The public is irate. Congress feels the heat. The leaders of Big Oil are summoned to hearings to explain their secretive actions. It's January 1974, the last time oil executives trudged to Capitol Hill for a famous appearance before lawmakers looking into prices and profits. Gasoline supplies are short, lines snake around stations, and prices have soared to 50 cents a gallon (adjusted for inflation, that would be $2.02).
A Saudi-led oil embargo is in full swing, and the oil companies are raking in huge profits. A windfall profits tax is threatened. Exxon Corp. reports that its profit in the third quarter of 1973 leapt nearly 80 percent to $638 million. (In today's dollars that would be $2.57 billion. By contrast, in the third quarter of 2005, Exxon Mobil Corp.'s profit is up 75 percent, to $9.92 billion; gasoline prices today are averaging $2.36 for a gallon of regular, according to the AAA).
Back in '74, lawmakers want to know whether the oil companies have been keeping gasoline off the market to drive up prices and whether they are leaving productive wells idle. The executives have been called in for answers by Sen. Henry M. Jackson (D-Wash.), who declares, "The facts are we do not have the facts." Amoco Corp.'s vice president, Richard H. Leet, calls the charges "wild and unsupported." Z.D. Bonner, president of Gulf Oil Corp., adds, "Absolute nonsense." Bonner says the culprits in the price climb are rising demand; big, powerful cars; and antipollution devices.
Two days later, the Maryland legislature holds its own hearings. Sen. Robert A. Pascal (R-Anne Arundel) asks Warren Davis, manager of economics for Gulf Oil, "Does your loyalty go first to your shareholders or to the American public?"
Davis replies: "Our feeling is that it is a joint responsibility and we can't give absolute priority to either group. We feel what's good for the United States is good for the Gulf Oil Corporation."
Ralph Nader, the auto-safety advocate, turns his censorious gaze on oil profits. He produces a report claiming that Exxon paid taxes of just 6.5 percent on profit of $3.7 billion in 1972. In vintage Naderese, his Tax Reform Research Group declares, "Taxpayers have been tricked into paying the oil companies and their wealthy investors billions through tax subsidies."
With oil supplies from the Organization of Petroleum Exporting Countries cartel in jeopardy, Joseph Kraft, in The Washington Post, suggests applying pressure to two countries that might work on behalf of the United States. "The obvious candidates are Venezuela and Iran, two producing countries outside the Arab world," Kraft writes. "Because both are friendly to the West and need oil revenues immediately for economic development, they are sensitive to the policies of the United States and its allies."
In early 1974, questions dog the oil companies -- and, as it happens, the White House. President Richard M. Nixon promises to provide whatever the Federal Energy Office and Internal Revenue Service need to audit the oil companies. "The main thing is," Nixon says in January 1974, "I want the truth."