Op-Ed: Big Oil is Not the Enemy, Big Intrusive Government Is

Posted May 2, 2008 by Steve Bellah
When the major media outlets run stories decrying “record profits” earned by the evil oil companies, they are not telling you the real story. Profit dollars are not indicative of the profit MARGIN, which is the really important figure.
Follow along with me for a moment: Suppose I invest $100.00 and get a return of $10.00 for that investment. My profit margin is 10%. Now suppose I invest $1000.00 and get a return of $100.00 for that investment. My profit margin is still 10% but now I’ve made “record profits”. What an outrage! Am I an evil person for making a profit? Isn’t a business supposed to be profitable? Aren’t we a capitalist society?
The oil & gas industry is a posting a decent profit margin but not as high as other industries. Is congress going to go after "Big Food" or "Big Software" the way they are grilling the oil companies? When the volume of goods sold reaches record levels, then profit dollars are also going to reach record levels but profit margins remain fairly constant. Most of our retirement and 401K plans are invested in “Big Oil” to some degree, either directly or indirectly, so it is in our best interests that they remain in business and remain profitable.
Don’t like the high gas prices? A good portion of the blame can be placed on our government and the activist groups that have influenced policy for many years. For years we have refused to allow drilling in ANWR or off the coast of California or off the coast of Florida. All of these areas hold vast reserves of oil, which if accessed, could greatly reduce the amount of oil that we would need to import from foreign countries. There is absolutely no excuse for having to import 60 percent of our oil from foreign sources. Another contributing factor is the 30 year lack of refinery construction in this country, coupled with the 18 different gasoline blends required in various regions of the United States. Oil is of no use until it has been processed into fuel and refineries have a difficult time keeping up with localized shortfalls because they can’t supply the same gas blend to every market.
Let’s talk about fuel taxes for a moment. We could realize immediate relief from the high gas prices if our beloved government would just suspend the fuel tax, at least for a while. 18 percent of every dollar you spend on gas is taxes. So, if gas costs $3.50 a gallon, you are paying 63 cents in taxes on every gallon you pump.
The last thing we need is government action to solve the fuel price crisis. Bought food lately? Can you say ethanol? Government does the most good when it does nothing more than get out of the way.