Monday, May 08, 2006



Over the last week, oil prices have come down roughly five dollars a barrel. Later this month, gas refineries in the process of refitting will come back on line. Together, the price of gas should drop back down to the $2.50 range or lower. However, demand will increase when summer driving starts, pushing prices back up slightly.

What does this mean for us in the long run? If we had drilled in the ANWR back in the early 1990's like many Republicans suggested, prices would be 50 cents to a dollar cheaper now. If we were drilling off of the coast of Florida, California, and Oregon, as many Republicans suggested in the early 1980's, we could knock another 50 cents off of the price. But the biggest problem is, and always will be, the taxes on gas and oil.

When all of the taxes are taken out(every tax from exploration to the gas pump, including employee taxes and transportation taxes)the cost of a gallon of gas drops dramatically. Factually, the highest profits on a barrel of oil, and ultimately on gas, goes to the federal and state governments. The oil companies make nine to ten cents a gallon on gas. The gas stations average even less than that. Their profits come in the quantity sold. But, that quantity also adds up for government coffers.

If our government leaders were serious about getting the cost of gas and oil under control they would cut all of the taxes on the processing of oil to gas, star drilling in ANWR and off the east and west coasts, and negotiate a deal with Russia to put them in direct competition with OPEC. The tax change would have an immediate impact, the Russia negotiations would make short term changes, and the domestic drilling would have long term effects. While we are at it, let's quit selling the oil drilled on the north slope of Alaska to Japan. That should be used domestically.

If we compound this with ecological changes and real research into alternative fuels and methods, we can get transportation back to affordable levels thereby strengthening our economy into the foreseeable future.

arkansas newspaper
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