Oil execs to Congress: Don't blame us
In what's becoming a ritual in the nation's capital, top executives of major oil companies took an oath Wednesday before the snapping cameras...
WASHINGTON — In what's becoming a ritual in the nation's capital, top executives of major oil companies took an oath Wednesday before the snapping cameras, received abuse by lawmakers from both parties and blamed Congress for many of today's energy woes.
While the public-relations battle was engaged in the Senate Judiciary Committee, crude-oil prices shot to $133.17 a barrel on the New York Mercantile Exchange.
"We're about to fall into a recession" because of high energy prices, Sen. Dick Durbin, D-Ill., told the chiefs of Exxon Mobil, ConocoPhillips, Shell Oil, Chevron and BP at the hearing. "Does it trouble any of you when you see what you're doing to us?"
The executives accepted no blame, despite the verbal jabs from Democrats and Republicans.
"We cannot change the world market," BP America Chairman Robert Malone said. "Today's high prices are linked to the failure both here and abroad to increase supplies, renewables and conservation."
Sen. Patrick Leahy, D-Vt., the committee chairman, opened by telling the oil executives that "prices should not skyrocket like this in a functioning, competitive market." His committee has jurisdiction over antitrust issues such as price fixing.
Over the course of three hours, Democrats pounded away on record profits being posted by oil companies while Republicans hammered home the point that the United States puts most of its available oil off-limits to production.
Oil executives were asked to restate their personal compensation, which is public record through company filings with regulators. Several sheepishly listed salaries and compensation between $2 million and $5 million a year.
But John Lowe, executive vice president of ConocoPhillips, said he couldn't remember.
"I wish I made enough money that I didn't know how much I make," Leahy shot back to guffaws in the hearing room. "Do you suppose you might be able to find out how much you make and let us know?"
The frustration was bipartisan. Sen. Arlen Specter, R-Pa., noting that Exxon Mobil's annual earnings increased from $11.5 billion to $40.6 billion over five years, could see no reason "why profits have gone up so high when the consumer is suffering so much."
In the first three months of this year, the five companies together earned $36 billion.
Supposedly the hearing was to focus on legislation being considered by Congress, such as a measure that would give the United States the ability to bring price-fixing complaints against members of OPEC, the cartel of major oil-producing nations.
It was also supposed to focus on whether to raise the minimum investment requirements for speculators who have no intent to take delivery of oil but are pumping billions of dollars into the trading of contracts for future delivery of oil.
But there was little talk of solutions. Most of the three-hour hearing was spent on zinging the oil execs, sometimes using props such as a giant photo of President Bush holding hands with Saudi Arabia's King Abdullah, who last week politely rejected U.S. calls for significant new production.
"People listening just don't get it ... when demand isn't going crazy, why are prices going crazy?" asked Sen. Herb Kohl, D-Wis.
Oil execs didn't think legislation would help much.
"I don't think suing foreign governments in our courts will do anything," said Peter Robertson, vice president of Chevron.
Kohl interrupted him to note that "unless we deal with OPEC in the foreseeable future, we will not be able to deal with the price at the pump."
Robertson fired back: "I don't think we can control OPEC. I don't think it is our place to control OPEC."
The problem, he insisted, is that "there's not much spare [production] capacity in the world. OPEC doesn't have much spare capacity to change the supply."
Since 2005, the correlation between oil inventory and market price has broken down, said Stephen Simon, senior vice president of Exxon Mobil, citing three factors: growing political uncertainty in oil-producing countries, a weakening U.S. dollar and an increase in speculation in oil markets because of the first two changes.
The executives said they were plowing profits 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.
"When many of these policies were implemented, oil was selling in the single digits," said Shell Oil President John Hofmeister, adding that private oil companies are forced to explore internationally, where most of the world's oil is now in the hands of state-owned oil companies.
Exxon Mobil's Simon said industry profits may look enormous "in absolute terms," but not when viewed in the context of the industry's massive size and mission. Huge earnings are necessary "in the current up cycle" to fund long-term investments, he said.
" 'Current up cycle.' What a nice term," Leahy said sarcastically.
Additional information from Cox News Service
Copyright © 2008 The Seattle Times Company
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