Something is wrong here...

[mackthefork]

Hi MMMMMM

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First of all, you are not paying anything like insane prices. You realise that a gallon of gas has about 600 man hours worth of energy, right? And you get it for 3$, that ain't bad, huh?

And secondly, that's the market. The end price has little to nothing to do with production price...


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$3 is nothing, we are paying $9-$10 in the UK, nearly 80% goes to HMC&E, that guy who had a goal of being pissed on at college should move to Blighty and buy a car, the effects are much the same minus the hardon.



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$9-$10 a gallon--why do you Brits punish yourselves so? Sorry, but taxes that high on petrol sounds really masochistic...Now I'm curious, exactly what benefits do YOU get from such high gas taxes, Mack? How can that much money possibly be returned to the drivers or citizens in form of benefits--I don't believe it can...

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I don't believe there are any benefits to taxes this high for citizens or drivers, this is the way it has always been, if the money wasn't raised this way they would find it from somewhere else, the alternative would undoubtedly be a lot fairer.

The government didn't sell access to North Sea fields, they taxed profits and levied duty of 12.5% I believe, the duty we paid on petrol was originally meant to make up for the fact we never raised capital from giving access to the oil fields. Generous capital expenditure reliefs are also available for North Sea gas and oil investment, all this was done in the name of making Britain a big force in the oil/gas industry.

These days the agenda has changed to the environment, the government argues that they add to duty to reduce consumption. It would be a good argument if it worked, however people are using cars more and more, the public transport system is of third world standards (with apologies to the third world), there is no real alternative to using a car if you want to hold down a job. The reality is they are just grabbing where they can, income tax is low (historically), for all the world this lot of crooks look like conservatives, until you dig a little below the surface and then you see the reality, we pay more in tax than we ever have before.


Fuel Duty/Price per litre breakdown (BBC)

Here is a BBC story from 2000

"By the time Labour came to power in 1997, the escalator was at 5% and had contributed a 11.1p rise to the cost of unleaded fuel. Tax as a proportion of total cost stood at 76.3%.

On taking office the new chancellor, Gordon Brown, increased the fuel escalator further and put 3p on a litre of petrol in his first budget.

That pushed taxes up to 81.5% of the total price of fuel.

Duty rose by a further 2p a litre in his last budget, but the chancellor, facing rising complaints from the road haulage industry, scrapped the fuel price escalator, saying that future increases should be decided on a year-by-year basis."

Things have got worse since then.

Mack

[Kurn, son of Mogh]

Oil companies, like any other business, have one and only one responsibility: maximize profits. Companies like ExxonMobil do not control the price of Crude oil. Oil is not a free market, it is a cartel controlled by a few producing nations. The main driver of the rise in the price of crude has been Hugo Chavez of Venezuela. You want to criticize something, start with that communist distator.

[Utah]

Lets not pretend that these things are really guided by true market forces. I believe there is implicit or explicit collusion within the industry to keep prices at certain levels. The industry works to keep themselves out of pricing wars, which is counter to free markets.

This type of thing happens way more than free marketers think.

[Il_Mostro]

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The main driver of the rise in the price of crude has been Hugo Chavez of Venezuela

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Ehh, I think you need to reference that claim. In what way does Chavez have influence of the price of oil?

[Dan Mezick]

That profit pays for their PAC and campaign contributions.

It's one big happy family.

The Senate hearings will follow, and they will be play-acted by the very players that benefit directly from the largesse of these huge corps.

It's called collusion. Perfectly legal of course.

[Cyrus]

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Oil is not a free market, it is a cartel controlled by a few producing nations.

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This is not true.

OPEC is a cartel of oil producings nations that meet once every year (or more often) and decide upon production caps for individual nations -- which every oil-producing nation then proceeds to violate! But OPEC has not been a factor in the price rise. (It's simple arithmetic really : OPEC is pumping practically at capacity; refineries worldwide are processing crude at 87% of capacity, which is the highest in the last 25 years. Source : BP Statistical Review of World Energy 2005.)

There are two facts that one should bear in mind about the price of oil, internationally:

1. There is effectively no single player strong enough to affect the price of oil with "market intervention" alone, and without physical intervention. (I.e. Saudi Arabia could start buying December futures like crazy but the market would move against it soon enough. However, if Saudi Arabia halves its crude oil production, the price will be affected, and seriously too.) Not even the U.S. Treasury could "corner" the market.

2. The main factor behind the price movements of the last five years has been demand for oil products, which resulted in refineries gobbling up every barrel of crude they could find.

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The main driver of the rise in the price of crude has been Hugo Chavez of Venezuela. You want to criticize something, start with that communist distator.

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Chavez is an easy target and he is indeed a (small) factor in amplifying the "nervousness" of the market. But he is no more than a mild annoyance. He can do little harm, if at all.

Watch his actions, not his words.