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stephen black

Your criticisms are fair but not devastating. Without quoting the likely alternative analysis the criticisms sound like an ill focussed moan about high gasoline prices.

I would be tempted to show the analysis for any European country where >60% of the retail price will go straight to government (and with little complaint as the resulting incentives to lower pollution and dependence on middle eastern oil are worth the pain). See http://www.ukpia.com/Portals/0/Repository/Documents/UKPIA%20understanding%20pump%20prices%202005%20year.pdf

Also from the point of view of retail gasoline, the breakdowns of profit/reinvestment/etc are irrelevant. The input (crude oil) is sold in a competitive market where the only cartel with market power (sometimes) is OPEC and not the oil companies. Sure they make profits, but the price is not high because they make profits, profits are high because the price is high.


I'm deliberately staying away from the politics and focusing only on the statistics.

That said, profits are totally relevant unless they change their base figure. If the base is the retail price, and if the 3 categories together add up to 100%, clearly profits need to be in the equation, otherwise, as I said, some dollars went missing.

Matt L.

In the big PDF on the API web site, there's a bar under the entire bill that says "Earnings (8.5%)" But there's no legit reason to leave that out of the main graph.

Worse, the bill is distorted! In both your image and the original PDF, the crude oil occupies 59% of the horizontal space and refining only 21%. And the thick bars muddle things further: the visible part of the bill in the refining area is actually narrower than the visible part in the taxes area!


Good catch, Matt! Now someone needs to explain where that extra 8.5% came from since the other 3 bits already reached 100%

What do you think of the Oil Poster? Curious if you had any thoughts.



I'd love to comment but even the large poster is not large enough to see what is going on. And they are selling posters so I doubt whether I can get a hold of a copy that is legible.

derrida derider

But of course any neoclassical economist will tell you that normal profit is the return on capital invested, so in this case the profits are an inevitable cost to the consumer. Indeed, some argue that a lack of past profit, and consequent underinvestment in exploration and refining, is why we're facing such a sharp spike; any super profits the oil majors are *currently* making are needed to remedy this, so these too should be seen as an inevitable cost.

I think separating out profits in this case would overly simplify what is a quite complex argument.

Don Culver

"Statistics and Liars" is one way to say it, but I prefer "Figures don't lie, but Liars can figure."



Nursing Gown

Did any of that money ever go to any human being? Isn't it sad that we have to wonder things like that?

certified nursing assistant

Wow these are popular - look at all the responses. I am going to try my level best to use them and not just keep and gloat, but will try and match them up to the recipient

which will be interesting.

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