Let me start out by saying I believe all Government subsidies should be done away with. This includes, Oil, Ethanol, etc. So I do support Democratic moves to drop oil subsidies. What I do not support is lying to the people by telling them this action will cause gas prices to lower.
However, it is hard for me to understand and believe that action will help lower oil costs and prices at the pump. In simple words, assume it costs $4.00 dollars to produce a gallon of gasoline. Assume the Government is subsidizing 50 cents on a gallon. That means it is costing the oil companies $3.50 top produce a gallon of gas. Add on a 8-10 % profit and you gallon of gas sells for about $3.80-$3.85/ gallon.
Now drop the subsidy. it now costs the oil company the original $4.00/ gallon to produce. Add on an 8-10% profit and gas now costs $4.30 – $4.40/ gallon.
So exactly how does dropping the subsidy cause gas prices to drop? The Democratic Party needs to be honest with the people. They are against Big Oil, and although I agree with the premise, dropping subsidies will not lower oil prices but in fact will raise the price of gasoline. All in a time of high unemployment and gas prices skyrocketing. The truth is, Democrats want high gas prices, as it will help their plan to develop alternative energy sites. It is estimated gas needs to be between $8.00 to $10.00 a gallon to make Alternate Energy viable. While they are doing this, the little guy, the people they claim to represent, is being crushed by the direct cost of fuel in his car. Add to this, the indirect cost of gasoline that is causing food costs to rise due to increased transportation costs. The “little Guy is hurting”.
2012 is coming!!!!