To: TimF who wrote (375333 ) 3/31/2008 2:37:30 PM From: Road Walker Read Replies (1) | Respond to They reduce what the company can sell its product for. If consumer demand is such that gasoline can be sold for say $3.30 a gallon. And the taxes are 40 cents a gallon (a number picked to use in the example, I'm not saying its necessary the actual amount of tax), the sale price before tax may be as low as 2.90 a gallon. The company probably doesn't take a hit on the whole 40 cents, but they almost certainly take a hit on at least part of it. And even considering the part that does fall on the consumer, that's an example of government making the money from the oil market even if not from the oil companies. Its taking the profit, rather than having the money go either to company profits or consumer surplus, and the amount that it takes is greater than any subsidies for the oil companies, and also greater than the oil companies profits.
