Big Government Profiting Off the Backs of the Poor

Prices at the pump unquestionably create a greater hardship on poor people than wealthy people.  So who is really price gouging and placing a burden upon our nation's impoverished?  Well, the typical profit margin for "big oil" is 7-8%.  According to some sources, this ranked 90th among other industries.  So this hardly seems to be gouging.  I don't remember hearing anyone decrying "big periodicals" for their 53.1% profit margin.  So how about the local distributor?  Well, it appears that for the last ten years, the local gas station has made less than a 2% profit margin.  That's not exactly gouging, either.  It would seem the free market forces have dictated a high volume, low price commodity.

So, what about the non-market forces, i.e., taxes.  California has just decided to raise its excise tax on a gallon of gasoline to $0.39.  This is a tax that doesn't vary by price.  With an average per gallon price in California of $4.211, this means the state of California profits on each gallon at 9.26% per gallon.  Of course, that doesn't include the California sales tax on gasoline of 2.25%.  So, in the end, California has a profit margin of about 11.5%.  The federal tax on gasoline is 18.4%, an even higher margin than those crazy left coasters in Cali.  Now, California is one of, if not the, highest gas tax states, and their profits include additional fees which are not discussed here.  According to the tax foundation, even the lowest state burden on tax was $0.08 per gallon as of January 2012 in Alaska.  At their average price of $3.996 per gallon, this is a relatively reasonable burden of 2%.

So what we see here is that even in the lowest burden state, government taxes constitute about 20% of the price of a gallon of gas and go as high as the 30% range while to people who produce and sell the product constitute about 10% of the price.  From these numbers, it is obvious that if anyone is engaged in price gouging and placing a heavy burden on our nation's poor, it is the government at federal and state levels.  The single highest price gouger is the federal government and that burden has been the same since about 1993.

So the next time you hear a politician demonizing big oil and their windfall profits, maybe you should but a mirror in front of them and blame big government.  Or just vote them out of office for lying to you.