The Comeback Kid

I wrote this about a month ago on Facebook due to the number of people I saw joining groups related to how "evil" the gas companies were because of their link with the price for a gallon of gas. I am tired of these people continually blaming gas companies and not the real crooks -- the federal government.

It is a shame that many do not educate themselves and blindly follow others.

The fact is, is that the state and federal governments make a higher profit on a gallon of gas than the gas companies do. How so? Through taxation; something the government does best.

In the state of Indiana, the state government taxes at a rate of 18 cents per gallon plus, a 6 cent sales tax on every dollar. Along with state taxation, the federal government taxes 18.4 cents per gallon. Altogether, taxes cost nearly 20% of the whole price you pay at the pump -- not to mention, other taxes that occur during the process of refining and transportation of oil.

What else is involved in the price of gas? Well, around 50% of that cost alone is for the barrel of crude oil that the companies buy. To refine this crude oil, it costs around 12-14% and another 9% is used for distributing the gas to various parts of the country. That leaves the gas companies with a profit of 7-9% profit.

The government makes a profit nearly double that of the gas companies. If the government stopped its taxing, you would see around a 50 cent drop in the price of gas.

Another thing to mention, the reason gas prices are rising this month is due to the hurricanes that occur in the Gulf of Mexico which disrupt the production of oil thus, making a shorter supply and with high demands, raises the price per gallon.