them)?

We do not have an energy crisis in this country. No, what we have is a policy crisis. No new refineries have been built in this country in over 30 years (South Dakota just passed a resolution allowing it, but it’s not online yet). Blame environmentalism. The refineries we do have are overworked and inefficient due to the fact that different states require different blends of gasoline so they can feel better about themselves. Blame environmentalism. Children the world over are starving to death due to the misguided bio-fuel initiative. Blame environmentalism. Money that could be spent developing new oil and gasoline resources is instead being spent to develop wind farms, solar farms, and countless other fantasy solutions because we’re not allowed to use nuclear power. Blame environmentalism. Now don’t get me wrong; I have nothing against reasonable conservation efforts. But Environmentalists have done to environmentalism what Televangelists have done to religion.

And by the way, don’t blame the speculators either. Have you noticed how gas has dropped slightly over the last couple of weeks? Well, you can thank the speculators and President Bush for that. Within four days of his announcement that he was lifting the Executive ban on off-shore drilling, oil prices dropped almost 15% !!! No new oil has been drilled; no new supply has been added. And yet the price dropped precipitously almost overnight. Just talking about developing our own resources and giving less money to our enemies has already improved our situation. Just imagine if the majority in Congress would actually allow us to DO SOMETHING. But I guess their five-week paid vacation is more important than the peons who give it to them.

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