The war continues, the government may or may not be tapping your phone and Congress wants to learn economics.
Each year we see Congress trying to find out why the price of oil increases. It is as if they cannot pick up an economics book and read. They blame the oil companies for price gouging while at the same time they never question how much money they are gouging by their gasoline taxes.
For example, the federal government currently takes 18.4 cents a gallon in taxes. Additionally, the State of Iowa takes 22 cents a gallon in their taxes. This adds up to being a tax of 40.4 cents that you are paying on every gallon of gasoline you purchase in the state of Iowa.
This is very similar to other states. When the oil companies make a profit they are able to reinvest their profits back into their businesses to do things such as find new oil. Similarly, the government uses their “profits” to reinvest back into roads.
Why Prices Increase:
The falling dollar makes our imports more expensive and our exports cheaper for other nations to buy.
Supply and Demand. Not just in the United States, but look at the increased demand in China and India.
Inflation. The price of everything increases, but you don’t see people protesting milk prices.
And Congress should also consider the following quote in The Wall Street Journal:
The oil industry also says it’s not reaping greater profits than other industries. American Petroleum Institute chief economist John Felmy this week pointed to fourth-quarter 2007 profit — net income divided by revenue — for the Dow Jones Industrial companies, which averaged 7.1 cents on the dollar compared with 7.4 cents on the dollar for the oil and gas industry.
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For more information about oil prices I encourage every member of Congress to watch the following John Stossel video.