Question:

Why is the "big oil" being blamed for high gas prices when it seems they only control a small % of the price.

by  |  earlier

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In an attempt to figure out where my $4 a gallon for gas was going I got on the internet and started poking around. What I found really surprised me. Wikipedia listed both Exxon’s profits and total sales and after a quick calculation I found Exxon to only be receiving about 9.37 cents for every gallon I buy(2006). Even if Exxon completely removed it profit it appears gas prices would only fall a few cents.

en.wikipedia.org/wiki/Gasoline

I also know the government takes anywhere upward of 12 percent of gas sales depending on where you live.

Where is the rest of the money going? Is possible my math is wrong? If it is just explain my error.

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1 ANSWERS


  1. You're correct.  Oil companies only make about 8-9% profit (compared to software companies who make 15-20% profit).  States and the feds both charge taxes.  Some cities (Chicago, for example) also charge taxes.  One key issue is speculators ... these are commodity brokers who speculate on what the future price should be.  Experts believe a "fair" price for oil today is about $80/barrel.  The price is about $130, so $50 of that is due to speculation.

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