CONGRESS BARKING UP WRONG TREE
By Bob Confer

Just two weeks ago the United States Senate took up arms against Big Oil yet again, bringing together representatives from a half-dozen of the biggest petrol players in America. Executives from Mobil, Chevron, and other firms were browbeat by Charles Schumer and the rest of the Judiciary Committee regarding the escalation of gas prices and the possibility that there exists industry-wide price fixing.

These hearings made for great press and even better drama, but substance was lacking. As much as government would like to point the finger at oil execs and blame them for the regular drubbing of the American populace’s pocketbooks, the real problem of rising prices is not with the oil industry. In part, it’s in the laws of economics. In most cases the industry’s prices fluctuate based solely upon market factors including supply, demand, and their associated forecasts. Were the government to seriously dictate to the oil industry as to how and what to sell, it would be greatly overstepping its bounds and ruining all tenets of sound economic policy.

The truth be told, government already is overstepping its bounds in the petroleum market.

The true evil – the greatest evil - in this mess is heavy-handed governance. What would have made these senatorial hearings more appropriate and worthwhile to the issue at hand would have been Big Oil turning the tables and asking Big Government, "what are YOU doing for the consumers?" When it comes down to it, Congress is the problem. State governments are the problem. County governments are the problem. Gas prices as a whole are unrealistically high and have always been so due what is over-taxation occurring at all levels of government. And, as is par for the course, New Yorkers suffer the most.

This situation has become a tragic afterthought to consumers, as most are completely unaware of how massive the tax burden is. They know it exists but assume it’s only at a level comparable to the state and local combination festooned upon durable goods. It’s so much more. The federal government places a fixed 18.4-cent levy on every gallon of gasoline. That is an incredible level of taxation in itself, but realize New York State takes it to another level. The conglomerated burden created by New York State (based upon all levels of excises and taxes) is another 44.5 cents per gallon. Therefore, the total tax-per-gallon burden in New York is a staggering 62.9 cents. This makes New York the most-heavily taxed state in terms of gasoline, a few cents ahead of logistically-impaired Hawaii, twenty cents ahead of the national median of 41 cents and a wild 36.5 cents ahead of Alaska, the least-taxed state.

New York is just plain gluttonous in this matter. Rather than taxing upon volume like the federal government, the state and local entities within the Empire State tax consumption based upon dollars spent. This means that the big spenders in New York government are tickled pink when gas prices rise, because it means greater revenues for the state. As a matter of fact, the state was estimated to receive a $100 million windfall in 2005 thanks to heightened gasoline prices.

Even more indicative of how dirty Albany is, New York is one of only three states that have the audacity to tax the dollar value of federal taxes that are already placed on the gasoline. Simply put, the State is guilty of double taxation.

So, before you get too fired up at the oil companies while you’re at the pumps paying over $2.50 for a gallon of gasoline, rethink your rage. Think about Uncle Sam. Think about New York State. Think about how they are the ones who have been hurting consumers and how they will continue to do so for years to come. If they were serious about protecting hard working American families from high gas prices, the powers-that-be in Washington and Albany would be looking in the mirror and not pointing their fingers at the oil execs they are using as their scapegoats.