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Government's Demonization of Capitalism

2/17/2012

 
The government enjoyed the billions of dollars of tax revenue being paid by the auto industry so much so that they wanted to limit the restrictions on emissions to lower their costs and sell more cars. Then when the political wind shifted with the Global Warming initiative, next thing you know the politicians viciously jumped on the auto industry for what they were doing to the environment.

They knew that methane gas is 23 times worse on the ozone than auto emissions. This equates to having to drive 12,500 miles in your vehicle to match the methane gas each cow releases. There are over a 1 billion cows on earth. So instead of sharing the truth that driving electric cars and reducing emissions would only put a dent in Global Warming, they tried to act like they were fighting for us in taking on the auto industry.

Another very important thing to think about is that we aren’t the industrialized nation we used to be so we couldn’t positively impact Global Warming as well as other countries like China and Taiwan.

The government received billions of dollars of tax revenue from the tobacco companies. Are we to believe that none of them knew that smoking wasn’t healthy? Are we to believe they didn’t know hundreds of thousands of people were dying each year from lung cancer?

Once again, as soon as the political winds shifted the politicians tried to distance themselves from the very industry they supported. They put on displays of being absolutely disgusted with the tobacco companies when in fact they loved them because of the revenues they were getting. Plus before they turned on the tobacco industry they enjoyed a lot of entertainment provided by them including trips on their corporate jets.

The oil industry makes a 6.2% net profit margin which ranks 114th out of 215 industries. Below are some of the profit margins in various industries:

    Publishing (Periodicals) = 51.7%

    Application Software = 21.7%

    Beer Brewers = 16.5%

    Drug Manufacturers= 15.4%

    Beverages: Soft Drinks = 14.3%

It’s very expensive to produce oil and gas; these are some of the reasons why:

There’s a tremendous amount of research that goes into site selection. This is especially expensive because it requires a lot of engineers and scientists. 

A construction platform is built and the equipment necessary for drilling is purchased and put into place.

Crude Oil is pumped from the ground then put on cargo tanks and sent to the applicable ports. 

Oil is then pumped out of the ships’ tanks into trucks that move the oil to refineries.

The oil is processed: broken down chemically to meet several different needs (i.e. crayons, gas, motor oil, kerosene, resins for plastic, synthetics fibers, tires, etc.). 

Oil Companies vs. Bottled Water Companies

Oil companies charge less than $2.80 a gallon before taxes by the federal and state governments are tacked on. These taxes include a state tax that averages $.31 cents a gallon (NC $.35) and a federal tax that is $.18 cents a gallon. Gas stations don’t mark up gasoline very much because the sheer volume of gas purchased takes care of their needs.

This is a very important point: It would be very difficult for us to find any product (i.e. juice, milk, water, etc.) that is less than $2.80 a gallon. The bottom line is that oil companies aren’t gouging us but other companies like bottled water providers are. 

Coke Cola (Dasani) Pepsi (Aquifina) make a 35% margin on bottled water; this is six times higher than what oil companies make. The following are the components of producing bottled water:

Somewhat comparable to the oil industry in that water is a natural resource; but keep in mind they don’t have to drill in the ocean to get it. Some companies purchase their water and some of them use wells the company owns.

The water is pumped out of the ground onto trucks that deliver them to the processing facilities.

The processing facilities have a filtering process to get rid of impurities. The reason Aquifina and Dasani taste a little different is directly due to the type of purification system they use.

This process sounds a lot easier and much less expensive than the processing of oil.

Oil companies charge around $2.80 a gallon and only make a 6.2% profit margin. If we average the cost between Aquafina and Dasani and convert their 20 oz. bottles into an equivalent gallon they would charge $9.60 a gallon and make a 30% margin. With taxes the amount we’d pay at the pumps would be $10.13.

Bottled water companies did around $60B in U.S. sales which means around $18B in profit. If an oil company did the same volume they would make $3.7B because they don’t charge the consumer as much for their product.

Bottled water is a much less expensive to manufacture yet Coke and Pepsi charge much more for their product than what oil companies charge for gas. Politicians should stop demonizing the oil industry and go after Coke and Pepsi instead. Politicians won’t do it because it’s much easier to invoke emotions if they go after big oil because they reference the billions of dollars oil companies make which is only due to the significant amount of oil used in our country.

Don’t you find it interesting that our legislators always try to create an appearance they are David taking on Goliath? Think about this:

If they stated the greatest problem in Global Warming was methane gas from cattle (i.e. Dairy & Meat) then it wouldn’t be an issue they could make political points with. They certainly weren’t going to tell voters that it’s our fault and that we should stop consuming dairy products and stop eating meat. 

The tobacco industry was such an easy target. Did you hear any of the legislators say that smokers were partly to blame? I was trying to get my dad to quit smoking over 30 years ago so either I was a medical visionary or I already knew data existed that proved smoking caused cancer. Our politicians played to the masses instead of letting people know that we should share in the blame. It certainly isn’t a good vote-getter for them if they say everyone is to blame.

It’s easy to villainize the Oil Industry when the legislatures can talk about the billions of dollars these companies are making and how their greed is out of control. Unless they’re all absolutely stupid my guess is they knew the oil industry wasn’t taking advantage of consumers; they just made for an easy target. I don’t know about you but it worked in my circles. All of my friends and family members were disgusted with the oil companies’ greed. We didn’t know the truth because we let our politicians and the media dictate our thoughts.

  “A lie can get halfway around the world before the truth has a chance to get its pants on.”  - Winston Churchill


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    Author: John Mann

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