The Tax Rebate for Big Oil Conspiracy :)

I have a couple fun new big oil conspiracies. The first conspiracy relates to the self-fulfilling prophecy of $4/gal (and maybe $5/gal) gas prices. Sure, it's much less than they pay in Europe, but we're also not paying nearly the same amount on tax as they are. Anyway, my theory on these prices is that big oil is trying to soak us consumers for every last cent possible before Bush leaves office. What do you think? :)

Now for the fun one... Are tax rebates really designed to benefit the big oil companies? Check out the chart below. In it, I have plugged in some relatively average numbers for miles driven per week (miles/wk), average miles per gallon consumer by the average American vehicle (mpg), the gain in prices over a year ago (price delta), the tax rebate for a single person (tax rebate), the calculated additional fuel cost per month based on the price delta (extra fuel cost), and then the number of months that the tax rebate covers that just the additional cost (# mos covered).

(the tables assume an average of 4 weeks per month)

miles/wk 300 300 300 300
mpg 25 25 15 15
price delta $1.00 $2.00 $1.00 $2.00
tax rebate $600 $600 $600 $600
extra fuel cost $48.00 $96.00 $80.00 $160.00
# mos covered 12.50 6.25 7.50 3.75

miles/wk 400 400 400 400
mpg 25 25 15 15
price delta $1.00 $2.00 $1.00 $2.00
tax rebate $600 $600 $600 $600
extra fuel cost $64.00 $128.00 $106.67 $213.33
# mos covered 9.38 4.69 5.63 2.81

If you look through the first chart above, and skip down to the yellow-highlighted row, notice that a driver who averages 300 miles per week in an economy where gas costs $1 more than a year ago and averaging 25mpg will see that their tax rebate nicely covers the price increase over the course of the year (12.5 months, by my calculation). However, if gas prices reach $2 more than a year ago, then the rebate only covers for about half the year (6.5 months).

Note that these charts do not account for the additional derivative expenses that we see in consumables, such as food, due to the increased cost of fuel. These calculations look strictly at how the individual rebate could be construed to cover the additional costs of fuel in your personally owned vehicle.

Now, look all the way to the right column of the 2nd chart. If your driving reaches 400 miles/week and you have a relatively inefficient vehicle (15mpg on average) in an economy with gas costing $2 more than a year ago, then you're seeing less than 3 months of the cost gap being filled.

Add into this mix that a portion of your increased prices for consumables, such as food, also go to increased fuel costs, and it starts looking rather convenient. Sure, the Congress and President claim that this is an economic stimulus package, but in reality, it's nothing more than a subversive way to transfer $600/vehicle to big oil.

It makes for a nice conspiracy, don't you think? It seems unlikely that this would be the underlying thought process behind the rebates, but one does have to wonder where the $600/taxpayer figure comes from. :)

About this Entry

This page contains a single entry by Ben Tomhave published on April 28, 2008 10:12 AM.

Names Can Be Deceiving was the previous entry in this blog.

PCI App Security, Kraken Hackback Ethical Dilemma, and MS Forensics is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.

Monthly Archives


  • about
Powered by Movable Type 6.3.7