August 8 2012
Vicki E. Alger
Taxpayers Protection Alliance Senior Fellow Drew Johnson breaks down why gas prices are so darn high in a recent Wall Street Journal editorial. The crude oil costs make up the lion’s share of what we pay at the pump, 76 percent or roughly $2.66 out of a $3.50 gallon of gasoline. Refining and transporting it represents about 6 percent each of that cost. So who’s responsible for the other 12 percent? Johnson explains:
With the average price of gas in America hovering around $3.50 per gallon for regular unleaded, it costs more than $50 to fill a typical car's 15-gallon tank this summer. Why does gas cost so much?
You may blame high gas prices on rich oil company executives or greedy gas station owners. The truth is that governments rake in a larger profit at the pump than anyone—and with gas taxes on the rise in many parts of the country, there's no relief in sight. …
The remaining 12%—or almost 50 cents per gallon today—goes directly to federal, state and local governments in an array of sales and excise taxes. The federal gas tax is 18.4 cents on every gallon of gasoline sold in America. State gas-tax rates vary from a low of eight cents per gallon in Alaska to a jarring 49 cents per gallon in New York. Other states where it's steep to fill up include California and Connecticut—each with 48.6-cent-per-gallon gas taxes—and Hawaii, at 47.1 cents per gallon.
Some local governments have gotten in on the act, too. In California, local sales and excise taxes on gasoline average 3.1%, according to the Los Angeles Times. That works out to about 12 cents in local taxes for each gallon of gas, based on the state's current average of $3.80 per gallon. …
Put this all together, and government makes far more from gas sales than all of the oil companies put together. Exxon, for example, made only seven cents per gallon of gasoline in 2011. That's a drop in the bucket compared to the nearly 50 cents per gallon that federal, state and local governments rake in on an average gallon of gas pumped in the U.S.
Most people have to drive—whether to work, to the grocery store, to pick up kids from school or for dozens of other reasons. For some families struggling to make ends meet, paying 50 cents per gallon in taxes may be the difference between driving to work and putting dinner on the table.
So the next time you begin to blame oil companies, speculators or service stations for high gas prices, remember that no one get richer off of gasoline than government.
Maybe it’s time to put government on a diet.