Wednesday, May 30, 2007

Fractured Fairy Tales, Part 1: Minimum mark-up

When gas was a buck, Big Oil was mandated to make at least 9.2 cents in gross profit per gallon and was happy.

Gas is now $3.50 and Big Oil is mandated to make 32.1 cents per gallon in gross profit in Wisconsin. Big Oil is very happy.

Would Big Oil be happy with 30 cents a gallon? Probably.

How about 25 cents? Maybe.

$0.20 per gallon? Possibly.

But we will never know. Because Big Tax mandates that Big Oil mark up the motor fuels it sells in Wisconsin by at least 9.18%.

The fact that Big Oil is making 32 cents per gallon upsets Big Tax. Big Tax says that 32 cents per gallon is an outrage, Big Oil does not deserve that much profit.

Big Tax has the ability to reduce the amount of profit that Big Oil is making in Wisconsin. Big Tax can simply repeal the State’s minimum mark-up law and Big Oil will sell it's fuels for less.

But Big Tax says, “I am the Gatekeeper. This cannot be done. Big Oil must reduce it’s profit without reducing it’s mark-up."

Big Tax intends to punish Big Oil for following the laws imposed by Big Tax. Fortunately for Big Oil, but unfortunately for you
and me, the only entity that Big Tax answers to will declare that Big Tax cannot punish Big Oil. The punishment will be paid by you and me.

Meanwhile, Big Tax has dislocated a shoulder patting his own back for punishing Big Oil.

Elsewhere, African American Alderman Michael McGee claimed from his Milwaukee County jail cell that racial bias was behind his Federal prosecution for bribery and extortion. He said he was only following the spirit and example of Caucasian Governor Jim Doyle in finding ways to creatively enhance revenues.


Anonymous said...

I thought the 9.2% was cumulative in that the wholesaler has to sell for x% over what he pays Big Oil, the retailer has to sell for y% over what he pays the wholesaler, and x+y=9.2. If that's the case isn't Big Oil's profit the difference between cost and what he sells it to the wholesaler for, and unrelated to the 9.2%?

Headless Blogger said...

Point taken. Although in some cases I believe Big Oil is a party to each of those transactions.

Wait until you see what I do with my analysis of the Gross Receipts Tax.

Dad29 said...


Is the Nuker Industry still trying to source fissile materials from Russia?

Headless Blogger said...

Dad - I have not heard much about that since beginning my life on the road (I no longer sit adjacent to the fuelies), but I think plans are still going forward. A couple operators (Dominion was one) had started the licensing process to use dimilitarized weapons grade fuel in their reactors.

If you search for "mixed oxides" you will get a load of hits on this topic.

Dad29 said...


My old pal EJL borrowed my Russian textbooks in prep for a trip he was taking over there on this program...