The price of gas in 2008

Let's do the Math!

The five largest U.S. oil companies earned $36 billion during the first three months of this year. This is after last year's figures set an all-time record.
Even if we assume that the next months will see the big 5 earning somewhat lower profits, they should still break $120 Billion dollars profit in 2008.

"Americans are furious about what's going on," declared Sen. Byron Dorgan, D-N.D., and want Congress to do something about oil company profits and "an orgy of speculation" on oil markets.

The cost of energy not only impacts consumers when they fill their tanks, but is a driving force in the price of everything we buy. Congress is getting the message that Americans are "Mad as Hell" and expect their government to do something.In response to the growing rage and falling economy, the Democrats on the hill have pushed legislation to tax the "Windfall profits of the oil industry." The law would boost taxes paid by the large oil companies, or allow them to instead invest the money in new clean energy development.

Republican leader Mitch McConnell of Kentucky has acknowledged that Americans are hurting from the high energy costs but strongly opposes the Democrats' response and has ridiculed those who "think we can tax our way out of this problem.""Republicans by and large believe that the solution to this problem, in part, is to increase domestic production," McConnell said.
A GOP energy plan, rejected by the Senate last month, calls for opening a coastal strip of the Arctic National Wildlife Refuge in Alaska to oil development and to allow states to opt out of the national moratorium that has been in effect for a quarter century against oil and gas drilling in more than 80 percent of the country's coastal waters.

The question is, how big are the profits compared to the increased costs we are all paying.

Here is how the basic math works......

Let's say that the combined profits for the big 5 are $120 Billion.

There are 126 Million households in the United States
$120,000,000,000 : 126,000,000 = $952 Dollars/ household in 2008 will go to profit for the Big 5 Oil Companies.

Average Annual Miles per Household = 11,100
The Average Fuel Economy = 22 miles per gallon
11,100 miles : 22 = 504 gallons of get used/ household

Now, let's take 504 gallons and divide that by the $952 Dollars profit/ household in 2008
and we see that about $1.88 of the cost/ gallon we pay at the pump goes straight into the pockets of 5 Oil Companies.

Take a cost of $4.00 at the pump, subtract the windfall profits, and gas is $2.12/ gal.

How do you like that math?


Larry Lubell
www.urbanInsuranceAgency.com

http://www.defra.gov.uk/
U.S. Department of Energy’s Transportation Energy Data Handbookhttp://www-cta.ornl.gov/
U.S. Energy Information Administration’s Residential Energy Consumption Surveyhttp://www.eia.doe.gov/emeu/recs/contents.html
Your Car Travel
AssumptionsEmissions per Gallon of Gasoline = 0.0089 tons of CO2Average Annual Miles per Household = 11,100Per Capita Miles Driven in 2004 = 9,941Average Vehicle Trip = 10 milesAverage Fuel Economy = 22 miles per gallon