Sunday, April 30, 2006

Energy Facts and Fundamental Truths

The following makes several good points which most Americans don't understand

"From 1986 to 2003, using 2004 dollars, the real national annual average price for gasoline, including taxes, generally has been below $2 per gallon," noted the Federal Trade Commission in a 2005 report absolving the industry of collusion. "By contrast, between 1919 and 1985, real national annual average retail gasoline prices were above $2 per gallon more often than not."

In other words, gasoline prices were lower than at anytime since 1919 for much of recent history. Some conspiracy! Maybe somebody should have been investigating consumers for "gouging" the oil companies.

And just who is the profiteer here? While the average profit on the sale of a gallon of gasoline is nine cents, the average state and federal tax on that same gallon of gasoline is about 45 cents (and 52 cents in Michigan). And if we must have an investigation, how about investigating the extent to which government regulations drive up prices and block new production?

Management guru Peter Drucker once remarked, with his usual drollery, that profit is "whatever government lets a company keep." But most folks have a vastly inflated view of corporate profits. One regular survey of Americans found that the majority believes the average corporate profit is between 30 percent and 40 percent of sales, while the real figure is closer to 4 percent.

Washington should cool its carburetors. The pursuit of profit is one of the main engines of Western progress and prosperity. And as people in my neck of the woods are fast learning, it is only out of profit that we can afford to pay for a comfortable retirement. As profits in the steel, airline and auto industries erode or even vanish, so do pensions and health care benefits, not to mention jobs.


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