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US: Congress grills oil execs on record pump prices

by Chris BaltimoreReuters
May 21st, 2008

Executives from the five biggest international oil companies on Wednesday claimed that they were victims of high oil prices along with U.S. consumers, but U.S. Senate lawmakers showed little sympathy.

For the second time this year, executives from Exxon Mobil Corp, Chevron Corp and three other big energy companies were called to testify before Congress to explain their swelling profits as gasoline prices hit a record average of $3.79 a gallon.

Executives testifying under oath before the Senate Judiciary Committee reiterated the corporate stand that crude oil markets -- not profiteering at the gasoline pump -- is the prime reason behind high prices.

"As repetitive and uninteresting as it may sound, the fundamental laws of supply and demand are at work," said John Hofmeister, president of Shell Oil Company, the U.S. subsidiary of Royal Dutch Shell.

Prime drilling acreage in Alaska and the Outer Continental Shelf off the U.S. coast are off-limits and international oil companies are at a growing disadvantage to government-owned companies like Saudi Aramco and Venezuela's PDVSA, executives said.

Exxon Mobil, the No. 1 U.S. oil company, makes about 4 cents on every gallon of gasoline it sells in the United states, down from 10 cents a gallon in 2007, due mainly to higher oil costs, said Senior Vice President Stephen Simon.

Lawmakers appeared leery and sometimes downright hostile to executives' testimony that crude oil prices - which comprise about 70 percent of gasoline prices - are the primary reason for soaring gasoline prices.

"To me it was just a litany of complaints that you're all just hapless victims of a system," said Sen. Dianne Feinstein, California Democrat. "I don't think you are really."

As the hearing in the Senate Judiciary Committee dragged on, crude oil prices surged nearly $5 to a record $133.72 a barrel, as the U.S. government reported a surprise drop in crude oil inventories.

Committee Chairman Sen. Patrick Leahy of Vermont asked the executives to disclose their 2007 salaries, and at least one executive was unable to answer.

"I know it's a matter of public record. I do not know the exact amount," said John Lowe, executive vice president of ConocoPhillips.

"Mr. Lowe, I wish that I made enough money that I didn't have to know how much I made," Leahy said. "Do you suppose you might be able to find out how much you make and let us know?"

Lowe said he would.

Oil prices have risen sixfold since 2002 as surging demand in China and other developing economies strained supplies and added pressure to a faltering U.S. economy already struggling under a housing crisis and global credit crunch.

The oil company executives, which also include the U.S. subsidiary of BP Plc, are scheduled to testify again on Thursday before a House Judiciary Committee panel.
Democrats in the Senate are pursuing punitive measures like higher taxes aimed specifically at the five companies who appeared at the hearing.

Earlier this month, lawmakers unveiled a new energy package that would revoke $17 billion in tax breaks extended to big oil companies and slap a 25 percent windfall profits tax on firms that don't invest in new energy sources.

Before the hearing started, protesters from the Code Pink organization, which opposes the war in Iraq, chanted anti-oil industry slogans and held up signs like "No War For Oil."

"Stop ripping off the American people," said one protester, aiming her voice at executives seated at the front of the hearing room. "Ride your bike to work, everybody."




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