The American Petroleum Institute has responded to Obama’s blame game by calling the energy policies “alarming.” API President Jack Gerard said: the administration has chosen “inaction on essential energy projects that would create jobs, drive economic growth, and boost federal revenues…. The best thing the administration can do on gasoline prices is to encourage greater oil production and greater fuel efficiency here at home. Launching another gasoline price investigation, when it’s obvious strong demand and world events are driving today’s markets, is pointless.”
Gas at the pump typically spikes in the spring. What pesters Obama is that as oil prices rise, his poll numbers fall.
Historically, as crude oil prices have increased, so have fuel prices. The reverse is true, too. The gradual growth in the global economy is increasing demand for oil and gas. Although growth is centered in Asia and the Middle East, U.S. demand also is growing.
The “biggest single component of retail gasoline prices is the cost of the raw material used to produce gasoline—crude oil,” the American Petroleum Institute acknowledges in its publication “What’s Up with Fuel Prices.” But “other factors—including weather events, geopolitical risks, inventories, exchange rates, and spare capacity—also have an impact…”
In spite of persistent Democrat attempts to appeal to the naïve by claiming that oil companies make huge profits, “Oil and natural gas earnings are typically in line with the rest of the manufacturing industry, averaging about 7 cents of every dollar of sales over the past five years. Critics usually focus on only half the story—profits. Profit margins, or earnings per dollar of sales (measured as net income divided by sales), provides a better way to compare financial performance among industries of all sizes.
Also, contrary to critics’ charges, oil companies aren’t owned just by a little pack of stingy and wealthy insiders. The 55 million households with mutual funds, the 45 million with personal retirement accounts, and millions of other stockholders typically have some of their money in petroleum stocks.
Although Obama desperately wants to hike up taxes on oil and gas companies, they already bear an effective tax rate of 48.4 percent, according to API statistics, compared with 28.1 percent for all other S&P industrial companies. A study by the research firm Wood Mackenzie (WM) found that from 2011 to 2025, negative economic consequences of higher taxes will more than offset any short-term gains in tax revenue. The study also found that increased access and development of domestic oil and natural gas would create an added half million jobs by 2025.
WM said that oil and gas companies paid $1 trillion in total income taxes from 1980 through 1008 and more than $178 billion to the government in rent, royalty, and bonus payments from 1982 through 2009. The oil and gas industry provides the Treasury with more than $95 million every day. The industry supports more than 9.2 million U.S. jobs.
If only Obama would give up the blame game and allow oil and gas companies access to domestic resources now off-limits, this could create hundreds of thousands of jobs in our jobless economy. Gas prices could even trend downward.
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