Are oil companies gouging consumers?
To a large extent, they are simply passing on increases in the price of crude. On the other hand, they’re not starving, either. ExxonMobil recorded a $36.1 billion profit for 2005, largest annual profit in history. Oil companies argue that current profits go to fund further exploration. And, says Kloza, speculators have to take part of the blame by pushing up oil prices in commodity markets, where oil is bought and sold. Q: If people drive less, will prices fall? A: Yes. U.S. motorists consume about 10% of the world’s petroleum production. But don’t hold your breath. So far, the consumer response to higher gas prices has been “incredibly muted,” Zandi says. He thinks it would take prices above $3 a gallon for an extended time for consumption to drop. Will the fuel-price increases finally flood showrooms with really cool, fuel-sipping vehicles? Nope. A few additional gasoline-electric hybrids will be introduced soon, but those were planned anyway. Also, it takes time to shift production
