Thomas Sowell asks if thinking has become obsolete.

I doubt if this is a new phenomenon. I suspect that it's been a problem down the ages, as have many aspects of human nature.

[Update a couple minutes later]

More evidence for my proposition.

Sowell writes: "If oil company profits are "obscene," as some politicians claim, are the government's taxes PG-13?"
Going by Dante's map, I'd classify them as products of the Eighth Circle of Hell, Seventh Bowge - the eternal destination for thieves.

No stop signs, speed limit, nobody's gonna slow me down...

Sowell's column really misfires there. For starters, he takes a shot at "media loudmouths.. and the multibillion dollar TV networks" for not doing any analysis about oil profits. But he fails to do any himself, at least to the point of getting actual data.

He asks a number of rhetorical questions, such as if the profit per gallon of gas were reduced to zero if it would reduce the price by even a dime. But then he never provides an answer. Nowhere does he indicate what the profit percentage is for oil.

Now this is actually a pretty complicated issue, because profit is being taken at multiple levels--the company that drills the oil, the refinery that turns it into gasoline, the distributor (not to mention various brokers in between), and the guy who operates the gas station. (They're not always the same. Some oil companies are vertically integrated, with the same company doing the drilling, refining and distribution. Others are not.) Each one is earning _some_ profit. If you eliminated the profit from all those levels, the price would certainly drop, although it would take some sophisticated analysis to determine by how much--analysis that Sowell doesn't bother to do while criticizing others for not doing it.

One thing he also leaves out is the fact that oil companies may earn high profits now, but they have also had very lean years in the past. Those who call for hitting them for "windfall profits" had no sympathy for the oil companies when they were barely covering their expenses.

He states that "the government collects far more in taxes on every gallon of gasoline than the oil companies collect in profits." There are a couple of problems with this assertion, starting with the big one--at no time does Sowell provide the reader with profit percentages and tax percentages for a gallon of gasoline. His assertion may be true, but where are the numbers--the analysis that he says is sorely lacking in this debate? How do we know that profits are not 12% and taxes are not 10%? He simply asserts that taxes are greater than profits.

The second problem is that at least some taxes are fixed not at a percentage point, but at a dollar point. In other words, the tax is not, say, 10% of every dollar, but 10 cents of every gallon, regardless of the cost of that gallon! This has resulted in some state and local governments getting nailed as the price rises, because their gasoline costs (for police cars, utility trucks, etc.) have gone up, but their revenue from taxes has remained fixed. The economic consequences of that are also clear too--as the price goes up, the oil companies get higher profits, but the government does not get higher revenue, and actually takes a hit with their costs. And from a purely statistical point of view, the government percentage of the price can drop below the company's profit percentage of the price.

Sowell's overall argument is correct, and it is worth noting that many industries have higher profit margins than oil companies (greeting cards, for instance--but nobody seems intent upon a windfall profits tax aimed at Hallmark). However, this is also a rather dumb argument for conservatives to try to rally around. I've heard Rush make a case out of it too. But do Republicans really want to be known as the party that is defending record oil profits? They need to pick a better issue to take a stand on than defending oil companies.

Surely the ancient philosophers complained about the same thing. I doubt thinking will ever become obselete, but I imagine it will always be convenient for some to encourage as much unthinking behavior as possible.

The real problem with this mess is the same problem with unions, entitlements, and socialism: motivation. Why on Earth would I work hard (90% of the accomplishments of humans being done by

You reward work based on value creation. Period.

at no time does Sowell provide the reader with profit percentages and tax percentages for a gallon of gasoline.

Chevron has a chart showing April 2006 gas taxes for each state (and the Dictrict of Columbia) here (its source is the American Petroleum Institute). Tax rate per gallon ranges from 26.4 centa (Alaska) to 67.9 cents (New York).

Funny I should post here and then open up my local newspaper to see a full-page ad paid for by the American Petroleum Institute on "Where does your gasoline dollar go?" It states that 55% goes to crude oil, 26% to refining, distribution and service stations, and 19% to taxes.

Of course, that somewhat sidesteps the issue of profits, because the profits are actually contained in the first two percentages (55% and 26%). We don't know how much profit is buried in there, and certainly it varies by time and company (for instance, a company that both pumps and refines its oil can take profit at multiple points in the process). If a company can pump the oil really cheaply, then they naturally make a lot of profit (both in absolute terms and percentage) when the price goes up.

One thing I was surprised to learn (not from this discussion) is that independent gas station owners have really thin margins. If they're not careful, they can end up selling at below cost and losing money.

