ExxonMobil posted record profits

Alex · 10-28-2005, 09:39 AM

Well, wholesale gas costs just as much in Europe as here (for the most part) it is just taxed much more heavily in Europe. Interestingly this give European nations a bit of a safety valve as gas prices rise. Though it would cut revenues, they can provide significant price relief by reducing the gas taxes. In the U.S. that is much less effective (where only 20% of the price is taxes, in most places).

In the Netherlands, for example, taxes make up about 80% of the retail price of gasoline (which is now around $7/gallon). The government could instantly drop the price of gasoline by $2/gallon and still be taxing the gas at more than four times the rate of the United States. In Poland, for example, when people complained about a six cent increase in gas prices following Hurricane Katrina, the government simply reduced the tax by six cents on a temporary basis. There is a small group of economists who advocate high gas taxes in the United States not for revenue or ecological reasons but so that the government could take the uncertainty out of the energy markets by controlling the taxes to smooth out price spikes (much as the Fed uses interest rates to control inflation/deflation spikes).

In Venezuala, however, the government essentially gives gas away at $0.12/gallon. That is a country set up for a fall if anything should ever disrupt their domestic supply of oil forcing them to import.

10-28-2005, 09:39 AM	#13
Alex . Join Date: Feb 2005 Posts: 13,354	Well, wholesale gas costs just as much in Europe as here (for the most part) it is just taxed much more heavily in Europe. Interestingly this give European nations a bit of a safety valve as gas prices rise. Though it would cut revenues, they can provide significant price relief by reducing the gas taxes. In the U.S. that is much less effective (where only 20% of the price is taxes, in most places). In the Netherlands, for example, taxes make up about 80% of the retail price of gasoline (which is now around $7/gallon). The government could instantly drop the price of gasoline by $2/gallon and still be taxing the gas at more than four times the rate of the United States. In Poland, for example, when people complained about a six cent increase in gas prices following Hurricane Katrina, the government simply reduced the tax by six cents on a temporary basis. There is a small group of economists who advocate high gas taxes in the United States not for revenue or ecological reasons but so that the government could take the uncertainty out of the energy markets by controlling the taxes to smooth out price spikes (much as the Fed uses interest rates to control inflation/deflation spikes). In Venezuala, however, the government essentially gives gas away at $0.12/gallon. That is a country set up for a fall if anything should ever disrupt their domestic supply of oil forcing them to import.
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