Oil chiefs scolded over gas prices, high profits
As gasoline prices hit another new high Wednesday, oil industry executives faced angry lawmakers on Capitol Hill with the message that they weren’t to blame.
But their defense of high profits at a time of rising prices only stoked anger among politically anxious lawmakers, especially after one executive was unable to say how much he earned last year.
“Consumers are angry, and they have every right to be,” Sen. Herb Kohl (D-Wis.) scolded the oilmen at the Senate Judiciary Committee hearing on rising oil prices. “You’re making more money than ever. It doesn’t seem fair, guys. It just doesn’t seem fair.”
Sen. Richard J. Durbin (D-Ill.) added that he also felt the pain, spending $61 to fill up his Ford pickup last week. “Does it trouble any of you when you see what you’re doing to us?”
Executives from Chevron Corp., ConocoPhillips, Shell Oil Co., Exxon Mobil Corp. and BP America Inc. denied that they were capitalizing on the public’s pain at the pump, insisting instead that they were subject to the vagaries of global oil markets and circumstances beyond their control.
“We’re doing all that we can to produce as much product as we can to put downward pressure on prices,” said J. Stephen Simon, senior vice president of Exxon Mobil.
But the companies are unable to alter the global forces of supply and demand to affect prices, Robert A. Malone, chairman and president of BP America, told the committee.
“Today’s high prices are linked to the failure both here and abroad to increase the supply of oil, gas and renewables and to reduce demand through conservation and energy efficiency,” Malone said.
The hearing came as the price of crude traded as high as $134.15 a barrel before closing at a record $133.17, up $4.19, in New York futures trading. The average price of a gallon of regular gasoline hit all-time highs Monday of $3.807 nationwide and $3.985 in California, according to AAA.
The hearing was designed to show that Congress was doing something about gasoline prices. But aside from scolding oil chiefs, a scene that will be repeated today before the House Judiciary Committee, there are limits to what Congress can do.
As the executives were testifying, the House approved a measure that would extend and expand tax breaks to promote energy efficiency and development of alternative energy sources such as solar and wind power.
But in a sign of the oil industry’s enduring political clout, Democrats dropped an effort to finance the tax package by repealing oil industry tax breaks. That proposal had encountered opposition from President Bush and faced a Republican-led Senate filibuster.
Senate Democrats are considering imposing a windfall profits tax on the oil industry, but Durbin acknowledged that “it’s not likely to pass” this year in a narrowly divided Congress and with Bush opposed.
John E. Lowe, executive vice president of ConocoPhillips, warned that such a tax could discourage energy exploration. “We urge you not to pass measures that have public appeal but would be counterproductive,” he said.
The executives said they were plowing profits back into efforts to increase energy supplies. They sought to blame Congress for pushing prices upward by restricting domestic production. Congress has placed most coastal areas off-limits to new drilling.
But senators became incredulous when Lowe was unable to tell the committee chairman, Sen. Patrick J. Leahy (D-Vt.), how much he earned last year.
“I wish I made enough money that I didn’t even have to know how much I made,” Leahy said.
A ConocoPhillips spokesman later said that Lowe’s total 2007 compensation was about $5.7 million.
In contrast, Exxon Mobil’s Simon was quick to provide his figure: $12.5 million.