What also costs you at the pump

April 24, 2011

In the last post, I explained how basic economics and Democratic policies are what’s behind the sharp rise of gasoline prices. But there’s another factor to consider, one that acts as a buffer to keep your fuel bill high: taxes. The combination of federal, state, and local taxes adds up to a considerable portion of the price you pay.

Here’s a map from the American Petroleum Institute that shows the average tax burden in each state; the national average is 48.1 cents per gallon:

Click the map for the full-sized PDF

So keep this in mind, the next time your eyes bug out at the price on the pump: a huge portion of the money you’re shelling out is due to government actions that distort supply-and-demand — and the punitive levels of taxation in many states*.

*Once again, California is a leader. D’oh! 

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Gas prices: Democrats think we’re idiots

April 24, 2011

You may have noticed that gas prices have gone in recent months — 30 cents per gallon on average in the last month alone. Since rising gas prices tend to hurt the party in power, the Democrats have decided the answer is not to do what it takes to bring prices down, but launch a witch hunt. Connecticut’s Senator Richard Blumenthal (D)(1) has gone so far as to suggest a grand jury:

Sen. Richard Blumenthal (D-Conn.) on Sunday called for an aggressive federal probe – including a possible grand jury – into whether rising gasoline prices stem from illegal manipulation of energy markets.

President Obama and the Justice Department last week announced a multi-agency task force to explore whether there is price manipulation or fraud afoot, and the role of speculative trading in energy futures.

Blumenthal, Connecticut’s former attorney general, said on CBS’ “Face the Nation” that federal officials need to play hardball.

“I commend and applaud the president for focusing on this issue but I think there really needs to be an investigation involving, for example, subpoenas and compulsory process which I used as attorney general in similar investigations. There needs to be very possibly a grand jury to uncover the potential wrongdoing,” said Blumenthal, who was elected to the Senate last year.

“The Justice Department should take the lead, seize this moment and send a message, a very strong deterrent message that this country will not tolerate the kind of illegal speculation and trading and hedge fund activity that may be driving prices up,” he added.

I’ve often said that to be a liberal Democrat or progressive requires one to surrender any knowledge of basic economics and embrace ignorance, but I don’t think Blumenthal is ignorant, here. Rather, as gas prices approach $5 per gallon in some parts of the country, Democrats, and Blumenthal is just the latest example of Democratic demagoguery on this, have resorted to blaming witchcraft greedy oil companies and wealthy people(2), because they dare not admit as we head into election season that, in accordance with immutable economic laws(3), their own policies have largely contributed to the rise, thus making the voting public miserable and likely to take it out on Democrats.

Let’s review:

First, several of the major world suppliers of oil (aka The Middle East and North Africa) are undergoing a period of turmoil and revolt that makes oil supplies uncertain. This potential for disrupted supply means that buyers (us included) have to pay more to compete for oil from other areas, because of the greater demand.

On top of that, thanks to the Luddites of the environmental movement, the United States has failed to extract enough of its own oil and refine its own gas to keep up with its needs, thus meaning we need to buy more on the open market, further driving up prices.

This is something called “supply and demand,” a law the Democrats just hate, because it makes them face the consequences of their actions, such as:

  • A deliberate policy of seeking gas prices that match the obscene amounts charged in Europe.
  • A “permitorium” meant to block almost any new exploration and drilling off our coasts or on land, even in defiance of a federal judge’s order, while at the same time driving up the cost of doing what business is allowed — or even when doing nothing.

These and other administration actions —deliberate choices done in full knowledge of what will happen– drive up the price of fuel for all of us. The Democrats know this and they know the public will get angry and thus hammer them on Election Day because of it.

Hence the appearance of tools and flunkies like Blumenthal on the talk-show circuit, trying to distract us by blaming corporations, “speculators,” and price gougers for a problem they themselves set in motion. They’ve taken their lead from Obama and, dagnabbit, they’re going to follow it right off that electoral cliff.

Go ahead, guys, treat us as if we’re ignorant rubes, and then the adults can clean up your mess when they take charge in 2013.

TANGENTS:

(1) As if we’re supposed to trust a guy who lied about his service in Vietnam.

(2)I wonder if this includes the wealthy who paid $38,000 per seat at Obama’s recent fundraiser?

(3)Liberals and other Leftists just hate these things, because they’re mean and make them face reality.

(Crossposted at Sister Toldjah)


Restraining Leviathan III: when the IRS goes wild

April 24, 2011

Here’s a question, the answer to which may just be a hearty “WTF?” Why does the IRS want to turn US banks into deputy tax collectors for foreign governments?

Under a proposed regulation, the Internal Revenue Service would order banks to report interest on deposits from foreign investors, not to the US government, but to the home government of the depositor.

What’s the problem, you ask? There are five, but I’ll list two here:

  1. Foreign depositors have put trillions of dollars in US banks because of the very fact that we don’t report interest payments to their governments. Yes, it’s tax avoidance on their part, but the moneys deposited here help grow our economy through loans and investment capital. If this regulation is enacted, foreign depositors will have every reason to move their fortunes elsewhere, to places like Hong Kong or the Caymans, which don’t threaten to rat them out to their governments. That loss would be a tremendous blow to our already ailing economy and banking sector.
  2. Even worse, this regulation overturns established US law. Congress mandated this safe-harbor for foreign deposits 90 years ago in recognition of the benefits an inflow of capital would bring, and that law has been reaffirmed by our democratically elected legislators at least twice since then. Yet now a bureaucratic agency want to undue laws enacted by the legislature through simple fiat.

WTF, indeed.

Dan Mitchell of the Cato Institute has produced a video that goes into these and three other reasons why this regulation shows the IRS is Stuck On Stupid:

This proposed regulation and the harm it will do have attracted the attention of Congress, who’ve reacted in bipartisan opposition to this dumb idea. For example, Senator Rubio said in a letter to President Obama:

At a time when unemployment remains high and economic growth is lagging, forcing banks to report interest paid to nonresident aliens would encourage the flight of capital overseas to jurisdictions without onerous reporting requirements, place unnecessary burdens on the American economy, put our financial system at a fundamental competitive disadvantage, and would restrict access to capital when our economy can least afford it. …I respectfully ask that Regulation 146097-09 be permanently withdrawn from consideration. This regulation would have a highly detrimental effect on our economy at a time when pro-growth measures are sorely needed.

You can read more reactions to this bureaucratic usurpation at Mitchell’s International Liberty, though I have no doubt the statists in the Congressional Progressive Caucus think it’s just peachy.

LINKS: Other posts on Leviathan government.

(Crossposted at Sister Toldjah)