Gas Profits II

Glenn Reynolds points out Thomas Bray's recent column in the Detroit News. He helpfully quotes from FTC 2005 report, after the last clamor for investigations:

"From 1986 to 2003, using 2004 dollars, the real national annual average price for gasoline, including taxes, generally has been below $2 per gallon," noted the Federal Trade Commission in a 2005 report absolving the industry of collusion. "By contrast, between 1919 and 1985, real national annual average retail gasoline prices were above $2 per gallon more often than not."

In other words, gasoline prices were lower than at anytime since 1919 for much of recent history. Some conspiracy! Maybe somebody should have been investigating consumers for "gouging" the oil companies.

And just who is the profiteer here? While the average profit on the sale of a gallon of gasoline is nine cents, the average state and federal tax on that same gallon of gasoline is about 45 cents (and 52 cents in Michigan). And if we must have an investigation, how about investigating the extent to which government regulations drive up prices and block new production?

Management guru Peter Drucker once remarked, with his usual drollery, that profit is "whatever government lets a company keep." But most folks have a vastly inflated view of corporate profits. One regular survey of Americans found that the majority believes the average corporate profit is between 30 percent and 40 percent of sales, while the real figure is closer to 4 percent.

Gas Profits

Inspired by Rush today:

Exxon's profit per gallon of gas: $.09
Exxons's 3-month record profit: $8,400,000,000

Federal government's tax per gallon of gas (as per Neil Cavuto): $.19

Mathematically, that means that the government, in the same time period, made essentially twice as much as Exxon. That is:

.09/8,400,000,000 = .19/x
x = 17,733,333,333

In other words, the Federal government's (unmentioned) record revenue last quarter: $17,733,333,333

And, it must be pointed out, the government made that proportionally greater revenue for work, risk, and investment they are disportionally NOT at all involved in. But that is the nature of taxing in general (hence, some think of taxing as robbing) and not of this situation demonstrating, once again, the failure of American economic education. At any rate, it is hypocritical, ingrateful, and a blinkered demagoguery that condemns a party making its just share while the demagogue takes twice as much.

UPDATE:
from Powerline, John quotes Republican Congressman Mike Conaway of Texas:

Congress's actions must be rationally based on economics and the realities of global energy markets. We must not fall into the political trap of knee-jerk reactions that will only worsen our problems.

There is a great hypocrisy in America's national energy policy. As long as politicians continue to demagogue energy companies and oppose legislation that addresses the long-term problem of rising energy costs, we will continue to fail the American people.

Yes, oil companies are making large sums of money in real dollars; however it is disingenuous to simply look at the raw dollar amounts without looking at these numbers in the proper economic context. We need to look at the percent of return these companies are making. In reality the oil and gas industry's earnings are easily comparable to other industries and in many cases lower.

According to Business Week and Oil Daily magazines, the oil and natural gas industry earned 5.7 cents for every dollar of sales compared to an average of 5.5 cents for all U.S. industry over the past five years. By contrast in the third quarter of 2005 the pharmaceuticals industry made a profit of 18.6% per dollar of sales versus 7.6% for the oil and gas industry. The average profit per dollar for all US industries is 7.9%. ***

It is time for Congress to look at the facts. It is the global market place and the law of supply and demand, not greedy oil companies that are responsible for higher prices. The price of a barrel of oil is set by the global market not by multinational energy companies. When some in Congress refuse to allow for domestic and deep sea energy exploration that would increase supply and reduce cost, the problems get worse. We must enact legislation that would open ANWR, expand refinery capacity, reduce costly fuel regulation and allow for deep sea exploration. These are long-term issues that could have made a difference today had we avoided political posturing and addressed them years ago. It isn't too late for us to do the right thing now and begin enacting common sense legislation like increasing supply and increasing research and development regarding alternative sources of energy.

We must stop allowing the issue of rising energy costs to be clouded with misinformation and politically motivated emotion.

John wraps up with this reflection:

I want the oil companies to make enormous amounts of money. I want them to make enormous amounts of money so they can spend it on drilling wells and building pipelines and refineries. I talked to an oil executive recently who told me that the fact that we can't expand our refining capacity is a scandal in terms of the public interest, but is actually good for the oil companies' profitability. Look at it this way: if the oil companies agreed among themselves not to drill for oil in new locations like ANWR, and not to build new refineries, so as to limit the supply of oil and thereby drive prices higher, it would be illegal; indeed, it would be the greatest price-fixing conspiracy in American history. But it isn't the oil companies that have conspired to limit supply and thereby drive prices higher. It is our government that has foreseeably, if not intentionally, achieved this ignoble end.

UPDATE 2 (Friday):
Further context for the record energy industry profits from the AP:

WASHINGTON - Casting off an end-of-year lethargy, the U.S. economy bounded ahead in the opening quarter of this year at a 4.8 percent pace, the strongest growth spurt in 2 1/2 years.

Bush Breaking News to the WH Press Corp

You got to love this chutzpah and wit; Bush announcing his new press secretary, Tony Snow:

BUSH: Good morning. I'm here in the briefing room to break some news: I've asked Tony Snow to serve as my new press secretary. Tony already knows most of you, and he's agreed to take the job anyway.

(Via Drudge)

Spring Back Home Today

Mom sent this picture of Wyoming today.

And, yesterday, here, it was 88 degrees and 55% humid....

Price Gouging defined

Courtesy of Powerline, Craig Harrison defines the terms for the day:

Price Gouging. Price Gouging is defined to be any profit made by a company in an industry that is defined to be a Suspect Industry.

