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Oil Executives Called To Answer For High Prices

posted on April 4, 2008

When grain and soybean futures soared to record highs in 1973, critics alleged speculators were manipulating the market by artificially driving prices higher. Congress responded one year later by creating the Commodity Futures Trading Commission or CFTC. But that didn't put an end to public disapproval.

Thanks again to record prices, roller-coaster-like volatility and disparity between cash and futures markets, the boo-birds are out again in force.

Responding to what one agricultural economist referred to as a "tsunami of complaints" about fund participation in the markets, the CFTC will convene a rare public meeting April 22nd.

CFTC officials aren't the only ones facing increased scrutiny these days. America's top oil executives were on Capitol Hill this week defending their combined $123 billion in profits last year and explaining why they deserve 18 billion in tax breaks.

Oil Executives Called To Answer For High Prices Top executives from the country's five major oil companies found themselves in front of a Congressional Committee this week. The House Select Committee on Energy Independence and Global Warming took issue with the way petroleum company leaders appear to be doing little if anything to handle the pain at the pump.

Rep. John Larson, D-Connecticut: "They don't have a choice here. When it's between heating your home or freezing to death that's not much of a choice. You know, when it comes down to whether or not you're going to be able to get back and forth to work that's not much of a choice. It's what my grandfather used to says, 'trust everyone but cut the cards.'"

Peter Robertson, Chevron Corporation: "We're doing our damnedest to fix this as much money as our company can with the people that we have and the infrastructure that exists."

This is not the first time oil companies have been called to testify about high prices. In 2005, when oil exceeded $65 per barrel, the petroleum company decision makers were called on the carpet. And today, those same companies say they are under even greater pressure.

The oil company witnesses told the committee that giving up profits and tax incentives would dampen investment and could lead to even higher prices. And Exxon Mobil's representative said their U.S. tax bill had exceeded its $19 billion in profits.

Jay Inslee, D-Washington State: "If you don't put research dollars into it is it going to come from the oil fairy? Somehow these new technologies are going to show up? We got to put some real money into this don't we?

J.S. Simon, Exxon Mobil: "We've got oil, and it is is in our equation, it is going to be a significant factor. We are focusing on how do we make the use of that oil much more efficient."

Last year, oil company Exxon Mobil Corporation made a record $40 billion while the average pump prices that exceeded $3 per gallon.

Other committee members asked the witnesses what might turn the tide of high gas prices.

James Sensenbrenner, R-Wisconsin: "What do each of the five of you think is the single most important policy that Congress can make to increase supply and thus take the pinch off of higher prices?"

Peter Robertson, Chevron Corporation: "We need access to all kinds of energy supplies - renewables and oil and gas. Single biggest thing, I think, would be to open up the 85 percent of the off shore acreage in the United States that is currently unattainable."

The members continued to hammer on the execs as the topic turned to alternative energy. Representative Edward Markey, a Massachusetts Democrat, noted that the combined total of investment in solar, wind and biodiesel projects for four of the oil companies in attendance was only $3.5 billion. Then he specifically asked Exxon Mobil's Simon...

Rep. Edward Markey, D-Massachusetts: "...BP is putting money into renewables and we're not talking about $100 million over 10 years we're talking about billions of dollars which are being invested. Why is Exxon Mobil renewable revolution that is being embraced by other companies even in the oil and gas sector?"

J.S. Simon, Exxon Mobil Corporation: "Our analysis is that we are not going to be able to meet the challenge you would like to make--meet, and I would like to meet, with current generation. That's our assessment."

Tags: agriculture news oil