Familiar Back and Forth With Oil Executives
Wednesday, April 2, 2008
It's becoming a rite of spring. Gasoline prices climb. Members of Congress fume. And oil executives make the trek to Capitol Hill to do battle over who's to blame.
Facing unhappy members of the House Select Committee on Energy Independence and Global Warming, executives from five giant oil companies yesterday sought to portray their firms as part of the energy solution, not the energy problem. And they put part of the blame for high oil prices on the federal government, lamenting obstacles to offshore drilling.
But the lawmakers took aim at the oil companies and the record profits they recorded last year.
"I believe the laws of supply and demand when it comes to oil and gas are broken and completely malfunctioning," said Rep. John B. Larson (D-Conn.).
"Your approval ratings are down lower than ours, and that means you are down low," said Rep. Emanuel Cleaver II (D-Mo.). Conversations with his constituents during the spring recess suggested that "the anger level is rising significantly," Cleaver said.
Rep. Edward J. Markey (D-Mass.), chairman of the committee, noted before the hearing that the national average price for regular unleaded gasoline set a record -- $3.287 a gallon -- on Monday. "Today, on April Fool's Day, consumers all over America are hoping that the top executives from the five largest oil companies will tell us that these soaring gas prices are just part of some elaborate hoax," he said in a written statement.
The criticism was bipartisan. Rep. Candice S. Miller (R-Mich.) said big oil companies have "to do the right thing" with their profits or face a backlash from "customers who are sick and tired of paying high prices."
But the oil executives turned some of the blame back on the lawmakers, complaining that Congress and past administrations had barred oil companies from drilling in much of the Outer Continental Shelf.
John D. Hofmeister, president of Shell Oil , noted that U.S. oil and gas production has dropped steadily for two decades: "Why? Because government policies place domestic oil and gas resources off-limits." Other executives said that many offshore prospects had not been examined with new technology.
The executives said other factors driving up oil prices were rising demand in developing nations, the weak dollar, investments flowing into commodities of all sorts, and the small amount of excess production capacity worldwide.
"Every time there's a little disruption or potential disruption, there's a blip in the price," Peter J. Robertson, vice chairman of Chevron, said in an interview before the hearing.
The executives also criticized a tax package passed by the House that would extend tax breaks for solar and wind projects and pay for them largely by eliminating a break for the five biggest international oil companies.