Time To Look In The Mirror

Joe Biden seems to be working hard every day to find someone to blame for high gasoline prices.

He has blamed Vladimir Putin.

He has blamed the Saudis for not pumping more oil.

He has now apparently decided to blame ExxonMobil and the oil companies for their profits being too high.

Source: https://www.foxbusiness.com/politics/white-house-shifts-blaming-putin-oil-companies-high-gas-prices-patriots

Biden is also saying that it is their "patriotic duty" to produce more gasoline.

He has even threatened oil refiners with using "emergency powers" if they don't get more gasoline supplies to the market.

The president has harshly criticized what he views as profiteering amid a global crisis that could potentially push Europe and other parts of the world into a recession, saying after a speech Friday that ExxonMobil "made more money than God this year." 

ExxonMobil responded by saying it has already informed the administration of its planned investments to increase oil production and refining capacity.

 

Of course, Biden is the same guy who cancelled the Keystone Pipeline on his first day in office and stated while he was running for President that oil executives should be put in jail for the environmental damage caused by oil and gas drilling.

Source: https://www.dailymail.co.uk/news/article-7837265/We-jail-Biden-wants-prosecute-fossil-fuel-executives-environment-damage.html

The Biden administration is also responsible for implementing regulations upon taking office that have effectively meant that at least two million barrels of refining capacity per day that we had in the United States in 2020 is no longer operating.

That puts us at about the same refining capacity we had in 2010---18 million barrels per day.

However, gasoline demand that was 18 million barrels per day in 2010 is now 20.5 million barrels.

Therefore, we need 20.5 million barrels per day and we only have the refining capacity for 18 million.

Do you see a problem?

I can confidently state that if Donald Trump was in office the oil companies would not have shut down 2 million barrels/day of capacity.

Biden and the Democrats have made the regulatory burden of operating these plants economically unfeasible.

What about the argument that ExxonMobil and the other oil companies and refiners are making too much money?

ExxonMobil's net profit margin for the first quarter, 2022 was 6.23%.

This means that ExxonMobil made just a little over 6 cents on each dollar of sales on its oil and related products.

If ExxonMobil controlled the entire supply chain from oil exploration, to refining, to wholesale distribution to retail sale (they don't), Exxon Mobil would make about 31 cents on gasoline at $5.00/gallon.

Let's compare that to the taxes that federal and state government's make on the sale of a gallon of gas.

The federal tax is 18 cents a gallon. State taxes vary from Pennsylvania's 58 cents and California's 51 cents a gallon to Alaska's 9 cents and Hawaii's 16 cents.

Most state gas taxes range between 20 and 40 cents a gallon. That means we generally pay anywhere from 38 to 58 cents in taxes on each gallon of gasoline we buy in the United States. In Pennsylvania and California, it is over 70 cents per gallon.

Therefore, government is actually deriving more benefit from each gallon of gasoline sold than ExxonMobil or any other private entity involved in the oil business..

How does that 6.23% net profit margin that ExxonMobil earned in the first quarter, 2022 compare to other high profile companies?

Take a look.

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?

Of course, Biden also seems to conveniently forget that oil companies lost massive amounts of money in 2020.

The five major oil companies lost a combined $76 billion.

ExxonMobil lost $22.4 billion for the year. 

It is really something to see Biden flail away trying to shift the blame anywhere he can.

He is a man who stated clearly he wanted to put the oil and gas companies out of business.

He stated oil executives should be in jail.

He shut down the Keystone pipeline that would have made it easier to get crude oil to refiners.

His administration has made it more difficult to drill and its regulations have contributed to the shutdown of oil refineries.

He is now surprised that his actions that have reduced supplies has resulted in higher prices and more profits to the oil industry?

The fact is that Biden and his policies have probably done more to increase gasoline prices and oil profits than anyone else.

I suggest that it is time for Mr. Biden to look in the mirror if he wants to blame someone for those high prices.