May 22, 2008, 8:00AM
Tempers boil as energy execs, senators spar over oil prices
By DAVID IVANOVICH
Copyright 2008 Houston Chronicle
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Oil prices rise; execs face Congress WASHINGTON -- With oil prices screaming past $133 a barrel and prices at the gas pump smashing records, lawmakers berated, needled, even sneered at oil company executives Wednesday for trying to present themselves as the "hapless victims" in today's energy crisis.
Members of a Senate panel grilled executives from the nation's five largest oil companies over issues ranging from multimillion-dollar executive pay to a possible Exxon Mobil Corp. deal in Iraq.
The executives have been here before, raising their right hands and swearing to tell the truth to a hostile panel.
But with crude prices spiraling into never-before-seen territory and policymakers at a loss to stop them, Wednesday's hearing took on a more acerbic, personal tone — with Democrats accusing the oil companies of inflicting serious damage to the U.S. economy.
"Does it trouble any of you when you see what you're doing to us?" asked Sen. Richard Durbin, D-Ill.
Appearing before the Senate Judiciary Committee, executives from Exxon Mobil, Chevron, Shell Oil, BP America and ConocoPhillips tried to steer the debate toward their industry's chief policy complaint: that the U.S. has closed off too many areas to oil and gas drilling.
With pink-clad protesters holding up signs — and one being escorted out yelling "We need to separate oil and state!" — the executives tried to make their case that instead of going hat-in-hand to ask such countries as Saudi Arabia to pump more crude, the federal government should allow more drilling here at home.
"If the nation set a goal of increasing domestic production by 2 to 3 million barrels a day by opening up new sources of exploration and production ... we could demonstrate to the world that we are in control of our own destiny," Shell Oil President John Hofmeister said.
But with lawmakers poised to go home for the Memorial Day weekend — the traditional start of the summer driving season — this was not the session in which oil companies were going to win any new converts.
Defending record profits
Sen. Dianne Feinstein, D-Calif., accused the executives of lacking an "ethical compass about the price of gasoline" and dismissed the industry's policy arguments as "just a litany of complaints, that you're all just hapless victims of a system."
Exxon Mobil Senior Vice President J. Stephen Simon defended his company's record profits, arguing that it depends on earnings from the "current up-cycle" to sustain large investments over the longer term.
Committee Chairman Patrick Leahy, D-Vt., pounced on Simon's use of that phrase.
"What a nice term," Leahy scoffed. "And I suppose we can tell our constituents when they're finding that they can't afford to go to work because of the price of gas, 'Don't worry, you're in a 'current up-cycle.' "
Leahy then asked the executives how much they made last year. Compensation packages for all the executives were in the millions, with Exxon Mobil's Simon testifying that he received $12.5 million last year.
When ConocoPhillips Executive Vice President John Lowe said he did not know the exact amount, Leahy responded: "Mr. Lowe, I wish I made enough money that I didn't even have to know how much I make."
With light, sweet crude for July delivery soaring $4.19 a barrel Wednesday to close at a breathtaking $133.17 on the New York Mercantile Exchange, and gas prices — according to AAA — averaging nearly $3.81 a gallon nationwide for regular, lawmakers wanted to know where the oil executives thought oil prices should be.
Shell's Hofmeister said a price range of $35 to $65 a barrel would be consistent with "our ability to run a successful company."
But Chevron Vice Chairman Peter Robertson argued a company can't produce oil from the kind of areas now available to them for that kind of price. And ConocoPhillips' Lowe argued that price would be north of $90 a barrel.
Sen. Charles Schumer, D-N.Y., questioned Exxon Mobil's efforts to land a deal in Iraq, even though the government in Baghdad has not yet finalized a national oil law or decided how to share oil revenues among the various factions in Iraq.
'We're doing all we can'
When pressed to commit Exxon Mobil not to ink any deals before an oil law is in place, Simon responded: "No, I'm not making any commitment of that type."
Calling that decision "outrageous," Schumer argued Exxon Mobil could "exacerbate the very problems that our soldiers, General (David) Petraeus and others are trying to undo."
When challenged by Durbin to say whether they had "any concerns about what you're doing to this country with the prices that you're charging and the profits you're taking," Exxon Mobil's Simon spoke up.
"We have a lot of concern about that," Simon said. "And we're doing all that we can to produce as much product as we can to put downward pressure on prices.
"When you look at what we've done, for example, in refining, we've expanded our refining capacity at a rate 40 percent higher than the rest of industry," Simon said before Durbin interrupted him.
The oil executives are slated to appear on Capitol Hill again today before a House panel.
All statements are my opinion!!
