Big Oil executives defend industry, record profits

The top executives of some of the world’s largest oil companies, who had been summoned to appear before the Senate Judiciary Committee to explain their “exorbitant profits,” on Wednesday defended their industry and challenged Congress to allow additional oil exploration.

They faced strong criticism from Democratic senators who noted that the companies are making record profits while Americans are hurting at the pump.

{mosads}“Consumers are angry — and they have every right to be — and the American economy is buckling under the weight of gas prices,” said Sen. Herb Kohl (D-Wis.). “And while consumers and businesses suffer from these price increases, the oil industry seems only to get richer and richer.”

The executives argued that the world market is dictating the cost of oil, saying that Congress should open up new areas for exploration and refrain from punishing the industry for its profits.

“U.S. oil companies should be viewed as the key to the energy solution, not as scapegoats but as assets in this global energy race,” said John Lowe, an executive vice president with ConocoPhillips. “We must be allowed to compete on level ground for the benefit for our country.”

Peter Robertson, vice chairman of the board of Chevron Corporation, noted that “Congress has recently made some hard policy choices on renewables and energy efficiency.

“We hope you can also make the equally hard choices to open up more federal lands and allow us to responsibly produce more American oil and natural gas, which can supply us for decades to come,” Robertson stated.

He argued that “punitive measures that weaken us in the face of this international competition are the wrong solution at this critical point in our history.”

ConocoPhillips’s Lowe agreed.

“We urge you not to pass measures that have public appeal but would be counterproductive, such as tax increases that diminish our investment capabilities, reduce the attractiveness of high-cost domestic production, or disadvantage U.S. oil and gas companies,” Lowe told senators. “This has been tried before with extremely negative results: reducing supplies, eliminating jobs and resulting in higher prices. The nation cannot afford to make that mistake again.”

The high cost of gasoline is expected to play a major role in this fall’s election, and both parties have sought to blame the other for the skyrocketing prices.

Committee Chairman Patrick Leahy (D-Vt.) left no doubt about who he thinks is responsible for the current situation.

“The president once boasted that with his pals in the oil industry he'd be able to keep prices low and consumers would benefit,” Leahy said. “Instead, it appears to be his friends in the oil industry who have benefited.”

Leahy added that there appears to be a “disconnect” between normal supply and demand and the current prices.

“We need to get prices under control and back to competitive levels and we need to do it now,” he stated.

Alabama Republican Sen. Jeff Sessions noted that “the world market for oil is not a free market.”

He also pointed out that oil companies “don’t exist to produce the lowest possible price of fuel for our constituents. They exist to maximize their profits for their shareholders.”

Sessions added that “shortages of supplies have allowed … extraordinary profits to occur,” stating that it is up to Congress to create a climate in which prices will fall.