The oil industry, known for boom-bust cycles, is resisting the temptation to pump more oil — for now.
Even before Congress approved that legislation, oil and gasoline prices were rebounding after last year’s collapse in fuel demand and prices. Gas prices have risen about 35 cents a gallon on average over the last month, according to the AAA motor club, and could reach $4 a gallon in some states by summer. While overall inflation remains subdued, some economists are worried that prices, especially for fuel, could rise faster this year than they have in some time. That would hurt working-class families more because they tend to drive older, less efficient vehicles and spend a higher share of their income on fuel.
That bizarre day seems to have become seared into the memories of oil executives. The industry was forced to idle hundreds of rigs and throttle many wells shut, some for good. Roughly 120,000 American oil and gas workers lost their jobs over the last year or so, and companies are expected to lay off 10,000 workers this year, according to Rystad Energy, a consulting firm.
Yet, even as they are making more money thanks to the higher prices, industry executives pledged at a recent energy conference that they would not expand production significantly. They also promised to pay down debt and hand out more of their profits to shareholders in the form of dividends. (by Clifford Krauss, New York Times)