Greed and gasoline prices

Politicians are old hands at trying to get some mileage (sorry) out of any current trend that raises voters’ ire. They hold hearings, they pass bills with feel-good monikers designed to convince constituents they’re “doing something.”

Take gasoline prices.

Senate Majority Leader Harry Reid, D-Nev., was all over the oil companies last week on the subject of current gasoline prices. Which greedy characters benefit the most from such high prices, Sen. Reid?

“You go to a service station in Las Vegas, and the price of gasoline is $3.28 a gallon,” Sen. Reid explained. “That man that has that service station doesn’t make any money. He makes pennies — pennies, less than a nickel a gallon. The oil companies and refineries make it all.”

Goodness. So when we pay $3.28 for a gallon of gasoline, the station owner gets less than a nickel, and the greedy oil companies pocket profits of more than $3.20?

Well, no. There are certain costs involved in leasing oil fields and drilling and refining and transporting the stuff. Sen. Reid may have let his rhetoric carry him away a bit, there. The average oil company profit on a gallon of that $3.28 gasoline turns out to be (according to the Tax Foundation and the American Petroleum Institute), um … 13 cents per gallon.

Well, nonetheless, 13 cents on each gallon can add up, can’t it? The point is that oil industry profits represent the largest share of the price of that gallon of fuel, right? If the big greedy oil companies were wiling to settle for half the profit — even if it left them short of funds to explore for future resources — gas prices could drop by as much as 7 cents a gallon. No one else could save us more money than that if they cut THEIR share in half … right?

Um … wrong. Only 13 cents for each gallon we buy in Nevada may go to the “greedy” oil companies, but more than 51 cents go to … government.

With an effective combined government gasoline tax rate of 51.9 percent, Nevada easily ranks among the 10 worst states for gasoline taxes, behind only greedy New York (62.9 cents) greedy Hawaii (60.1 cents) greedy California (60 cents), greedy Illinois (54.6 cents) and greedy Michigan (52.4 cents).

Yes, most of that loot goes to road construction and repair, which makes this one of the best “directed” and thus least objectionable tax burdens going.

But if by taking 13 cents per gallon the big oil companies earn the label “greedy” — along with absurd laws threatening them with prosecution should they charge a price for gasoline that some politician deems “excessive” — what shall we call politicians who grab 50 cents out of every gallon?

Fortunately, we know how to really reduce gasoline prices: Increase supply. To do that, we need only open up the Gulf of Mexico and the desolate north slope of Alaska to drilling, while approving more pipelines and refineries and offshore fuel terminals in places such as California, where environmental regulations have choked off supply by preventing any such new facilities being built for 35 years.

So Sen. Reid and his Senate colleagues next month will debate an energy bill which … does none of these things.

Instead, the proposed bill would merely increase federal tax subsidies for “renewable” fuels such as ethanol, which is not only more expensive than gasoline, but which also costs more energy (and pollution) to produce, than it can ever save.

Goodness. So who benefits?

Big corn producers, such as Archer-Daniels Midland. Wonder why Sen. Reid never calls them “greedy”?