The top executives of six of the nation’s largest oil and gas companies testified before Congress on Wednesday, at a time when high gas prices have become a political flash point in Washington and across the country.
Gas prices surged after Russia invaded Ukraine in late February, hitting $4.33 a gallon on March 11 before falling to $4.16 a gallon Wednesday, according to AAA. Prices of crude oil have dropped much more steeply, from a peak of more than $139 per barrel in early March to about $107 on Tuesday.
Democrats hammered oil executives at Wednesday’s hearing over why gas prices have not fallen in tandem with crude prices, accusing the fossil fuel firms of engaging in “war profiteering” at the expense of American consumers.
“These prices are constraining our constituents’ budgets and patience,” said Rep. Diana DeGette (D-Colo.), chair of the Energy and Commerce subcommittee on oversight and investigations.
The executives defended themselves from such claims, noting that energy industry analysts have said it’s natural for gas prices to fall more slowly than crude prices. The trend is known in the industry as the “rockets and feathers” phenomenon.
“I want to be absolutely clear: We do not control the market price of crude oil or natural gas, nor of refined products like gasoline and diesel fuel, and we have no tolerance for price gouging,” said Michael Wirth, chairman and CEO of Chevron.
Democrats also argued that fossil fuel companies have been using their soaring profits amid the war in Ukraine to enrich investors through stock buybacks and dividends, rather than to lower gas prices.
“We are here to get answers from the oil companies about why they’re ripping off the American people,” said Chairman Frank Pallone Jr. (D-N.J.). “At a time of record profits, Big Oil is refusing to increase production to provide the American people some much-needed relief at the gas pump. Instead, they’re buying back their stock at an estimated cost of about $40 billion this year.”
Pallone asked the executives whether they would commit to doing “whatever it takes” to lower prices for American consumers, including by limiting stock buybacks and dividends to shareholders. None of the six executives committed to doing so.
Scott Sheffield, the CEO of Pioneer Natural Resources, declined to dial back dividends, the quarterly payments that investors receive for owning shares. “The answer is no on dividends,” Sheffield said.
Republicans instead blamed President Biden’s climate change policies for higher energy costs.
“Rather than deflect blame, President Biden should consider his own culpability,” said Rep. H. Morgan Griffith (R-Va.). “As a direct result of President Biden’s anti-American energy agenda, prices have rapidly risen for more than a year.”
Rising gas prices pose a political liability for Democrats ahead of the midterm elections in November, when the party could lose control of Congress. Top Democrats, including House Speaker Nancy Pelosi (Calif.), have huddled to discuss legislative strategies for curbing prices at the pump in recent weeks.
One idea under consideration is to tax the “windfall” profits that oil companies have reaped amid soaring crude oil prices sparked by Russia’s invasion of Ukraine. Sen. Sheldon Whitehouse (D-R.I.), one of Congress’s most vocal climate advocates, has introduced a bill to impose such a tax, but its path forward is unclear.
Rep. Cathy McMorris Rodgers (R-Wash.) accused Democrats of keeping gas prices artificially high to garner more public support for their climate agenda.
“Democrats have never made gas prices a priority,” she said. “Why? Because they want to usher in a green revolution. If you’re wondering what life would look like under the Green New Deal, you’re getting a small taste of it now.”
McMorris Rodgers cited Biden’s decision to revoke a key permit for the Keystone XL pipeline last year as a factor contributing to high gas prices. In fact, just 8 percent of the Keystone XL pipeline had been built when Biden took office, and experts say it’s unlikely the project would have been operational today.
Several Democrats sought to walk a fine line, urging the energy companies to increase oil and gas production to alleviate supply crunches in the near term, while also investing in renewable energy to address the climate crisis in the long term.
“Long term, we need to wean ourselves off of this dependence on fossil fuels,” said Rep. Kim Schrier (D-Wash.). “But in the short term, we need you to step up” by ratcheting up production.
As the House hearing wore on, a group of Senate Republicans representing oil-producing states gathered reporters for a news conference at which they expressed amazement and exasperation that Democrats were pushing energy companies to produce more gas and oil, not less.
Several made reference to an October hearing of the House Oversight and Reform Committee, where some of the same executives testified about their companies’ purported role in spreading misinformation about climate change — and faced Democratic criticism for not doing more to wean the global economy off their product.
“They’re saying you need to invest more in terms of capital. Six months ago, these same House members were telling the executives you need to commit right now to producing less oil and gas,” said Sen. Dan Sullivan (R-Alaska), who called Wednesday’s hearing a “show trial.”
The executives appeared virtually at the hearing in October, rather than attending in person. They participated virtually again Wednesday.