By H. JOSEF HEBERT, Associated Press Writer
WASHINGTON - Top executives of the five biggest U.S. oil companies said Tuesday they know high fuel prices are hurting consumers, but deflected any blame and argued their profits — $123 billion last year — were in line with other industries.
“On April Fool’s Day, the biggest joke of all is being played on American families by Big Oil,” said Rep. Edward Markey, D-Mass., as his committee began hearing from the oil company executives.
Lawmakers were looking for answers to the soaring fuel costs a day after the Energy Department said the national average price of gasoline reached a record $3.29 cents a gallon and global oil prices remained above $100 a barrel although supplies of both gasoline and oil seemed to be adequate.
“I heard what you are hearing,” John Hofmeister, president of Shell Oil Co., told Markey, adding in prepared testimony that he knows that “Americans are worried about the rising price of energy…. These cost increases are hitting consumers hard, particularly the poor and those on fixed incomes.”
But neither Hofmeister nor the executives from Exxon Mobil Corp., BP America Inc., Chevron Corp., and ConocoPhillips said their companies should be blamed and they rejected the notion that their profits are extreme.
“Our earnings, though high in absolute terms, need to be viewed in the context of the scale and cyclical, long-term nature of our industry as well as the huge investment requirements,” said J.S. Simon, Exxon Mobil’s senior vice president. Last year the oil and gas industry earned 8.3 cents per dollar of sales, only a little higher than the Dow Jones Industrial Average for major industries, he argued in prepared testimony.
Executives from the largest U.S oil companies have been frequent targets of lawmakers, frustrated at not being able to do much to counter soaring oil and gasoline costs.
In November, 2005, Hofmeister and the top executives of the same companies represented Tuesday, sat in a Senate hearing room to explained high prices and their huge profits.
The prices are of concern, Hofmeister said at the time, adding a note of optimism: “Our industry is extremely cyclical and what goes up almost always comes down,” he told the skeptical senators on a day when oil cost $60 a barrel.
About six months later, when the cost of the same barrel reached $75, the executives were grilled again on Capitol Hill on their spending and investment priorities.
Recently oil prices reached a peak of $111 a barrel. While declining a bit in recent days, the price remains above $100 and there’s talk of $4 a gallon gasoline in the coming months.
Markey challenged the executives to pledge to invest 10 percent of their profits to develop renewable energy and give up $18 billion in tax breaks over 10 years so money could be funneled to support other energy and conservation.
The executives said the companies already are spending billions of dollars — more than $3.5 billion over the last five years — on renewable fuels such as wind energy and biodiesel, but rejected any tax increases.
The White House has repeatedly rejected use of the oil in the federal Strategic Petroleum Reserve to influence prices. More…
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