Archive for the ‘Political Issues’ Category

Cost of Gas: Where the Money Goes

Wednesday, February 20th, 2008

gas pumpI think it’s safe to say that every person who owns a car has sat at the pump, watched the total purchase price climb faster than Apple stock the day they announced the Iphone, and asked yourself the question: “where is all this money going?”.

With the cost of a gallon of gas over $3.00 per gallon throughout the U.S., everyone wants to know who’s getting all that money.

Breaking Down the Cost of Gas

The money received at the pump for a gallon of gasoline will be split between at least 4 parties:

  1. Crude Oil (Drilling, research, investment)
  2. Refining (making gasoline out of crude oil)
  3. Taxes (Federal and State)
  4. Distribution & Marketing (Includes wholesaler and Retailer or gas station)

Using several sources to determine how to breakdown the cost of a gallon of gasoline, including the Department of Energy, we found that the cost for crude oil accounts for about 55%, refining accounts for about 22%, taxes accounts for about 19%, and cost of gasdistribution and marketing accounts for about 4%.

So for example, if a gallon of gas costs $3.00, then $1.65 would go to the oil companies, $0.66 would go to the companies that refine the oil, $0.57 would go to the government for taxes, and $0.12 would go to the gas station and the wholesaler who sold the gasoline to the gas station.

Who Benefits the Most?

When you understand that 3 of the 4 entities that receive a cut are receiving basically a fixed amount, then it becomes clear that the fourth entity (crude oil companies) is profiting the most from the price increases. You see, gasoline taxes are set amounts and, depending on the state (see state gasoline taxes), will be about $0.57 per gallon. So if a gallon of gas cost $2.00, then the government still receive around $0.57, the refining company would still get about $0.66, $0.12 would still go to distribution and marketing, but the crude oil company would only get about $0.65 instead of $1.65. So it is the so called “Big Oil Companies” that are profiting the most from the price increase.

Who Sets the Prices?

If it’s the oil companies that are reaping all of the profits from the price hikes, then naturally we can assume that they are the ones setting the prices. Well, not really. If the oil companies set the prices then they never would have let the price for a barrel of crude oil, currently $100, drop to $10 as it did in the late 90’s. The real culprit is actually the global markets. And the global markets set their prices based on what people are willing to pay i.e. DEMAND.

There can be many factors that can effect demand one way or another. Since the Iraq War began, that countries oil production has been down. The oil consumption of countries with huge populations, such as India and China, have been rapidly increasing. Instability in other oil producing countries. Then add to that mix the fact that oil refineries in the U.S. have not completely recovered from previous hurricane seasons. What’s left is a perfect recipe for high gasoline prices.

Will Prices Come Back Down?

This is the question that everyone really wants the answer to. We now know why the price of gasoline is so high. Will it ever come back down? You can either increase production or reduce demand.

We can increase production by developing new oil fields and building new refineries. Some politicians have tried to open new oil fields for drilling, such as the Arctic National Wildlife Refuge (ANWR) in Alaska. But, so far, animal rights organizations have been able to stymie such efforts.

The other approach is to reduce demand by developing new technologies (hybrid or electric cars) or by developing alternative fuels (ethanol, etc.). This approach has been slow going and late to the party. But at least they are on there way.

Washington Openly Supporting Waterboarding

Wednesday, February 13th, 2008

Some Bush administration officials are openly supporting the military’s use of the specific interrogation technique known as waterboarding. Waterboarding is process of strapping the prisoner to a board and poring water over them to try and make them feel like they are drowning.

What is asinine to me is that some people are working so hard to protect the rights of known terrorists who have actually been apart of plans that lead to thousands of deaths of innocent US civilians. What on earth makes someone think that such a terrorist deserves these rights.

So on one hand, we have some human rights activists trying to defend the “rights” of terrorists. And on the other hand, we have border patrol agents, who we asked to defend our boarders, that are serving 10 year sentences for inflicting a non-lethal gunshot wound on an illegal alien and known drug dealer. What are we doing?

And what about the rights of those innocent civilians who would prefer to not be blown up by a terrorist. I believe it is within our rights to defend ourselves and some interrogation techniques that have been deemed “harsh” should be considered self defense.

I just don’t understand what some people are thinking.

Tax Rebate Passes Congress

Friday, February 8th, 2008

Congress sent a $168 billion economic stimulus package to the President last night for his approval.  The package has good intentions and includes something for just about everyone, unless your “rich” (over $75,000 for singles, $150,000 for couples).

If they are really looking to stimulate the economy though, they ought ask the question, “who is more likely to spend an $1,800 rebate check, someone who already has enough money and can afford to treat themselves with something new, or someone who probably should use that money to save or pay off debt?”.  This makes me really wonder if this is going to work.

Don’t get me wrong. I’m not complaining. I’m looking forward to that rebate check. I just probably won’t be spending it. And if the government wants to put money in the hands of people who will spend it then they probably shouldn’t leave out the so called “rich” Americans who, by the way, contribute most of the taxes anyway and yet when a rebate is dished out they get nothing.

Why wouldn’t the Flat Tax really work?

Thursday, January 24th, 2008

Why wouldn’t the flat tax work?  It sounds like a good idea.  If you are at a point in your life where you are trying to get ahead and save some money you don’t have to worry about the government taking your money before you even get it.  If you wanted to invest your money instead of spending it, the incentive would be there to do that.  It would also remove the discussion about tax brackets.

The greatest part of it all is that it would do away with the complicated tax filing system we now use.

So there are plenty of reasons, in theory, to implement a flat tax system.  So why doesn’t it happen?  Are there studies out there that disprove the the flat tax? Do those currently in power have something to lose?

The injustice of Ramos and Compean

Saturday, December 22nd, 2007

I don’t understand why this one is so hard to get right.  I don’t know why a state attorney prosecuted them. I don’t know how a jury convicted them.  And I don’t know why President Bush won’t pardon them. Is this case really that hard to figure out.  Here’s what it looks like without much detail. We have two good family men who are doing a very dangerous and difficult job that under current circumstances is impossible to be successful at and yet the American people desperately want it done. A known Mexican drug dealer crosses the border illegally in a van packed with marijuana. These two border agents chase him, wrestle with him, and eventually shoot him in the butt.  The shot by agent Ramos should be complimented.  He took a non-lethal shot (not that easy to do) at a dangerous illegal drug smuggler.

Not only do I not understand why they have lost their jobs and been sentenced to 10 plus years in prison, I don’t understand why they would even be disciplined at their job. What Ramos and Compean did that day at the border is what literally tens of millions of Americans are begging our government to have done.  To PROTECT OUR BORDERS!