September 5, 2003
When gasoline prices rise, lawmakers reflexively mount soapboxes to call for probes and vilify oil companies. They should be careful, says Investor's Business Daily (IBD), because they get more out of the industry than the industry makes for itself.
In fact, Energy Department figures show that government's take from the oil industry actually exceeds the industry's profits:
- In 2001, the major oil companies earned $50.8 billion in profits from their petroleum products.
- In that same year, government collected nearly $78 billion in taxes from them.
- To put this in focus, consider that roughly 370 million gallons of gasoline are consumed in the United States each day.
- When gasoline prices are averaging $1.25 a gallon as they were in May 2002, the government pulls in more than $194 million a day.
- When prices hit an average of $1.75 per gallon, as they have this week, the government's daily hauls increase to almost $272 million.
So, just as it is in the best interest of lawmakers for Americans to smoke so they can reap the high taxes on tobacco, lawmakers rake in bigger revenues as the prices climb, says IBD.
Source: Editorial, "Addicted to Oil," Investor's Business Daily, August 28, 2003.
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