Congress has big questions for big oil
WASHINGTON (AP) - April 1, 2008 The executives, peppered with questions from skeptical
lawmakers, said they understood that high energy costs are hurting
consumers, but deflected blame, arguing that their profits - $123
billion last year - were in line with other industries.
"On April Fool's Day, the biggest joke of all is being played
on American families by Big Oil," Rep. Edward Markey, D-Mass.,
said as his committee began hearing from the oil company
executives.
With motorists paying a national average of $3.29 a gallon at
the pump and global oil prices remaining above $100 a barrel, the
executives were hard pressed by lawmakers to defend their profits.
"The anger level is rising significantly," said Rep. Emanuel
Cleaver, D-Mo., relating what he had heard in his district during
the recent two-week congressional recess.
Alluding to the fact that congressmen often don't rate very high
in opinion polls, Cleaver told the executives: "Your approval
rating is lower than ours and that means your down low."
"I heard what you are hearing. Americans are very worried about
the rising price of energy," said John Hofmeister, president of
Shell Oil Co., echoing remarks by the other four executives from
Exxon Mobil Corp., BP America Inc., Chevron Corp., and
ConocoPhillips.
But the executives rejected claims that their companies'
earnings are out of step with other industries and said that while
they earn tens of billions of dollars, they also invest tens of
billions in exploration and oil production activities.
"Our earnings, though high in absolute terms, need to be viewed
in the context of the scale and cyclical, long-term nature of our
industry as well as the huge investment requirements," said J.S.
Simon, Exxon Mobil's senior vice president.
But Markey asked Simon why Exxon Mobil hasn't followed the other
companies in investing in alternative energy. The four other
companies reported spending as much as $3.5 billion in recent years
on solar, wind, biodiesel and other renewable projects.
"Why is Exxon Mobil resisting the renewable revolution," asked
Markey.
Simon said his company, which earned $40 billion last year, had
provided $100 million on research into climate change at Stanford
University, but that current alternative energy technologies "just
do not have an appreciable impact" in addressing "the challenge
we're trying to meet."
Executives from the largest U.S oil companies have been frequent
targets of lawmakers, frustrated at not being able to do much to
counter soaring oil and gasoline costs.
In November, 2005, Hofmeister and the top executives of the same
companies represented Tuesday sat in a Senate hearing room to
explain high prices and their huge profits.
The prices are of concern, Hofmeister said at the time, adding a
note of optimism: "Our industry is extremely cyclical and what
goes up almost always comes down," he told the skeptical senators
on a day when oil cost $60 a barrel.
About six months later, when the cost of the same barrel reached
$75, the executives were grilled again on Capitol Hill on their
spending and investment priorities.
Recently oil prices reached a peak of $111 a barrel. While
declining a bit in recent days, the price remains above $100 and
there's talk of $4 a gallon gasoline in the coming months.
Markey challenged the executives to pledge to invest 10 percent
of their profits to develop renewable energy and give up $18
billion in tax breaks over 10 years so money could be funneled to
support other energy and conservation.
The executives said the companies already are spending billions
of dollars - more than $3.5 billion over the last five years - on
renewable fuels such as wind energy and biodiesel, but rejected any
tax increases.
"Imposing punitive taxes on American energy companies, which
already pay record taxes, will discourage the sustained investment
needed to continue safeguarding U.S. energy security," Simon
insisted.
"These companies are defending billions of federal subsidies
... while reaping over a hundred billion dollars in profits in just
the last year alone," complained Markey, chairman of the Select
Committee on Energy Independence and Global Warming.
The House last year and again on Feb. 27 approved legislation
that would have ended the tax breaks for the oil giants, while
using the revenue to support wind, solar and other renewable fuels and incentives for energy conservation. The measure
has not passed the Senate.