Gasoline $$$$$

THE PRICE OF GASOLINE

            I watched the 5/2011 Senate hearings on gasoline prices/oil company “excessive” profits.

            The following was written in 2008, after Senate hearings following a gasoline gas price spike:

           

            I have opined that nobody should run for public office unless they had run their own small business, or at least demonstrated the ability to understand a Profit and Loss Statement.      

            The senators quizzing the oil company CEO’s are either stupid or think that “profit” is a dirty word.

            At least three CEO’s tried to explain Business 101 to the Senators. The CEO’s patiently explained that profit, expressed as dollars, was rising due to increased demand and sales. They tried to explain that their profit, as a percentage of sales, had dropped from 10% to 4% because of the increased cost of crude oil, commodities and operating expenses. The Senators didn’t understand the math. A CEO patiently explained that for each dollar of their sales they used to make 10 cents in profit but now where down to four cents.  He pointed out that governments were collecting 14 cents for each dollar of gas sales.

            Senator Diane Feinstein accused the CEO’s of playing “The Victim” card. She blasted the CEO’s for making “excessive profits” and not using the profits to help “the people” (redistribute wealth). Evidently the Senator is not happy that governments are collecting three times the amount of the oil company profits. She wants it all. I think it’s called “Nationalization”. How long would take the oil companies to move out of the US if they saw this coming? How would that affect jobs and national debt?

            An hours pay for my first job (1940’s) bought one gallon of gas. Today’s hourly minimum wage will buy two gallons of gas! Gas is being sold below a price corrected for inflation!

            Also, shouldn’t the media report profits of all businesses as a percentage of sales? Otherwise large companies with gigantic sales $’s will be blasted for “excess profits” and small companies who make 50% profits will not be identified. Using percentage value can also be distorted. A company whose profits increase from $1.00 to $2.00 could be chastised for having a 100% increase in profits. Politicians and the media selectively report numbers that punish “bad” companies. Why is profit a dirty word?

            I’ve noticed that the “No Profit” politicians and media demean the gas and oil companies by saying they are receiving “subsides”. To me subsidies are government grants to “preferred” companies to develop government preferred things like “Green Energy” or buy votes. Taking a legal tax deduction for money spent to develop business is an expense deduction, not a subsidy.

            Unfortunately, with the present American educational system, the average person doesn’t have a clue when it comes to economics and business.

            Those who do understand what’s happening are starting to oppose “The redistribution of wealth”.  Our president calls them “Misinformed”

(stupid)!