The government makes a far greater profit off a gallon of gasoline than the oil companies do.  Currently, the federal government takes 18.4 cents a gallon in taxes.  Additionally, the State of Iowa takes 22 cents a gallon in their taxes.  This adds up to being a tax of 40.4 cents that you are paying on every gallon of gasoline you purchase in the state of Iowa.  That does not include the local tax you may pay for a gallon of gasoline.  On the other hand, columnist George Will reports the oil companies make only about 13 cents a gallon.  (Will, 2007)  With high taxes, the government makes a far greater profit on gasoline than the oil companies.

Politicians may want you to believe that oil companies are engaging in price gouging; however, in reality it is the politicians that are engaging in price gouging.  If we take out George Will's estimated profits of the oil companies from the current price of a gallon of gasoline, $3.25, we are still looking at gas prices being about $3.12 a gallon.  If we take out the taxes from the gasoline we are looking at gas being about $2.85 a gallon.  This is not including the local taxes you may be paying in addition to the state and federal taxes.  Of course, once we lower the price by lowering the taxes, we must realize that consumers will likely use more gasoline which will raise the price of gasoline.  Politicians are good at blaming others for price gouging, but in reality are blaming others for their high taxes.

Gasoline is actually not as expensive as you may have been told.  Remember when your grandmother used to talk about buying a pop for five cents?  Inflation has increased over the years and so has inflation price on gasoline.  When adjusted for the inflation rate, gasoline has not been at an all time high for as long as the media has been reporting it has.  

    "As I write this, the department says the average price of gasoline in the United States is $3.05 per gallon. That's relatively high, but once you account for inflation, gas prices today are about the same as they were in the early 1920s. And they're lower than the record average set in March 1981, of $3.22 per gallon." (Stossel, 2007)

Similarly, another myth is that water at a convenience store costs less than gasoline.  That is not true because a gallon of water is much more than a bottle of water.  If you were to purchase a gallon of water from a convenience store you would be spending more than you currently do on a gallon of gasoline.  In fact, John Stossel reports that a gallon of water would cost $6.88 per gallon.  (Stossel, 2007)  When adjusted with inflation, gasoline is not as expensive as you have been told.

What can the government do?  The government cannot lower the price of gasoline by regulating the market.  On the other hand, there are a few things they can do to help by deregulating the market and cutting their own consumption.  For example, the government purchases their own energy for their own use.  They could invest that money in alternative forms of energy.  To sum up, the federal government would purchase alternative forms of energy from a private company, but would not be involved in actually creating the energy.  This would reduce consumption and would not only be good from an economic point of view, but from a strategic military point of view.  We do not want other countries to be able to shut down our government by refusing to export oil to the United States.  Additionally, the government could put an end to boondoggles such as ethanol or at least import the ethanol which would make the prices much cheaper.  If you want to lower the price of gasoline you need to invest your own money into alternative forms of energy such as wind and solar power.  Additionally, you could also reduce your consumption of gasoline by driving more fuel efficient vehicles.  The government cannot do much, but could lower taxes on gasoline, and reduce their own consumption of oil.   Until then, the government has no room to accuse others of price gouging.

Don't blame the "greedy bastards" at the oil companies for high taxes, inflation, and government regulation of the market.  If you are going to blame someone for gas prices, blame the "greedy bastards" in government.

Sources:

http://www.kcci.com/money/13365525/detail.html

http://www.conocophillips.com/newsroom/other_resources/energyanswers/oil_profits.htm

http://www.retirementliving.com/RLstate1.html#IOWA

http://www.townhall.com/columnists/GeorgeWill/2007/05/17/energy_independence

http://www.washingtonpost.com/wp-dyn/content/article/2006/04/27/AR2006042701693.html