WASHINGTON - Some of the world's top oil
executives, whose companies are logging record
profits, deny accusations that they are engaged in
"price gouging" in the United States, and even
call for more incentives for the industry.
Feeling the pinch on US consumers - and
understanding the importance of the issue for
voters - the US Congress held a hearing Wednesday
at which legislators questioned the chief
executive officers of the country's largest oil
companies.
The move came amid rising
public anger over high energy costs for consumers
and soaring profits for oil companies, which forced
an
unprecedented recognition among US lawmakers that
the country, the largest oil consumer in the
world, needs to hold the companies accountable,
and that it also needs additional refining
capacity.
Some US oil companies have
recently posted their highest profits in history.
ExxonMobil corporation, the world's largest oil
company, reported a 75% increase in profits last
month, including US$9.9 billion in the third
quarter alone.
Testifying before a joint
hearing of the Senate Energy and Natural Resources
and Commerce, Science and Transportation
Committees, the oil executives tried to turn the
tables, urging Congress to open new lands for
exploration and advocating fewer regulations as
the only means to lower energy prices.
"What we definitely need is really the
streamlining of regulations and permits," said
David O'Reilly, CEO of Chevron. "What we really
need is access [to new exploration]." Officials
from ExxonMobil, ConocoPhillips, BP America and
Shell Oil also testified on Wednesday and stuck to
similar lines.
Democratic leader, Nancy
Pelosi, had called for the House of
Representatives to pass measures providing US
consumers with relief from skyrocketing petrol and
home-heating prices. "These companies have been
given billions of taxpayer dollars in subsidies,
tax breaks and even 'tax holidays' from paying
royalties due to taxpayers from the production of
oil from public lands," she said.
Democrats have called for a house vote on
a new bill, the Federal Response to Energy
Emergencies Act, which they say would protect
consumers from price rigging by the energy
industry.
The act would also give the
Federal Trade Commission broad authority to crack
down on price gouging for a wide range of fuels
and by businesses all along the supply chain.
US consumers who heat their homes with
natural gas could see their fuel costs increase by
as much as 85% in some parts of the country, and
those who use heating oil can expect to pay an
average of 32% more.
"The average American
family will spend $4,100 on energy costs this
year, translating for many into living closer to
the financial edge," said Steve Miller, president
of the non-profit Americans for Balanced Energy
Choices.
"Affordable energy is a vital
part of Americans' way of life to warm our homes,
cook our food and to light our dinner tables. In
addition, soaring energy costs can rob American
families of the opportunity to have affordable
health care, housing and nutrition."
Democrats say they are willing to consider
punitive measures such as taxing windfall profits
related to market manipulation.
Independent watchdog and consumer groups
have complained of price gouging and appealed for
official intervention. Among the measures sought
is for the White House and Congress to force
ExxonMobil to invest some of its record profits in
new refining capacity.
Environmental
groups, including Greenpeace, argue that
ExxonMobil should fulfill its legal obligations
from a lawsuit that took place 16 years ago. The
group demanded that the company compensate Alaskan
fishermen for an oil spill that dumped 11 million
gallons of crude oil into Prince William Sound in
Alaska.
Fishermen and community members
still have not been paid the $5 billion awarded by
a jury in punitive damages in 1994, says
Greenpeace.
Other groups called for a
criminal investigation. "We believe we have solid
evidence that refiners have manipulated the
reformulated gas market by reducing supplies and
gouging consumers," said Alan Dye, president of
Gas Pump Watch, a consumer watchdog group that
submitted an analysis to the Federal Trade
Commission and the Justice Department alleging
that the oil industry has illegally hoarded
gasoline supplies to maximize profits.
"Big Oil is up to their old tricks,
sticking it to consumers while laughing all the
way to the bank," Dye said.
The group
claims that by acting in concert, the industry and
refiners ensured that supplies are artificially
limited, insulating refiners from competition,
causing record price spikes and guaranteeing
themselves hefty profits.
"Time and again,
history has shown that Big Oil will distort
competition in the marketplace to reap windfall
profits on the backs of the American public," Dye
said. "They're feathering their own nests on a
bogus premise and they need to be called to
account for their behavior."
But some
pro-industry analysts have argued against any of
these measures, particularly extra taxes on oil
profits.
"If they enact a windfall profits
tax or any other form of price control, the result
will be the exact opposite of what consumers
demand and their constituents need," said Richard
W Walker of the Dallas-based National Center for
Policy Analysis.
Walker argues that
Congressional intervention would place US oil
companies at a competitive disadvantage in the
global energy marketplace and that it would dampen
investment in domestic oil production.
