Joe Biden has now decided the answer to high gasoline prices is for the gas station operators to lower their prices.
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| Source: https://twitter.com/BonginoReport/status/1539694149754134528 |
He suggests that it is some sort of patriotic duty to do so.
This is what Biden said Wednesday on the subject of high gas prices.
To the companies running gas stations and setting those prices at the pump: This is a time of war, global peril, Ukraine. These are not normal times.
Bring down the price you are charging at the pump to reflect the cost you are paying for the product. Do it now. Do it today. Your customers, the American people, they need relief now.
As usual Biden (or whoever wrote the speech) is factually challenged.
They also clearly do not read Barron's or know much about the economics of the gas station or oil business,
Most gas stations (57%) are owned by individual operators. They are not owned by companies or giant corporations.
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| Source: https://thehustle.co/the-economics-of-gas-stations/ |
Most major oil companies have backed out of the retail gas station business because it isn't very profitable.
In fact, ExxonMobil, which Biden has recently been criticizing almost daily, got out of the retail gas business in 2008.
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| Source: https://www.nbcnews.com/id/wbna25126563 |
The ExxonMobil stations you see are usually owned by individual operators or retail distribution chains that license the name and buy their products from ExxonMobil.
According to IBIS World, gas stations makes an average profit margin of just 1.44% on their fuel sales.
ExxonMobil had a net profit margin of 6.23% in the first quarter, 2022. It would have been lower if it was still in the retail gas business.
Gas stations make the bulk of their profits on what they sell inside---sodas, lottery tickets, bottled water and candy.
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| Source: https://thehustle.co/the-economics-of-gas-stations/ |
When will Biden ask Coca Cola and Pepsi to lower their prices or for gas station operators to cut the cost of those soft drinks in half?
I continue to be amazed that Biden is directing all of his focus on inflation on the supposed outrageous profits of oil companies and gas station operators but seems oblivious to the profit margins of companies like these.
Pfizer 30.65%
Alphabet (Google) 24.17%
Meta (Facebook) 26.75%
Netflix 20.30%
Tesla 17.69%
(All data from Google Finance)
How come Biden is not calling on these companies to reduce their prices to lower their profits?
Biden's strategy on gas price inflation also includes asking Congress to provide a 90-day suspension of the federal gas tax of 18.4 cents per gallon on gas and 24 cents on diesel fuel.
I don't even understand why Biden thinks he has to ask Congress to do this. If he believes he has the authority to cancel $10,000 or more of student loan debt per person why would he not just go ahead and sign an executive order and suspend collection of the gas tax?
(Interesting sidetone---the federal gas tax suspension would cost the federal government $10 billion compared to a $321 billion price tag for cancellation of $10,000 of student debt for every borrower).
Of course, the real question is how is suspending the gas tax for 90 days going to solve anything?
Isn't it something like this?
There is only one rationale for even suggesting it.
It is called POLITICS.
How do I know it is just about politics?
It is because a consummate politician told me it was.
He called it a political stunt.
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| Source: https://twitter.com/Forbes/status/1539658221861740544 |
If you wonder why Biden is not following the advice of his friend Barack Obama you need only look at this recent Gallup poll.
There is outright panic in the White House right now.
87% of Americans think the country is headed in the wrong direction.
76% of Democrats hold that view as well.
I want to find someone that is in the 13% that thinks we are headed in the right direction.
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