by Kerry Thomas
July 15, 2007
According to Father
Guido Sarducci’s 5-Minute University, (which teaches you everything the average
college graduate remembers five years after they graduate from college)
economics is simply supply and demand.
Business is as simple as you buy something and you sell it for more.
If you can comprehend these two basic principles, you should
be able to understand why the price of gasoline keeps changing.
The recent deluge of rain down south flooded the 108,000
barrels-per-day Coffeyville
Resources refinery in Kansas,
taking it out of production for the next several months. Other refineries in the South have also
suffered flood damage.
Reduce supply, maintain demand, what happens to the price?
Or maybe you want the businesses who sell gasoline to sell
it at cost, or take a loss on the sale?
Nope, can’t do that. Wisconsin’s
Unfair Sales Act (Ch
100.30 Wis Stats) mandates gasoline retailers charge you and me a minimum
of 6% more than the price they pay for gas.
Selling gas at or below cost is illegal in Wisconsin.
(Personally, I’d like to thank all of our local gas station
and convenience store owners who take the risk to operate these businesses, and
for putting up with all of our collective bitching over gas process.)
And let’s not forget our benevolent government’s role in gas
prices. We pay the federal government
18.4¢ for every gallon of gas we buy, and the State of Wisconsin gets 32.9¢ per
gallon. (These figures were current as
of March 2007.)
Now Wisconsin Governor Jim Doyle wants to tack on an
additional surtax to “big oil” companies, because they are making record
profits, after years of just small to average profits. Governor Doyle claims penalties in his
proposal will prevent these companies from passing this surtax along to
consumers. Unbiased estimates are that
this surtax will end up raising gas prices by about 8¢ per gallon, bringing
Wisconsin’s tax on gas to almost 41¢per gallon.
Governor Doyle claims this tax will be used to pay for
transportation projects. Correct me if
I’m wrong, but isn’t that what the 32.9¢ per gallon excise tax on gasoline is
supposed to pay for? Of course, when
lawmakers raid that fund and use the money in it to pay for other pet projects
instead of transportation, that fund tends to come up short. And since we finally got rid of the
automatic gasoline excise tax increase every year, lawmakers will now actually
have to vote to raise that tax if they want it increased.
I have a news flash for the Governor. Corporations don’t pay taxes. Oh, sure, they’re charged taxes. But those costs are always paid by the
consumers in the end. Corporations have
armies of attorneys and accountants whose job it is to make sure the feeble
attempts by government bureaucrats to punish them and their stockholders can be
legally avoided.
Remember, a fine is a tax for doing wrong; a tax is a fine
for being successful. Higher taxes will
not reduce the price we pay for gasoline.
And speaking of our benevolent Governor Doyle, do you
suppose it’s just a coincidence that the people who made some hefty
contributions to his campaign are the same people who are now reaping big State
subsidies for their ethanol plants?
This despite the fact that ethanol reduces gas mileage by 10%. Even if 100% of the corn production in the
United States were to go to ethanol production, it would only account for 12%
of our fuel needs.
Ethanol’s not the solution, but it makes environmentalists
feel good, because they’re “doing something” about “the environment.”
So remember, economics = supply & demand. And in business, you buy something and you
sell it for more.
Class dismissed.