Real Gas Prices, Big Oil and Big Government
From George Will's latest column On Rising Gas Prices, "They come with metronomic regularity, these media stories about "soaring" gasoline prices...
Today, as the price of a gallon of regular "soars" almost to where it was (measured in constant dollars) in 1982, the "news" is: "Drivers Offer a Collective Ho-Hum as Gasoline Prices Soar'' (The New York Times, last Friday). People are not changing their behavior because the real, inflation-adjusted cost of that behavior has not changed significantly.
MP: See the chart above of real, inflation-adjusted annual retail gas prices from 1919 to 2007. Gas prices today (2007 average of $2.50 per gallon) are still about 20% below the peak in 1981-1982, and below the gas prices of the 1920s (average of $2.72) and 1930s (average of $2.73).
Will also points out that: In the 20 years from 1987 to 2006, Exxon Mobil invested more ($279 billion) than it earned in profits ($266 billion).
Big Oil's profits are much smaller than Big Government's revenue from gasoline consumption. Oil companies make about 13 cents in profit on a gallon of gas. Government makes much more. The federal tax is 18.4 cents per gallon. Mrs. Clinton's New York collects 42.4 cents a gallon. Forty-nine states -- all but Alaska -- make more than the oil companies do on every gallon.