But the Congresscritters are asking why they're charging so much for gasoline, diesel, and other fuels. The oil company execs have told them approximately 70% of the price of fuel is the cost of the crude from which the fuels are refined. As crude prices go up, so do fuel prices. There are other costs to producing and delivering fuel as well, like refining, transportation, marketing, R&D, exploration, and taxes.
Taxes are probably the second biggest factor in the costs of petroleum products, and I'm not talking about the federal and state fuel taxes imposed at the pump.
The industry's effective tax rates are in the neighborhood of 40% to 44%. Over the past five years, Exxon Mobil's total U.S. tax bill exceeded its U.S. revenues by some $19 billion.
Individual taxpayers in the US pay nowhere near that amount in income taxes. If they did, there would be a rebellion.
Congress has also threatened to remove $18 billion in what they're calling “subsidies”, which are really tax write-offs for doing what oil companies are supposed to do – explore for more oil. But here's the kicker:
Mr. [Ed] Markey also used the occasion to threaten special tax increases, grilling the executives about $18 billion in "subsidies," which are actually a tax deduction that Congress itself extended to all manufacturers, including Big Oil. And he demanded that the companies commit 10% of profits to renewable energy. (emphasis mine)
So Ed Markey (D – People's Republic of Taxachusetts) is threatening to pull the plug on a tax deduction that every other industry in the US enjoys, and is trying to extort the oil companies into investing in technologies that they are a) already investing in; or b) find are not viable at the present level of technology. Twisting the arm of any industry to force them into investing into some scheme against their will is not the best way of getting any of them to do what you want. Instead they'll spend time and money working to get around those ever so popular mandates rather than using their and their shareholder's money as they see fit, which is the right of any business as long as they aren't breaking the law.
When the oil business is in the dumps, nobody, but nobody wants to waste their time kicking them when their down. But as soon as things turn around, they become the favorite target of those same self-serving members of Congress. Never mind that far too often Congress ends up making things worse for all of us, not better.
This is one time Congress should shut the hell up and take care of far more pressing matters, like cutting the federal budget and eliminating pork. Once they clean their own house, then maybe they'll have the moral high ground. That, and maybe they should take some economics courses.