Making A Bad Situation Worse

As of April of this year, California had the highest gasoline taxes in the nation [51 cents per gallon (article here)]. Now Governor Newsom is going to do something that will increase the pain at the pump for Californians.

On Sunday, Townhall reported:

Just when Californians thought they were getting a break on high gas prices, they shot up again, hitting $7 in some areas. 

Gov. Gavin Newsom (D-Calif) called for an emergency session of the state legislature to propose a tax that will rip off what he calls the “greed of oil companies.” 

“I’m calling for a Special Session to address the greed of oil companies. Gas prices are too high,” Newsom tweeted, adding “time to enact a windfall profits tax directly on oil companies that are ripping you off at the pump.” 

The oil companies are not ripping you off at the pump. The higher gasoline prices are caused by the Biden administration’s war on fossil fuel and by The Organization of the Petroleum Exporting Countries (OPEC) deciding to reduce production in order to keep prices high. The Biden administration has done what it could to limit lending to oil companies while also limiting their ability to drill for oil. It has also stopped pipelines that cheaply and safely move oil from one place to another. The rise in prices at the gas pump are simply a reflection of the economic principle of supply and demand. Governor Newsom either never studied economics or chooses to ignore what he learned.

Remember, corporations do not pay taxes–their customers do.

The article notes that the Governor was mocked on Twitter for wanted to raise the tax on oil companies. At least some people on Twitter understand the economics of the issue.

The article concludes:

Meanwhile, California Assembly GOP leader James Gallagher and Vince Fong, the Assembly Budget Committee vice chair argued for Newsom to not call for the special session. 

They said that lawmakers should suspend the state’s gas tax if the governor does take this action. 

Stay tuned.

Are Oil Companies Really The Greedy Ones ?

Below is a chart from the American Petroleum Institute showing gasoline taxes acoss the country.

Oil companies produce a product. They employ people in the production of that product. What oil product does the government produce? It would be interesting to compare what the oil companies make on a gallon of gasoline versus what the government makes on a gallon of gas.

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