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Washington: Top executives of the United States' five largest oil companies say they realise that record high fuel prices are hurting Americans, but they argue it is not their fault and their huge profits are in line with other industries.
Appearing on Tuesday before a House of Representatives committee, the executives were pressed to explain why they should continue to avail themselves of 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," Democratic Republican Edward Markey 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 ExxonMobil, 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, another Democrat. "The anger level is rising significantly." Alluding to the fact that Congress often does not rate high in US 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 in coming months. While inexpensive by the standards of many countries, the price is ana-thema to Americans accustomed to far cheaper fuel.
"I heard what you are hearing. Americans are very worried about the rising price of energy," said John Hofmeister, president of Shell Oil, echoing remarks by the other four executives including representatives of BP America, Chevron 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 recommended 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.
Access
"We need access to all kinds of energy supply," replied Robert Malone, chairman of BP America, adding that 85 per cent of the country's coastal waters are off-limits to drilling.
Markey wanted to know why the companies are not investing more in other energy projects than oil and gasoline 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 ExxonMobil 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 on 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 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 emphasised 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 in Congress when a barrel of oil cost $75. As the three-hour House hearing came to a close on 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. He said he understands that "Americans see the pain" of oil that costs $100 a barrel.
On April Fool's Day, the biggest joke of all is being played on American families by Big Oil."
Edward Markey
Democratic Republican
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