FOX8WebTeam's Blog

With gas prices projected to rise to nearly $4 per gallon, the U.S. Congress decided to step in and ask executives of the five biggest U.S. oil companies about the situation. The oil companies saw record profits -- $123 billion last year.

I think this situation -- where lawmakers step into an economic matter -- raises a few questions:

1. Is it Congress' responsibility to deal with this?
2. We live in a (mostly) free-market economy; aren't companies supposed to make profits?
3. How do Exxon (or BP or Chevron, etc.) shareholders feel about all of this?
4. If Congress does make a change in policy as a result, have they thought about how it will affect other industries?

Some of the talk has centered on not giving tax breaks to large corporations, which would perhaps bring their profits down, but will it change gas prices?

It seems like letting the government make these changes could work, but it's going to be rather inefficient. A free-market economy is flexible and can respond quickly when conditions change. It works much better when the suppliers are motivated (usually by loss of profit) to change because the demanders (us) want the change.