I was under the impression that nearly 50% of what we pay @ the pump was ALREADY taxes....

Increased gas taxes won't cause shortages ; rather, they will kill the economy.

The just-passed sudden shortage is a nice illustration of the effect. There the prices were not set by the oil companies but by the consumers, bidding against each other for a limited and unexpandable supply. The price rose until enough people in fact cut back that there was a match of supply and demand.

Georgia stupidly proposed eliminating the gasoline tax to ease the price pressure. That has exactly zero effect on the price! The price paid by the consumer that's necessary to choke off demand is not changed by it. All eliminating the tax does is move more windfall profit to the oil companies from the (state) government, beyond the control of the oil companies entirely.

Exactly conversely, if you raise the tax, it moves windfall profit from the oil companies to the government, but has zero effect on the price.

But that's just for a fixed supply, ie. short term.

Taxes long term, in affecting profit and profit expectations, change the supply downwards, which is not the effect you want. The price will rise until that reduced supply supplies the reduced demand.

But since the demand is reduced, the economy is operating at a lower level than otherwise, and that's more or less Q.E.D at that point.

If you want tax revenue, it matters a lot where you get it from. The economy can bear a lot of burden if it's applied adroitly, which a gas tax does not do.

It's time to argue publicly that windfall profit is far from a problem (the problem here was reduced supply, not profits ; and profits solved the distribution problem that reduced supply produced). As a reflex, throw out the politicians who suggest windfall profits tax. If you're interested further, study economics.

Inventory profit : no. It was a real profit, albeit non-recurring so not of much use to the oil companies compared to the usual PR nightmare. It won't affect the value of the stock, in other words.

They still own the cheap wells and don't have to pay a higher price for oil to replace the current inventory.

The correct argument is that the oil company did not set the price - the consumers did. Their having a profit as a result is not proof that they're screwing the consumer unnecessarily. No lower price would have worked because there would be no gasoline to buy at a lower price.

The rationale for the tax is to get oil companies to lower their price, which is basically a price control. The shortage comes in when at some point oil companies stop selling because it's actually costing them money for every gallon/barrel they sell.

You want lower gas and energy prices? We have to do some combination of two things:

1) increase supply: not terribly difficult--drill ANWR, off the coast of CA, increase drilling on federal lands in the Rockies, and increase deep water production in the gulf of Mexico.

2) Reduce demand: even though renewble energy sources are more expensive today than tradional means, that differential is closing. Fast. More windmills, hydroelectric, and perhaps in the future even more solar. Additionaly, more nuclear power, please. Much of the crude we use as a nation is used in power generation and that's just silly.

These are all fairly easy steps we could take today without waiting for the 'hydrogen future' or some other nonsense...steps for today that would lower the price of energy untill the alternative means could be found (we need incentives for that, too--tax cuts, not hikes). What's stopping this? Environmentalist wackos and their limosine liberal buddies. Blame them, not oil companies.

There's no way a tax will lower prices. It will lower supply, and lower consumption, and lower oil company profits. The price will unambiguously rise, however, except in the short term in the case of a supply blockage, where the price will not change.

There will be no shortage precisely because the price is not controlled. You can't have a shortage. You can get all the gas you want. You just want less.