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.
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