Gas price naturally at $3.70??

CNN article on gas subsidies affecting world prices.

One consultant claims that the US price of $4.10, minus the $0.40 cents paid in taxes would indicate a "natural" gas price of $3.70.

I really hope this is a case of the writer inferring something extra, because if the consultant really believes that $4.10 is a true indicative price of gasoline, he's either lazy or stupid.  But he did get his name mentioned on a nation wide website, so he did have something going for him.

I'd say that other tax credits, R&D credits, corporate welfare, grandfathered laws, etc. help keep gasoline prices lower than they would normally be, in the US.  We are already seeing record profits for some oil companies, in part because they can make long term decisions for the greatest benefit given the tax code as it stands now.  Without those breaks, there's no way they could make the same profits that they are without raising prices.

As for the profits.  I have no issue with that.  Each business is expected to take $1 of resources and create $X of return/profit.  The % are supposed to be relatively consistent.  If a company fails to make enough, then it gets punished in the public markets.  It ends up being a bad use of capital.  But the challenge is, the greater the capital required, the higher return needed.  So as the cost of oil goes up, the oil companies, in order to maintain the same % of capital efficiency, need to raise the price of their final product.

But there's no way that the natural price of gas is $3.70