The line between behavior that's capitalistic and vaguely seditious can be thin at times. Just ask the major oil companies.
Everyone from the man on the street to the president has been accusing Big Oil of invoking Saddam Hussein's name to divert attention from blatant price-gouging.
But a look at gasoline prices, world oil prices and oil company profits since the Iraqi invasion yields some surprises. Whereas in past oil crises, some oil companies engaged in unscrupulous profiteering that resulted in Justice Department fines, things appear to be different this time around, experts say.
In fact, a practically unheard-of notion is being advanced: The oil industry has nobly fallen on its sword for the American people, absorbing declining profits to avoid passing on ruinous price increases.
"As unpopular generally as Big Oil is with consumers, they have exercised admirable restraint in raising the price of gasoline," said Stephen J. Mottus, an analyst with Legg Mason Inc. The price of crude oil was around $20 on Aug. 2 and has gone as high as $40 since then, but a corresponding increase in petroleum product prices wasn't passed on to consumers, according to Mr. Mottus.
"They can't go on like that, and sooner or later there's going to be an adjustment," he said. "Really, nobody passed through $40 oil. It would be kind of frightening to think what would happen if someone did try to pass through $40 oil to the economy. I may sound like I'm defending the major oil companies -- I'm not really trying to do that."
Trilby Lundberg runs a California-based newsletter that studies petroleum industry trends in pricing, consumption and consumer preferences. Ms. Lundberg said the price of crude oil went from $19.63 on July 20 to $33.93 on Nov. 2, an increase of 73 percent. But gasoline prices went up less than 25 percent during the same time span, according to Ms. Lundberg.
In Maryland, where the average price of a gallon of self-service, unleaded, regular gasoline is currently hovering near $1.40, about 70 cents of that is for state and federal taxes, transportation and refining costs, and dealer markups.
"Crude oil price increases have not been fully reflected in the price of gasoline," Ms. Lundberg said. "They've only partially been passed through. The oil industry is absorbing it."
The results were seen in oil companies' third-quarter results for their U.S. refining and marketing operations, Mr. Mottus said. For example, Exxon Corp. posted a $54 million profit, down from a $128 million third-quarter profit last year. Chevron Corp. experienced a $53 million loss for 1990, compared with a profit of $130 million for 1989.
"We have acted very responsibly, we have acted with restraint, and if you look at the numbers, they show that," said Joe Lastelick, a spokesman for the American Petroleum Institute trade organization
Edwin S. Rothschild scoffs at the notion of Big Oil largess. A member of Citizen Action, a national consumer advocacy group based in Washington, Mr. Rothschild said that the oil companies have indeed given the U.S. consumer a break on oil prices, but only because a hidden agenda is at work.
"The fact that they showed some restraint during the third quarter doesn't make them benevolent or socially responsible or conscious," Mr. Rothschild said. "In fact, what they were doing was making a policy decision to forgo some profits in order to prevent any adverse legislation, like windfall profits acts, from being enacted in Congress. Now that Congress is out and now that the summer driving season is over, and now what we're going to have a 5-cent-a-gallon federal additional gasoline tax, the companies are going to be able to quietly add a few cents a gallon more to the price of gasoline."
Following the invasion of Kuwait, many motorists wanted to know why the price of gasoline shot up immediately. Mr. Lastelick addressed that question.
"They were charging us with price-gouging," he said. "Their point was that gasoline came from oil produced before the crisis, therefore you should keep the price down. But the service station dealer in Baltimore knew that the next load of gasoline that he was going to buy was going to be higher, and the refiner knew that the next batch of crude coming in on the tanker was going to be higher because of what was happening.
"Therefore, they had to raise the price because there would be a replacement cost which was going to be higher. They needed the cash to buy the next load, in effect. That's why it went up right away."
Crude oil prices skyrocketed after the invasion of Kuwait, but there has been no subsequent outbreak of war, so why haven't prices returned to original levels?