Oil firms aren’t to blame for prices, execs tell House panel
Executives from the five largest oil companies told a House panel Tuesday that they were not responsible for record gas prices and defended the industry’s record profits for 2007.
The oil industry is cyclical and will experience ups and downs, J. Stephen Simon, an Exxon Mobil Corp. senior vice president, told the House Select Committee on Energy Independence and Global Warming.
These days, he acknowledged, “we are currently in an up cycle.”
Executives from Exxon Mobil, Shell Oil Co., BP America Inc., Chevron Corp. and ConocoPhillips -- which reported combined profits of $123 billion last year -- shifted blame for high prices to issues outside their control, including growth in global demand, geopolitical events, material and labor costs, the fall in the dollar’s value and government restrictions on U.S. oil and natural gas resources.
Some committee members said that restrictions on new oil drilling offshore may have contributed to rising gas prices because the U.S. consumes 25% of the world’s oil, most of which is imported.
“We have made a choice as a nation to not advantage ourselves to our own oil supply,” said Rep. Candice S. Miller (R-Mich.).
Opening or improving existing areas of oil exploration could increase supply, thus reducing prices at the pump, the panel was told.
“We need your help to open up the 85% of the outer continental shelf that is now off-limits to environmentally responsible oil and gas exploration and development,” said Peter J. Robertson, Chevron vice chairman.
“We cannot expect other countries to expand their resource development to meet America’s need when our government limits development at home.”
The companies need to think of a better idea, said Judy Dugan, research director for Consumer Watchdog, a Santa Monica consumer group.
“When the only idea that oil company executives can agree on for curing our energy woes is to open up the coast of California for oil drilling, it’s proof that Congress has to take the reins,” she said in an e-mail. “These hugely profitable companies continue to demand freedom to drill anywhere while they give lip service, if that, to renewable energy.”
Four of the five companies have invested in alternative energy, but the executives told the panel that oil would be a part of the U.S. economy for years to come.
“We must disavow the perception that alternative sources of energy can quickly fix the problem,” said John E. Lowe, an executive vice president of ConocoPhillips.
Democrats grilled Simon about Exxon Mobil’s relatively low contribution to alternative energy -- $100 million of its $40-billion profit.
Simon said his company did not believe that existing technology for alternative resources was viable and instead was focusing on using oil more cleanly.
Chevron and BP America were praised for the steps they had taken toward renewable energy.
“We knew we were in the carbon business and our business emits greenhouse gases,” said BP America Chairman Robert A. Malone. “Seven years later, it’s still a problem.”
Despite advances, said Shell President John D. Hofmeister, alternative energy hasn’t become commercial enough to be profitable.
However, he said, “as we move up the maturity curve, I believe we’ll make a lot of money on renewable energy.”
In February, the House voted to end tax credits for the oil companies and shift the resulting revenue to funding renewable resources such as wind, solar and geothermal energy. President Bush has said he will veto the bill if it gets to his desk.
The executives said the tax breaks served as an incentive for investment in new production, and removing them would only drive gas prices higher.
“The Congress is punishing five companies by name,” Hofmeister said of the bill.
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