What's 10% Between Friends?

If I were in charge, I'd bring down the cost of gas to what it was when I was a kid when they used to have "gas wars."

Memory is not the best testament to the truth, particularly when it is a memory so distant; however, when I was about 12 or so, I remember seeing gas on sale for 8 cents a gallon when the usual price was around 20–21 cents a gallon. It sticks in my mind because I had recently started learning to drive. But that's another story for another day.

Now that would make it truly affordable and would bring down prices across the board. Wouldn't it?

The trouble with this scenario is the fact that it is merely wishful thinking. For the sake of our argument, let's say the cost of a gallon of gasoline were to suddenly drop to $1.00 — just so the math won't tax the minds of too many government school graduates.

Out of that greenback, want to venture a guess as to the profit the oil companies in this country make? Interestingly, the profit margin and the profit would be equal in number in our little quiz, though they use different units. If you went to a government school, you might make note of that.

The profit on that gallon of gas would be less than one thin dime. Therefore, the profit margin would be less than 10 percent.

How much is the government's take on that gallon? Funny you should ask.

A very quick search led me to the Energy Information Administration's website. According to their numbers, "From 2000 to 2007, taxes averaged about 24% of the retail gasoline price." This doesn't include county and local taxes, they go on to say. (A downloadable PDF is available here.)

Now, if my math teachers in the government schools I attended taught me anything it is that 24 is a larger number than 10. So, let's add county and local taxes and very conservatively call it 25 percent, though we both know that misses the mark widely.

The sundry costs of that gallon of gas amount to about 65 cents. That's 65 cents that the oil companies must PAY for the crude that makes the gas. The oil companies don't own the oil; they must buy it on the open market and they must compete with other oil companies, speculators, and the emerging markets of China and India, which are consuming vast quantities of oil in order to grow their own economies.

OPEC, which is not the friendliest of cartels in the world, say that the supply is adequate for the world and only, occasionally, will offer the tiniest of bumps in production output, which tends to keep the price of crude rather high. They rake in the cash while the world's economies experience an extreme case of "pucker-factor," tightening everything up.

If we say that the average price of oil for 2007 was $70 (it was actually $72.32) and that world oil consumption was 80 million barrels of oil per day (it was upwards of 82 million), then the roughly 2 trillion dollars spent for that oil seems to look like "real money," to quote the late Sen. Everett Dirksen, compared to the US oil industry's profit of 120 billion dollars.

My point is, If I only made a profit margin of 10 percent. . . Me? I'd find another line of work. There are plenty of investments out there that pay much more than 10% and of which anyone of almost any means could take advantage.

What do we do to reduce the impact foreign oil has on our economy? The most logical answer seems to lie in accessing our own resources; resources that, even today, are illegal to touch. Dare I mention it? ANWR by any other name would smell as sweet as the crude beneath its frozen soil. There are offshore sources in the Atlantic, the Gulf, and the Pacific that are out of bounds only because of environmental crazies who are afraid of huge oil spills — that simply haven't happened in significant quantities — and harming the caribou or snail darters or some other B.S. Drill here. Drill now. Pay less.

It's time to shove these idiots out of the way and head to the oil fields — wherever they are. Even the oil locked up in the shale of Colorado, Montana, and Utah cannot presently be tapped because of moronic laws passed by a Congress overly intimidated by these environmental weirdos.

Should we be good stewards of the earth? Absolutely. Should we invest in new, renewable sources of energy? Of course. Should we engineer new, more fuel-efficient automobiles? Kewl! Should we use the resources provided to us by Nature to improve and enhance our lives on the planet? Damn right!

If the oil companies turn a tidy 10 percent profit while providing a product upon which the world's — and particularly the United States' — economies heavily depend, good on them. That's what capitalism is all about.

When fools like Richard Beller of Summit, New York call for more regulation of the economy in an op-ed on the Times Union website and he doesn't have the vaguest understanding of the difference between profit and profit margin, nor any idea what costs make up that gallon of gas (above) you can bet your gas money on Congress listening to him.

Why? Because it's an election year and the squeaky wheel gets oiled. And the rest of us get lubed.

Cindy Sheehan Strapped to a Tomahawk

If I ruled the world, we'd be drilling both in ANWR and off Florida's Gulf coast, researching alternative energy sources, new forms of transportation, and developing a vaccine for children so they wouldn't grow up to be liberals.

But I'm not. So, here we sit with OPEC (and China and India) in a demand-driven oil-price war that is straining the pocketbooks of most every family in the country and threatens to put our economy into a nosedive. Plus, that 50¢ package of rice is now $2.00. That's not as bad as  other parts of the world because the U.S. produces 80% of the rice it consumes. Try living in Vietnam right now. They live on rice and the price of the little white grains has gone up some 1200% in the past year or two.

Corn? Well, I don't have to tell you about corn; do I? The idiots on Capitol Hill don't have much sense so they actually listened to the environmental wackos who have been screaming that we've got to create ethanol from corn so we can replace the foreign oil on which we're so dependent. Trouble is, robbing from the food chain to feed the fuel chain turns out to be a net negative strategy. Everybody loses. Will someone please wake up Congress and tell them we won't be able to afford to eat soon?

I drive a car that used to get somewhat decent gas mileage -- 22 mpg/city. At $2-2.50/gallon, that's still not bad. But we're approaching $4 for a freakin' gallon o' gas and 22 mpg just doesn't cut it. That's almost 2 dimes for every mile I drive.

I'm lucky; I work at home. No hour-long commute twice a day in stop-and-go traffic out to the 'burbs. I suppose I could live in Frisco, a suburb 25 miles north of downtown Dallas, as the mockingbird flies. And drive a Hummer. 

I read a story yesterday about people trying to dump their gas-guzzling SUVs in favor of less thirsty transportation. Unfortunately, no one's buying. As Lucy would say, "Eeeeuuuwwww."

I may end up buying a smaller car myself. With talk of SEVEN dollar gas in the news (if oil hits $200/bbl) I may just have to settle for a bicycle. Or a trike. With a basket on the back and little horn and. . . and. . . a flag! Oooh, yeah, that's me. Oh, well, it may just be if we can't find a solution to this foreign oil dependency.

Hey! I just had an idea. Man, this is gonna make me MILLIONS! Let's track down all the environmentalists who were screaming about corn-based ethanol and put 'em in a big pot and render the fat from them and use that to run our bio-diesel cars!

Oh, wait. . . Damn! They're all vegetarians and don't have but about 3% body fat. Another net-negative energy strategy. 

Okay. . . then the only thing left is to bomb Ahmadinejad back to the Stone Age and take his oil. We can strap Cindy Sheehan to the first nuclear-tipped Tomahawk missile.

Oh, this is gettin' goooood.