While car buyers continue to demand gas-guzzling SUVs and other low-mileage automobiles, the price of filling up is going up.
Already at a 14-year high of $1.74 per gallon, the average price of gasoline is expected to continue to rise this spring, according to the Energy Information Administration. The federal agency predicts gas prices to top $2 per gallon throughout much of the country heading into the peak summer driving months.
The reason for rising costs? Supply and demand. Facing the highest crude oil prices since 1990, major refiners are buying less, resulting in dwindling inventories of many petroleum products. At the same time, motorists continue to drive gasoline usage higher, up 4.5 percent from last year.
Making a fortune
With consumers still paying more at the pumps, oil companies are raking in the dough. In the April 5 issue of Fortune, three refiners ranked among the top U.S. corporations in terms of sales last year.
Exxon Mobil, which made a profit of $21.5 billion, leapfrogged General Motors to take the No. 2 spot in the annual Fortune 500 list. ChevronTexaco inched up to No. 6, while ConocoPhillips vaulted five spots to No. 7.
Not surprisingly, Wal-Mart Stores Inc. remained atop the list for the third consecutive year, posting $259 billion in worldwide sales in 2003, although its profits totaled just $9.05 billion.
Following Wal-Mart and Exxon Mobil were carmakers General Motors and Ford at third and fourth, respectively, while General Electric was No. 5. Rounding out the top 10 were Citigroup, IBM, and American International Group.
After two years of dismal earnings, the 500 companies on this year's list recorded $7.5 trillion in revenue and pocketed $445.6 billion in profits. The magazine credited low interest rates, fewer accounting scandals, President Bush's tax cuts, and increased government spending as helping to power the blue-chip boom.
Additionally, many metropolitan areas are under new government regulations that call for lower-pollutant gasoline, such as reformulated gasoline. These specialized blends are often more costly to produce.
Ed Silliere, vice president of risk management at Energy Merchant Corp., said these new environmental requirements also make it harder for European suppliers to ship gasoline into the United States to ease supply concerns.
Mr. Silliere said he would not be surprised if prices went to $2.50 a gallon in some Northeastern states, the West Coast, and parts of the Midwest where price spikes have been common in past summers.
Concerned about the lack of new jobs created by the current economic recovery, the Federal Reserve decided to hold interest rates at their 45-year low. Many economists believe the Fed's decision means rates won't likely be raised until 2005.
The consolidation of the banking industry continued last week with the merger of Bank of America and Fleet Boston. The combination creates the nation's third-largest bank with nearly $1 trillion in assets. It also is expected to leave 13,000 employees from the two companies looking for work.
Calling it "the right thing to do," Martha Stewart stepped down as director and chief creative officer for Martha Stewart Living Omnimedia following her conviction on four counts of conspiracy and obstruction of justice. Ms. Stewart will retain significant influence over the company with 61 percent of the company's stock.
With American consumers opting for advanced television technology, Thomson Electronics will close its picture-tube manufacturing plants for RCA in Indiana and Ohio. While sales for traditional televisions remain strong in Europe and China, company officials said the U.S. market is increasingly demanding flat-panel TVs with LCDs.