Are Gas Prices Really So Frickin’ High?
The price of gas at our local pump is now over $4 per gallon!
Little known fact: The price of gas is NOT actually set by Joe Biden’s command! The president doesn’t have that kind of magic control.
Do you like the free market? Are supply and demand your favorite jams? Let’s take a closer look!
Breaking Down The Nation’s Gas Bill: A Poem***
(Disclaimer: Not a poem)
When you buy a gallon of gasoline, here’s approximately where that money goes.
For every $1.00 of gas:
- $0.50 buys the crude oil raw material. The source might be Texas or Russia, or somewhere else. Oil always must be extracted from natural resources.
- $0.22 pays the oil company refinery costs and profits. Exxon made $23,000,000,000 in profit in 2021.
- There are $0.13 of state and local taxes. Need to repair roads.
The remaining change goes to trucker distribution, marketing, federal taxes, and retail profits.
Leaving the Gas Station: Your Takeaways
The biggest reasons gas gets expensive are (A) oil supply and (B) oil companies.
Remember that the oil supply chain isn’t super reliable. We see that in price volatility.
Remember the 2021 Colonial Pipeline ransomware hack?
Remember when oil prices went NEGATIVE because we drove less in 2020?
Now the free world is cutting a Big Oil Supplier (Russia) out of the global economy.
Do you really think oil prices will stay cheap and steady after this? Let’s go ahead and leave Internal Combustion Engine cars in the I.C.E. age!
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(disclaimer: not saying eliminate all gas engines!)