Suspect Industry. Any company that is engaged in any energy activity, or any company or industry that is designated by any elected official of the Democratic Party to be a Suspect Industry by any public statement. Under no circumstances will trial lawyers, the health care industry, unions or the abortion industry be included within this category.

(HT: Peter Robinson at NRO.)

Churchill on Vagaries of War

The fellows over at The American Thinker posted this quote just yesterday but I can no longer find it. So, I looked elsewhere; found it over at Wikipedia's Wikiquote for Churchill (a very handy feature it appears). The context for their quoting this bit was the recent criticisms of Rumsfeld (and continuing ones of Bush) by the "arm-chair generals".

* Never, never, never believe any war will be smooth and easy, or that anyone who embarks on the strange voyage can measure the tides and hurricanes he will encounter. The statesman who yields to war fever must realise that once the signal is given, he is no longer the master of policy but the slave of unforeseeable and uncontrollable events. Antiquated War Offices, weak, incompetent, or arrogant Commanders, untrustworthy allies, hostile neutrals, malignant Fortune, ugly surprises, awful miscalculations — all take their seats at the Council Board on the morrow of a declaration of war. Always remember, however sure you are that you could easily win, that there would not be a war if the other man did not think he also had a chance.
- Roving Commission: My Early Life (1930)

Churchill's observation seems to me to be not only an additional consideration before jumping into war, but also the context in which denizens of a modern democracy should think of how a war is prosecuted by its leaders. That is to say, war is not, has not, will never be a phenomenom that is managed like inflation, the price of oil, the Stock Market, or any other part of our life that our foresight, ingenuity, and experience have slowly and progressively insulated us from Fortune's ill winds. The expectation that the Comander-in-Chief or any general or a committee of generals or Secretary of Defense--or any leader--can control and is in control of the unfolding war situation, and that somehow, someway, somewhere there was a better choice, a choice with no bad consequences, removed from repercussions, from chance, a perfect solution that all good people could agree upon is as false and ultimately suicidal idealism as could arise in a democracy in wartime. For further illustration, read Thucydides.

Euston Manifesto

Michael Ledeen pointed out this remarkable document/website. Actually, "The Euston Manifesto" is a group of self-described (British?) democrats and liberals, who by opposing tyranny, terrorism, and esteem the United States, call for a new political alignment on the Left. This is indeed good news.

They warrant support and watching.

Re-Enlistenment Up

Glenn Reynolds point out this recent article the continuing trend of increased re-enlisting--among the branch that suffers 69% of fatalities!--over at Strategy page:

Why U.S. Troops Re-Enlist in Record Numbers

April 14, 2006: In the last six months, the U.S. Army is seeing 15 percent more soldiers re-enlist than expected. This continues a trend that began in 2001. Every year since then, the rate at which existing soldiers have re-enlisted has increased. This despite the fact that 69 percent of the troops killed in Iraq have been from the army. New recruits continue to exceed join up at higher rates as well.

All this is extremely important, especially when there is a war going on. Experience saves lives in combat, and more of the most experienced troops are staying in. This means that, a decade from now, the army will have a large and experienced corps of senior NCOs. That, in turn, means the younger troops are likely to well trained and led.

Steyn's Humorous Exercise

From his latest:

You know what's great fun to do if you're on, say, a flight from Chicago to New York and you're getting a little bored? Why not play being President Ahmadinejad? Stand up and yell in a loud voice, "I've got a bomb!" Next thing you know the air marshal will be telling people, "It's OK, folks. Nothing to worry about. He hasn't got a bomb." And then the second marshal would say, "And even if he did have a bomb it's highly unlikely he'd ever use it." And then you threaten to kill the two Jews in row 12 and the stewardess says, "Relax, everyone. That's just a harmless rhetorical flourish." And then a group of passengers in rows 4 to 7 point out, "Yes, but it's entirely reasonable of him to have a bomb given the threatening behavior of the marshals and the cabin crew."

Cheney

Victor Davis Hanson, in his "Response to Readership" section of his website, had this to say on a question about Dick Cheney:

Vice President Dick Cheney, in my mind, is a most intriguing character. I admire and respect his intelligence, calm demeanor, and toughness, especially since the U.S. has been at war with Islamic fascists. I subscribe to Cheney's view of this war as a fight for the future of civilization. Is there a man from the Greek age that held a similar position of power and that reminds you of Vice President Cheney?

Hanson: A good question. A good book could be written about how a formerly much admired public servant has become demonized by the far Left to such a degree that his general poll ratings reflect a newfound public antipathy—despite his constancy and rock-solid views that are not predicated on adulation. But I doubt Cheney cares much for the polls of the age, and counts on history's verdict that more likely will see us in a long war against Islamic fascism, and thus his own tough worldview substantiated. Many of the media hate him because they sense he is on to them, and sees them as vain and in constant need of affirmation and adulation. Whether true or not, it matters little, since no felony is worse in Washington than seeing the press there as childish rather than cutting-edge. Remember something from the Greeks: every statesman of any account — a Themistocles, Aristides, Pericles or Epaminondas — who functioned in democratic society was at one time either exiled, fined, or put on trial. No real Greek leader wished to be liked rather than respected or even feared. So yes, in that sense Cheney's perceived disdain for shot-term fawning is, in the age of Clintonism, both Hellenic and welcome — however unwise for his increasing his popularity.