Congress presses Big Oil on profits as gas prices soar
Published Tuesday, April 1, 2008
Related Multimedia
Related Multimedia
WASHINGTON — Don’t blame us, oil industry chiefs told a skeptical Congress.
Top executives of the country’s five biggest oil companies said Tuesday they know record fuel prices are hurting people, but they argued it’s not their fault and said their huge profits are in line with other industries.
Appearing before a House committee, the executives were pressed to explain why they should continue to get billions of dollars in tax breaks when they made $123 billion last year and motorists are paying record gasoline prices at the pump.
“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, aiming his remarks at the five executives sitting shoulder-to-shoulder in a congressional hearing room.
“Our earnings, although 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, senior vice president of Exxon Mobil Corp., which made a record $40 billion last year.
“We depend on high earnings during the up cycle to sustain ... investment over the long-term, including the down cycles,” he continued.
The up cycle has been going on too long, suggested Rep. Emanuel Cleaver, D-Mo. “The anger level is rising significantly.”
Alluding to the fact that Congress often doesn’t rate very high in opinion polls, Cleaver told the executives: “Your approval rating is lower than ours, and that means you’re down low.”
Several lawmakers noted the rising price of gasoline at the pump, now averaging $3.29 a gallon amid talk of $4 a gallon this summer.
“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 including representatives of BP America Inc., Chevron Corp. and ConocoPhillips.
While Democrats hammered the executives for their profits and demanded they do more to develop alternative energy sources such as wind, solar and biofuels, Republican lawmakers called for opening more areas for drilling to boost domestic production of oil and gas.
What would bring lower prices? asked Rep. James Sensenbrenner of Wisconsin, the committee’s ranking Republican
“We need access to all kinds of energy supply,” replied Robert Malone, chairman of BP America, adding that 85 percent of the country’s coastal waters are off limits to drilling.
But Markey wanted to know why the companies aren’t investing more in energy projects other than oil and gas — or giving up some tax breaks so the money could be directed to promote renewable fuels and conservation and take pressure off oil and gas supplies.
“Why is Exxon Mobil resisting the renewable revolution,” asked Markey, noting that the other four companies together have invested $3.5 billion in solar, wind and biodiesel projects.
Exxon is spending $100 million on research into climate change at Stanford University, replied Simon, but current alternative energy technologies “just do not have an appreciable impact” in addressing “the challenge we’re trying to meet.”
The appearance Tuesday before the Select Committee on Energy Independence and Global Warming was not the first time that oil executives had faced the harsh words of a lawmakers frustrated over their inability to do anything about soaring oil and gasoline costs.
In November 2005, executives of the same companies sought to explain high energy costs at a Senate hearing at which Hofmeister emphasized the cyclical nature of his industry. “What goes up almost always comes down,” he told the senators on a day when oil cost $60 a barrel.
About six months later, the executives were grilled again on Capitol Hill when a barrel of oil cost $75. As the three-hour House hearing came to a close Tuesday, the price of oil settled at just over $100 a barrel on the New York exchange.
“We face a new reality, volatility, high prices, greater competition for resources,” said Peter Robertson, vice president of Chevron Corp., adding that he understands that “Americans see the pain” of $100-a-barrel oil.
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.
They responded that their companies already are spending on alternative energy projects and argued that new taxes would dampen investment and could lead to even higher prices.
“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,” said Simon. He said over the past five years Exxon Mobil’s U.S. tax bill exceeded its U.S. earnings by $19 billion.
Markey was not impressed.
“These companies are defending billions of federal subsidies ... while reaping over a hundred billion dollars in profits in just the last year alone,” he said. The companies are reaping “a windfall of revenue” while poor people have to choose between heating and eating because of high energy prices.
Elsewhere on Tuesday, many independent truckers parked their rigs and others slowed to a crawl on highways to protest high fuel prices. The demonstrations were only scattered, but long lines of trucks were moving at about 20 mph on the New Jersey Turnpike, and three drivers were ticketed for impeding traffic on Interstate 55 outside Chicago, driving three abreast at low speeds.
Community Discussion
Newsminer.com doesn't necessarily condone the comments here, nor does it review every post. Read our full user's agreement.
Same old thing.
Subsidies for oil corporations making record profits? Congress is just now getting around to holding a committee meeting, in an election year, too? And an Administration that is fumbling with keeping Wall Street and the financial institutions from collapsing?
THIS SOUNDS LIKE THE PERFECT STORM, FOR ANOTHER 1930'S GREAT DEPRESSION...or a sick April Fools Day joke.
The rapid run up of oil prices are having a global impact on the production of food. As farmers and fishers can no longer afford the astronomical fuel bills, there will be less for the harvest and less to eat.
Boo hoo, the sky's falling... another victim on the left.
