Profits, Prices Spur Oil Outrage

Wall Street analysts discounted the likelihood of congressional action against oil companies. "As someone in the industry for more than 25 years, I've seen it before," said Fadel Gheit, an oil company analyst at Oppenheimer & Co. "Penalizing oil companies does not lower prices at the pump. If we have a windfall profits tax, it will just create another moneybag for the government. It will not increase oil production by one barrel. It will not lower gasoline prices by one cent or alter our dependence on OPEC countries."

Federal Reserve Chairman Ben S. Bernanke also cautioned Congress on the various proposals being floated. In response to a question at a hearing of the Joint Economic Committee, Bernanke said, "Unfortunately, after many years of not really doing as much as we should on the energy front, this situation has arisen. And I don't see any way to make a marked impact on it in the very short run."

Bernanke said a windfall profits tax would reduce incentives for companies. "What we need to do," he said, "is think about whether there are actions we can take that over at least a number of years will put us on a more secure footing."

And he added, "I would like to let the market system work as much as possible to generate new supplies, both of oil but also of alternatives, and for the prices, painful as they may be, to help generate more conservation and alternative uses of energy on the demand side."

While many of the proposals in Congress are familiar, costly and unlikely to be enacted, bipartisan political pressure for action could result in tougher scrutiny and possible sanctions against the oil industry -- until recently one of the closest allies of the Bush administration and the Republican-led Congress

The Senate Finance Committee, for instance, requested federal income tax returns for the past five years from the 15 largest oil and gas companies, based on sales, in what could amount to a congressional audit. "We're seeing record profits and significant executive compensation in the oil and gas industry," said Finance Committee Chairman Charles E. Grassley (R-Iowa). "I want to make sure the oil companies aren't taking a speed pass by the tax man."

The Senate Judiciary Committee unanimously voted to allow the Justice Department to prosecute countries that belong to the Organization of Petroleum Exporting Countries for price fixing in violation of U.S. antitrust laws. "What you have today is an oligopoly, effectively, and I think it's a disaster for the American people," said Sen. Dianne Feinstein (D-Calif.), a member of the panel.

Judiciary Committee Chairman Arlen Specter (R-Pa.) said GOP leaders had assured him they were eager to push the legislation to the floor, pointing out the political pressure -- including a series of Democratic news conferences held in recent days at Capitol area gas stations.

Staff writers Jim VandeHei and Sholnn Freeman contributed to this report.