Tom, that's why you almost never see a gas station in the U.S. that isn't also a convenience store.

Most stations use the availability of gasoline, and the advertised price, as a means of luring in customers who -- they hope -- will also come inside and buy soft drinks and prepared foods on which the margin is much wider.

It works because by the time you've pumped the gas and walked inside, the idea of walking out and driving across the four-lane highway to the other one in hopes they'll charge you a dime less for a Big Gulp, is simply absurd.

Yes, I know that is why they sell other goods like potato chips and cigarettes--especially cigarettes. It's like movie theaters selling candy. What I did not realize was how _much_ thinner the profit margin on gasoline is for the station owners. But this is also a case of instability hurting them as well. When the price is steady, then the station owner faces little risk. But when the price rises rapidly, sometimes twice in a single day, the station owner has a harder time staying ahead and they can lose a lot of money.

According to an article I read last year, gas station owners are caught by another squeeze factor when prices rise - the cost of credit card transactions. Typically, a gas station might make somewhere around 10-20 cents per gallon in gross profit. However, a high percentage of gas purchases are made by using a credit card and those companies charge the vendor around 3% of the transaction cost. That being the case, when gas prices rise, so does the cost of the credit card transaction (9 cents per gallon if the cost is $3 a gallon), really eating into the gross profit.

There's another thing that a lot of people don't seem to understand - when the prices are rising rapidly, the seller has to raise his prices accordingly in order to make his next purchase. Consider what happened last year when Katrina hit - prices jumped very rapidly. Suppose a vendor bought a load of fuel for $2 a gallon, only to find out that his next load was going to cost $2.50. He'd be crazy to charge less than $2.50 a gallon on his current gas because he wouldn't be able to afford his next shipment. Without that next shipment, his tanks would soon be dry and he'd be out of business.

Tom, your comment has some validity, but honestly, how much can you expect to fit into an op-ed column? Your comment alone is a significant fraction of the column's length...

Tom,
With those record earnings came record income TAX payments. For Exxon that was 47% so another 3% would be dollar for dollar. Not to mention taxes on the royalty payments, higher sales taxes, excise taxes and any other dollar related tax, 3% at least I'm sure. There is something else those media loudmouths, and there are plenty of them, won't mention.

"but honestly, how much can you expect to fit into an op-ed column?"

How about: "According to the Department of Energy, 19% of every dollar spent on gasoline goes to federal, state and local taxes. According to the market analysis firm ??, approximately XX% of every dollar is profit made by the oil companies, refineries and distributors."

See? That's the kind of analysis that Sowell chastises others for not doing, but then he fails to do himself. I imagine that with a few hours of research, he could have turned up some hard numbers to put in his column. And he could have put that information into his article in only a few sentences.

Wow, come up with a headline line like "Is Thinking Obsolete?" and some rise to the occasion to prove it correct. Present an op-ed pointing out that people respond emotionally, and you get a heated debate about how the work wasn't cited enough.

Logically, if Sowell is making an argument that people respond emotionally rather than considering the facts rationally, exactly how responsive would a technical explanation be to his audience? I have heard the numbers many times, and I can't convince people who read only headlines to understand. I know people that are upset that MI:III only grossed $47 million domestically ($127 million world wide), yet believe the oil company profits are too high.

I agree that emotion is utterly worthless and counterproductive. It should be excised from humanity and all of us turned into Vulcans.

"Present an op-ed pointing out that people respond emotionally, and you get a heated debate about how the work wasn't cited enough."

Heated debate? "Heated"? Did you see anybody swearing or tossing insults? Anybody using all-caps? Nope. So it has been a respectful discussion.

And my point is that Sowell doesn't make a very good argument in his op-ed. I pointed out the rather obvious fact that while he criticizes the media for not doing any analysis of the gasoline price issue--and here is the key point--he doesn't do any real analysis himself. That's not an emotional argument, it's a pretty straightforward comment on Sowell's piece.

"Logically, if Sowell is making an argument that people respond emotionally rather than considering the facts rationally, exactly how responsive would a technical explanation be to his audience?"

That makes no sense at all. You essentially seem to be saying that Sowell believes that people respond emotionally to issues, not analytically, so therefore Sowell does not have to make an analytical (technical) commentary. In essence, you're arguing that "Jane, you ignorant slut" is a valid counterpoint response. But that's not what Sowell is saying at all.

Indeed, Sowell didn't say "Jane, you ignorant slut", instead he said "Is Thinking Obsolete?" Tom, how do you say tomato?

As a great man once said, I may make you feel but I can't make you think.