Who Really Profits From High Gas Prices? (Farrah)

With evil oil companies posting record quarterly profits and gas prices near record highs, talking points from both the left and the right are flooding the airwaves. Conservation vs. exploration, ANWAR and Halliburton…blah blah blah.

Some states are implimenting price caps and some politicians have gone so far as to propose windfall profits taxes (a la 1970’s) to punish those evil oil companies. The assumption here of course is that Halliburton and Cheney’s buddies are screwing the poor innocent consumer, forcing them to choose between perscription drugs and gas.

But who’s screwing who here? Let’s take a look at who is really profiting. This little fact is going to shock you:

Federal, State and Local governments have collected far more revenue from gas taxes than the largest U.S. oil companies have collectively earned in domestic profits.

since 1977, there have been only three years (1980, 1981, and 1982) in which domestic oil industry profits exceeded government gas tax collections. In the remaining years, gasoline tax collections consistently exceeded oil industry profits, reaching a peak in 1995 when gas tax collections outpaced industry profits by a factor of 7.3.

That’s right folks….while oil indusrty profits are skyrocketing, governments are making even more money in gas taxes. And unlike cyclical oil company earnings which rise and fall with the economy, gas tax receipts are growing at a steady pace.

between 1977 and 1985, the oil industry recorded relatively high profits—averaging nearly $33 billion per year, after adjusting for inflation. These good times were followed by ten years of relatively flat profits, averaging just $12.3 billion per year. In 1996, profits began to rise again but have been anything but stable, ranging from $9 billion to nearly $42 billion per year. Between 1977 and 2004, the industry’s domestic profits totaled $643 billion, after adjusting for inflation.

….

In contrast, federal and state taxes on gasoline production and imports have been climbing steadily since the late 1970s and now total roughly $58.4 billion. Due in part to substantial hikes in the federal gasoline excise tax in 1983, 1990, and 1993, annual tax revenues have continued to grow. Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.

So there you have it. Governments are making more money than these evil oil companies. Yet it’s the evil oil companies that must be punished.

If our representatives in Congress really wanted to help ease the pain of gas prices, they’d cut the Federal gas tax. But that doesn’t make a sexy talking point.