Oil Execs Say "Don't Blame Us!"

Wed, Apr 2, 2008 at 1:27 pm

    Oil Execs Say "Don't Blame Us!"

    Oil Firms Aren’t to Blame for Prices, Execs Tell House Panel

    Growing demand and curbs on U.S. drilling are among reasons they cite for record highs at the pump.

    April 02, 2008

    WASHINGTON DC — Executives from the five largest oil companies told a
    House panel Tuesday that they were not responsible for record gas
    prices and defended the industry’s record profits for 2007.

    The oil industry is cyclical and will experience ups and downs, J.
    Stephen Simon, an Exxon Mobil Corp. senior vice president, told the
    House Select Committee on Energy Independence and Global Warming.

    These days, he acknowledged, "we are currently in an up cycle."

    Executives from Exxon Mobil, Shell Oil Co., BP America Inc., Chevron
    Corp. and ConocoPhillips — which reported combined profits of $123
    billion last year — shifted blame for high prices to issues outside
    their control, including growth in global demand, geopolitical events,
    material and labor costs, the fall in the dollar’s value and government
    restrictions on U.S. oil and natural gas resources.

    Some committee members said that restrictions on new oil drilling
    offshore may have contributed to rising gas prices because the U.S.
    consumes 25% of the world’s oil, most of which is imported.

    "We have made a choice as a nation to not advantage ourselves to our own oil supply," said Rep. Candice S. Miller (R-Mich.).

    Opening or improving existing areas of oil exploration could increase
    supply, thus reducing prices at the pump, the panel was told.

    "We need your help to open up the 85% of the outer continental shelf
    that is now off-limits to environmentally responsible oil and gas
    exploration and development," said Peter J. Robertson, Chevron vice
    chairman.

    "We cannot expect other countries to expand their resource development
    to meet America’s need when our government limits development at home."

    The companies need to think of a better idea, said Judy Dugan, research
    director for Consumer Watchdog, a Santa Monica consumer group.

    "When the only idea that oil company executives can agree on for curing
    our energy woes is to open up the coast of California for oil drilling,
    it’s proof that Congress has to take the reins," she said in an e-mail.
    "These hugely profitable companies continue to demand freedom to drill
    anywhere while they give lip service, if that, to renewable energy."

    Four of the five companies have invested in alternative energy, but the
    executives told the panel that oil would be a part of the U.S. economy
    for years to come.

    "We must disavow the perception that alternative sources of energy can
    quickly fix the problem," said John E. Lowe, an executive vice
    president of ConocoPhillips.

    Democrats grilled Simon about Exxon Mobil’s relatively low contribution
    to alternative energy — $100 million of its $40-billion profit.

    Simon said his company did not believe that existing technology for
    alternative resources was viable and instead was focusing on using oil
    more cleanly.

    Chevron and BP America were praised for the steps they had taken toward renewable energy.

    "We knew we were in the carbon business and our business emits
    greenhouse gases," said BP America Chairman Robert A. Malone. "Seven
    years later, it’s still a problem."

    Despite advances, said Shell President John D. Hofmeister, alternative energy hasn’t become commercial enough to be profitable.

    However, he said, "as we move up the maturity curve, I believe we’ll make a lot of money on renewable energy."

    In February, the House voted to end tax credits for the oil companies
    and shift the resulting revenue to funding renewable resources such as
    wind, solar and geothermal energy. President Bush has said he will veto
    the bill if it gets to his desk.

    The executives said the tax breaks served as an incentive for
    investment in new production, and removing them would only drive gas
    prices higher.

    "The Congress is punishing five companies by name," Hofmeister said of the bill.
    —————-
    Contact the author at: sarah.wire@latimes.com

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