U.S. senators question big oil profits
July- September earnings at 5 companies top $25 billion (U.S.) ExxonMobil chief executive denies price gouging in wake of storms
WASHINGTON— The chiefs of five major oil companies defended the industry’s huge profits yesterday at a U. S. Senate hearing where they were exhorted to explain prices and assure customers they’re not being gouged.
There is a “ growing suspicion that oil companies are taking unfair advantage,” Sen. Pete Domenici, R- N. M., said, opening the hearing.
“ The oil companies owe the American people an explanation,” he declared. Lee Raymond, chairman of Exxon Mobil Corp., said he recognizes that high gasoline prices “ have put a strain on Americans’ household budgets” but he defended his company’s huge profits, saying petroleum earnings “ go up and down” from year to year.
ExxonMobil, the worlds’ largest privately owned oil company, earned nearly $ 10 billion ( U. S.) in the third quarter. Raymond was joined at the witness table by the chief executives of Chevron Corp., ConocoPhillips, BPAmerica Inc., and Shell Oil Co.
Together the companies earned more than $25 billion in profits in the JulySeptember quarter as the price of crude oil hit $70 a barrel and gasoline surged to record levels after the disruptions of Hurricanes Katrina and Rita. Raymond said the profits are in line with other industries when earnings are compared to the industry’s enormous revenues. But senators pressed Raymond to explain why in the aftermath of Hurricane Katrina some ExxonMobil gas station operators complained the company had raised the wholesale price of its gas by 24 cents a gallon in 24 hours. Raymond said he could not confirm the specific price increase, but that ExxonMobil had issued a directive in response to the storm disruptions “ to minimize the increase in price while at the same time recognizing if we kept the price too low we would quickly run out ( of fuel) at the service stations.”
“ It was a tough balancing act,” said Raymond, who said it was not price gouging. Although only 28 states have price gouging laws, and they vary widely as to implementation, the head of the Federal Trade Commission cautioned against enactment of a federal pricegouging law.
“ Price- gouging laws that have the effect of controlling prices likely will do more harm than good” and would be difficult to enforce, FTC chairman Deborah Platt Majoras told the hearing held jointly by the committees of energy and commerce.
Sen. Barbara Boxer, D- Calif., made the issue personal, noting that the executives were reaping multimillion- dollar bonuses on top of multimillion- dollar salaries as “ working people struggle” to pay for gasoline and face the spectre of soaring home heating bills this winter. “ Your sacrifice appears to be nothing,” Boxer told the executives.
“ It’s important that the private sector be good corporate citizens and invest in the energy infrastructure and support those who are in need,” said spokesman Scott McClellan.