| July 14, 2001 How YOU Can Help Reduce Gasoline Prices at the Pump! This message was sent to some of our peers May 22, 2001. Since then the situation has improved. In the Chicago area prices dropped from over $2 per gallon to...well, it depends where and when you buy! Prices vary from place to place. I paid $1.195 yesterday. This message was inspired by several friends who sent me copies of a widely circulated "Lower Gas Prices!!!!!!!" e-mail. The message seemed to have a lot of merit even though Exxon Mobil says they aren't worried about it. Their response is shown below. The message got me thinking, led to some research, and resulted in the following recommendations that are followed by background information. What you can do: 1. Contact your federal Senators and Representatives and pressure them for lower gasoline prices. The federal government is largely responsible for the problem and quite likely it won't be solved without federal action. 2. Don't buy from the biggest producers except in emergencies until their prices drop at least 10% below their smaller competitors until the price for regular gasoline drops to $1.30. If you buy when prices are even with their competitors there won't be enough pressure to force lower prices. Especially avoid Exxon Mobil, BP Amoco, and Royal Dutch/Shell. People living in areas where these companies are not prominent but smaller biggies such as Chevron or Texaco are should avoid these two also unless for some reason it doesn't make economic sense for them. 3. Use transportation modes other than autos and especially the bigger guzzlers when practical. Use public transportation and car-pool when practical. 4. Don't expect others to solve the gasoline price problem unless you take action to motivate them. Most of us won't do anything to help, but if enough people DO get involved the situation will be improved. Background information including the original e-mail, Exxon Mobil's response and much more follow. == Here are some fuel tax facts from the American Petroleum Institute: "The price for a gallon of gasoline includes 43 cents for taxes. The federal gasoline tax is 18.4 cents a gallon. The national average for state gasoline taxes is 22.6 cents a gallon; the national average for local gasoline taxes is about 2 cents a gallon. The total annual gasoline tax bill for Americans is about $53 billion, including $23 billion in federal tax and $30 billion in state and local taxes. The federal tax on diesel fuel is 24.4 cents a gallon, six cents a gallon more than the federal tax on gasoline. Diesel fuel users - usually truck owners - pay $14 billion in federal fuel taxes each year. The total annual motor fuels tax bill for the nation is nearly $67 billion. That works out to about $250 for every man, woman and child; $380 for every licensed driver, or more than $670 for a family. Rural Americans drive much more than urban Americans and may pay two to three times as much in gasoline taxes. " These figures must be a little out-of-date. I have a table that includes all states as of 4/1/2001. I heard Illinois' taxes on gasoline are higher than most other states; that is not true. Also heard that when there was all that hoopla about Illinois not taxing gasoline for awhile the state only eliminated part of the tax collected by the state, not all of it. As of 4/1/2001 Illinois tax was $0.19 per gallon on gasoline, $0.21 per gallon on diesel. New York taxes $0.3095 per gallon for gasoline. So how come Midwest consumers are paying the highest gas prices in the nation? I think it must be the oil companies like ExxonMobil are making more on Midwesterners than on consumers in the rest of the country! In Alaska the gasoline tax was $0.08 per gallon, Georgia $0.075, Wisconsin $0.303, Idaho $0.25, Florida $0.136. In defense of the oil companies, API also says: "A comparison of the profit rates of the Energy Information Administration's sample of oil companies with those of the Standard & Poors Industrials over the period since 1977 shows oil company profit rates (as measured by the contribution of net income to net investment in place) averaged 9.7 percent compared to 11.5 percent for overall industry. In recent years, the profit rates of oil companies have been even lower. From 1994-1998 oil company profit rates have averaged 7.2 percent, or exactly half of the 14.2 percent average of the S & P Industrials. And the latest figures for 1999 show returns to fuel producers averaged 11.1 percent compared to an all industry average of 17.1 percent." On the other hand, Don Baker who covers technology, manufacturing and sports business for the Dayton Business Journal (dbaker@bizjournals.com or 222-6900, ext. 115) wrote: "Oil companies pump up profit ...But one thing that amazes me is the sheer amount of money being made by companies in a certain sector. I'm not talking about tech, pharmaceuticals or auto. Those are yesterday's news. It's oil -- black gold. ...ExxonMobil is the world's largest oil company, and rightly should have positive earnings -- especially since the oil companies have consumers over a barrel at the pumps. But when I read