More on Gas Prices

Gas prices are the top media topic. President Obama has
been against carbon-based energy and has used taxpayer money
to make alternative fuels cheaper. He has prohibited
drilling for oil and has delayed the permits for drilling.
The United States has coal, oil and natural gas supplies
which will last for centuries, yet we import about 9M
barrels/day at about $110/barrel. Much of that supply comes
from Canada and Mexico, but much comes from people who
consider us infidels worthy of death.
But geopolitical issues and supply interruptions and
global demand are only part of the “high” gas prices.
The dollar has been devalued more than 95% since 1913 when
the Federal Reserve was born. Gas at $4/gal is only 18
cents/gal in 1913 dollars. The Federal government talks
about keeping the dollar strong, but it is disadvantageous
for it to do so. A weaker dollar makes it easier to repay
debt and also makes U.S. exports cheaper. It is a tax which
hurts the poor and elderly the most.
What about price gouging and obscene profits by big oil
corporations? The profit margins* of Exxon and Chevron
are 8.89% and 10.03% respectively. The profit margins of
Microsoft and IBM are 30.84% and 14.85% respectively. The
profit margins of JP Morgan and Citi are 21.91% and 17.27%
respectively. The profit margins of AT&T and Pfizer are
15.98% and 12.18% respectively.
Also institutions (mutual and pension funds ) hold 49.3%
and 63.2% of Exxon and Chevron. The stocks are therefore
indirectly held by millions of Americans. Seizing their
profits for more redistribution schemes will be as popular
as delaying BP's dividends to U.K. pensioners after the
tragic accident in the Gulf of Mexico.
The subsidy that taxpayers give to big oil (depletion
allowance) is similar to the depreciation allowance given
to manufacturers, businesses and realtors/landlords.
The United States has 5% of the world's population but
25% of the world's energy use each day. If higher gas
prices discourage use and encourage efficiency, then the
result will be better for many reasons – particularly our
soaring debt and national security.

*Data source: Yahoo Finance, 31 Dec 2010