Who makes the most profit off a gallon of gas in the United States? The oil company? No. The gas station that sells it? No way. The truck company that delivers it to the seller? No. Ok, the refinery that refines it? Not even close.
The Federal Government that taxes it! How come we do not hear the politicians lowering taxes on a gallon of gas?
If the democrats controll all 3 branches of government, we haven't seen nothing yet. The sky will fall and we'll have 5-7.00 dollars a gallon of gas. How else will they pay for all thier entitlment programs.
Snowjob (and that's certainly an accurate name), if this is the case why have the oil companies posted the highest profits in US history? No other corporations come close to matching the amount of money they have reaped from the american public.
Here's a quote from Reuters:
Exxon's $40.6 billion annual profit and Chevron's $17.1 billion come at the cost of an economy tipping into recession, said FTCR. While Exxon makes the largest corporate profit by any corporation, ever, families pay $60 and more for a gas station fill-up and Northeasterners are shelling out more than $2,000 on average for heating oil.
Do you work for an oil company, or are you simply intent at cutting your own throat?
When will you people begin to understand? If gas costs too much, find ways to not drive as much; consolidate trips, carpool, use public transportaion...just make sacrafices. If you don't think consolidating trips or carpooling are options then gas is obviously not priced high enough for you. It is not the governments responsibility to bail anyone out for not having their priorities in order. The taxes levied on every gallon of fuel don't line the pockets of government as the billion dollar revenue lines Big Oil Pockets. Big Oil has a responsibility to sell as much gas as they can for as much money as they can get. Consumers are supposed to keep that in check, but WE don't. Evaluate your fuel spending for your extra-curriculars (snowmobiling, boating, bar-hopping,etc..) and add in all your fuel costs for transportation to and from your favorite grounds....there's your "rebate check" and that's your first step to checking up on Big Oil.
The quasi-recession is the fault of the consumer alone who does not live within their means and expects someone to bail them out. Until you evaluate your priorities and get your dependence on oil in check, just keep your trap shut....Unless you use that hot-air to supplement your oil-fired furnace.....
They are right. Its not their fault. The oil companies are just the middle men, raking in huge profits. The real criminals are the world bankers & aka the IMF. These people control your lives more than you know. They tell governments what to do including your own. Wake up America!!!
$40 Billion in Profits. If they gave that money back equally to each american we'd be looking at about $133 each. $11 a month for each person. 40 bil spread across the whole nation really isnt that much, and that $11 extra dollars of yours wouldnt make a difference either.
We've been spoiled with cheep gas for too long anyway.. Maybe you'll finally realize you dont need that 10mpg SUV anymore. Really, you dont need it. You dont need that 46in plasma either.
Where there is a demand, someone will supply it (i.e. gas).
The good ole' days of cheap gas is over.
That old saying "You got a Hemi in there" is now a curse.
Unless you start walking and stop driving, the gas prices will not go down ever- the higher the demand, the higher they can get away with raising prices.
Of course, a war in the World's second largest oil field (Iraq) doesn't help much. At least we secured that real estate, eh?
The real kicker, all this raising of crazy gas prices causes an effect of inflation for all other things, thus, the value of the dollar drops faster. Competition with other rapidly rising Industrial Nations (i.e. China and India)) doesn't help either, Eeps!
Oh well, I'll just finish my Teriyaki Marinated Polar Bear Steak and wash it down with this refreshing, crisp, Polar cold, Flouride tainted public water! AHHH!!!
authenticalaskan -- good choice, being that the cheep alcohol will be illegal.
In Alaska we have the unique situation where the State is the one selling the crude to the refineries. At current prices the State makes $2.45/g. selling the royalty oil and then an additional 8 cents for road tax. All together the State of Alaska receives 75% of the money we pay for gas and heating oil.
Fairbanksgas, If that is correct, that really changes the way I feel about some things. Do you know where I can look to confirm these numbers?
Fairbanksgas: Right On Point. While the STATE of ALASKA has been riding the band wagon and reaping the benefits of HIGH OIL PRICES, the individual ALASKAN citizen has not only been paying for the higher heating and fuel costs, but are beginning to see the escalating cost for other necessities that are a direct result of the high oil prices. Food prices, electricity and transportation costs are going up now, soon to be followed by most other industries as they raise their prices to keep up with INFLATION.
Shagdog: You might be oversimplifying the fact that the consumer is the only one to blame for the high oil prices. There are more than plenty of players involved with the HIGH OIL prices. Stock Market commodity speculators, OPEC, Big Banking, Government regulations, lack of investment in alternative energy sources...and few dozen more. Even those dog biscuits your eating are indirectly related to the consumption of oil for harvesting, transporting and marketing.
Post a comment
Commenting requires registration.