the reports about how much money the company was raking in, my jaw dropped -- $5.05 billion in profit on $57 billion revenue, and that's just for the first quarter. Imagine, at that rate ExxonMobil was earning $2.5 million per hour, 24 hours a day and seven days a week during the three-month period. That beats even the best high- priced attorney's fee. How's that compare to the biggest gorilla of them all? Microsoft, the convicted monopolist, had a comparatively paltry $6.46 billion in revenue and $2.45 billion in profit for its most recent quarter. And forget about the tech downturn, Microsoft's revenue was up from the previous year. [ARK NOTE: $2.45 on $6.46 is a lot better than $5.05 on $57, but read on.] And ExxonMobil's earnings aren't a fluke. Shell posted $12.7 billion in profit for 2000 on total revenue of $191.5 billion. Its first-quarter earnings weren't released as of press time. For the most recent quarter, Chevron reported a 53 percent surge in profit to a record $1.6 billion on revenue of $12.3 billion. Texaco, which is being bought by Chevron, reported a meager $836 million in net income for the previous three months on revenue of $14.1 billion. But don't let your sympathy for the oil companies wane too much. Despite all those barrels of cash they're making, stock prices haven't quite seen the surge many dot- coms once did. ExxonMobil has seen its stock price increase only from about $75 per share three years ago to $88 now -- with no splits. In the same three-year period Texaco's stock went from $60 to about $72, and Chevron went from about $85 per share to just below $100. So when you're pumping your $3-per-gallon gas this summer, don't get mad, realize that you're doing your part to make sure the oil companies can earn even more billions this year and see their stock prices soar as well. " == Also according to API, when the price of gasoline averaged $1.196 per gallon between 1/1997 and 9/1999: 7.3% went to profits; 18.4% to federal excise tax; 24.7% to state and local taxes; 31.8% to the cost to manufacture, distribute and market; 37.4% for cost of crude to refiners (price determined in international market). Doesn't a lot, maybe most, of the blame rest with the federal government? Why does it hit us with unrealistic environmental requirements? Why did it allow Exxon to merge with Mobil, BP to merge with Amoco, etc .? Why doesn't it put pressure on foreign oil- producing countries we defend to be more reasonable, or charge them more for defense so we could subsidize their high prices? Why did the government put strict environmental regulations on auto emissions, then allow companies to build oversize vehicles that guzzle more gas and are exempt from the emissions standards for autos? ---Original Message--- Subject: Gas Price Problems We heard today from a man who is very savy about the economy (Clark Howard-visit his website at Clark Howard.com for lots of good information) and he says that the gas prices are going to start going up again and will be high this summer-$2 and up. We need to do whatever we can. This sounds doable..... This makes more sense than the don't buy gas on a certain day routine that was going around last year. Whoever started this has a good point. By now you're probably thinking gasoline priced at about $1.49 is cheap. Me too! As it is now $1.58 for regular unleaded. Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a gallon of gas is CHEAP at less than $1.50, we need to try an aggressive response. With the price of gasoline going up more each day, we consumers need to take action. The only way we are going to see the price of gas come down is if we don't buy it. But, that's not really a practical option since we all have come to rely on our cars. But we CAN have an impact on gas prices if we all act together. Here's the idea - For the rest of this year, don't purchase gasoline from the two biggest companies (which now are one), EXXON and MOBIL. If they are not selling, they should be inclined to reduce their prices-and if they reduce their prices the other companies will too. But to have an impact, we need to reach literally millions of users. But it's doable! I am sending this note to over 80 people. If each of you send it to at least 10 more...and those 10 send it to at least 10 more and so on by the time the message reaches the sixth iteration we will have reached over one million consumers. Acting together we can make a difference. If this makes sense to you, please pass this message on, or one you compose, to at least 10 more E-mail addresses. **** PLEASE HOLD OUT UNTIL THEY LOWER THEIR PRICES TO BELOW $1.28 - $1.29 AND KEEP THEM DOWN. THIS CAN REALLY WORK. == I guess they don't care much about what happens to their dealers. Well, they've proven that many times in the past. I'm quite sure the dealers don't make much in terms of % of sales, though with high volume they should make out ok. More information about reducing gas prices can be found at http://lowergaspricesnow.com. Are we going to live with soaring gasoline prices? It's up to you. Allan R. 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