Pump Price Perspectives
The price of oil closed at $104.42 a barrel on Friday. It was the highest cost placed on crude since $106.89 was posted on Sept. 26, 2008. The new figure came on the heels of the federal government issuing the first deepwater drilling permit since a moratorium was put in place following the BP Deepwater Horizon explosion and oil release on April 20, 2010.
Normally, high prices in oil producing areas can be good news. But when the increase is not based on what is extracted, refined and distributed domestically, when it is the result of turmoil in the Middle East and North Africa, and when it comes in the face of financial hardship imposed on American workers because their own government had basically placed sanctions on them – that is not normal.
Added to the frustration has been a lack of income for local oil producers, support companies, processors, transporters and the businesses that make and sell petroleum based products during the past 10 months.
For consumers buying gasoline – which includes both those inside as well as outside the oil industry – prices at more than $100 a barrel translate into an expensive transaction at the pump.
With that said, it is important to keep a perspective what has taken place to contribute to gasoline prices pushing $4 a gallon.
In most instances nearly half the retail price for a gallon of gasoline is not the product itself, but the state and federal taxes that go along with it.
The average tax on every dollar spent for a gallon of gasoline in the United States is 48.1 cents. In Louisiana – a lower tax state – it is 38.4 cents. The highest tax placed on gasoline at the pump is in California at 66.1 cents. Alaska has the lowest excise tax on gasoline at only 26.4 cents.
Official tabulations have not been made as to the total number of jobs and dollars lost due to the lack of oil production in the Gulf.
Yet, we realize that when domestic producers are shut out of their work, but are among those paying for it at the pump, it becomes all the more evident that the issuing of a single permit, as if it puts everything back to normal, only adds increased injury to the insult, and fails to compensate for the cost.