The old saying comes back to haunt us with the price of gasoline: if you want less of something, just tax it
The Wizards of Smart in Sacramento are planning to wreck the gas supply chain even further by imposing a windfall tax - alleging that energy companies are gouging you and I at the pump.
Of course the real gouging has been taking place for years. And politician are to blame.
Let's take a look at why our gas costs way too much...
First. The state charges 51 cents per gallon of gas you buy at the pump. Nobody in the supply chain pays that tax. It's a regressive hideous tax that targets anyone that has a vehicle and it arguably hurts poor people and those on fixed incomes the most (1) The federal government doesn't want to left out of any opportunity to make money, so they are taxing your gallon of gas too! They charge 18 cents per gallon.
But there are also fees, where we see 22 cents per gallon to fund the states Low Carbon Gas Programs, 15 cents per gallon earmarked for Greenhouse Gas Programs and then something that makes no sense to me, the state also takes two cents per gallon for what they call Underground Tank Storage.
A second reason your gas costs way too much
Too many different blends in California. Regular straight forward gas that you pump in other states isn't good enough for California -
According to University of Houston Energy Fellow Ed Hirs said several refineries are offline right now in California for planned and unplanned maintenance.
“There are four, maybe five refineries that are offline, at least temporarily, and so the supply of California blended gasoline is a lot lighter than everybody had planned,” Hirs said. (2)
A third reason your gas costs way too much.
The occupant of the Oval Office wants America to be dependent on other nations for fossil fuels. While some believe Biden's reason for immediately closing Americas pipelines had to do with his environmental convictions, many of us on the other hand believe he is bought and paid for by China, and is not acting in Americas best interests. I'll leave that one up to you to decide. Either way, importing gas from overseas is more expensive than drilling our own. I still believe you will see another Trump prediction come true, that in places like Humboldt County we will see 10 dollar per gallon gas.
To keep things in perspective, on average, the gas station retailers make a profit of 30 cents per gallon but after their typical expenses it appears to be roughly 10 cents per gallon and if you pay with a credit card, that can eat over 2 percent.
The Gas manufacturers make a profit of roughly 7 to 8 cents per gallon. Of course being large operations they have other methods for generating revenue, but whatever study you choose to read, the actual net profit per gallon of the gas for the guys making it is 7 to 8 cents. (3)
The politicians take home a lot more than that! And now they want to give you a rebate! Oh gee, thanks for giving me some of my money back.
Here is a full breakdown of the added cost:
Federal Excise Tax: 18 cents per gallon
State Excise Tax: 51 cents per gallon
Sales Tax (estimated): 10 cents per gallon
Low Carbon Gas Programs: 22 cents per gallon
Greenhouse Gas Programs: 15 cents per gallon
Underground Tank Storage: 2 cents per gallon