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Oil executives defend profits before Congress

WASHINGTON — When it comes to public opinion, Congress isn't held in very high regard, Rep. Emanuel Cleaver reminded executives of the country's biggest oil companies.

Then the Missouri Democrat added, "Your approval rating is lower than ours, and that means you're down low."

So it went Tuesday as oil company chiefs defended their huge profits in the face of record gasoline prices — perhaps heading toward $4 a gallon — and a winter during which many people have been struggling to keep up with heating bills.

"On April Fool's Day, the biggest joke of all is being played on American families by Big Oil," said Rep. Edward Markey, D-Mass., as he opened the hearing.

The executives of Exxon Mobil Corp. as well as Shell Oil Co., BP America Inc., Chevron Corp. and ConocoPhillips said they know fuel costs are hurting people but argued that it's not their fault and that their profits are in line with other industries.

Appearing before a House committee, the executives were pressed to explain why they should continue to get billions of dollars in tax breaks when they made $123-billion last year and motorists are paying an average of $3.29 a gallon at the pump.

"Our earnings, although high in absolute terms, need to be viewed in the context of the scale and cyclical, long-term nature of our industry as well as the huge investment requirements," said J.S. Simon, senior vice president of Exxon Mobil Corp., which made a record $40-billion last year.

"We depend on high earnings during the up cycle to sustain … investment over the long-term, including the down cycles," he continued.

That up cycle has been going on too long, Cleaver said.

While Democrats hammered the executives for their profits and demanded they do more to develop alternative energy sources such as wind, solar and biofuels, Republican lawmakers called for opening more areas for drilling to boost domestic production of oil and gas.

Markey wanted to know why the companies aren't investing more in energy projects other than oil and gas — or giving up some tax breaks so the money could be directed to promote renewable fuels and conservation and take pressure off oil and gas supplies.

He challenged the executives to pledge to invest 10 percent of their profits to develop renewable energy and give up $18-billion in tax breaks over 10 years so money could be funneled to support other energy and conservation.

They responded their companies are spending on alternative energy projects and argued new taxes would dampen investment and could lead to higher prices.

>>fast facts

Measuring up

Oil and gas executives on Tuesday argued that their record profits are in line with the average of other industries. The combined 2007 earnings of five top companies in these industries:

Pharmaceutical: $48.24-billion profit on $230.64-billion revenue, or 20.9 cents on the dollar

Oil and gas: $123.29-billion profit on $1,460.20-billion revenue, or 8.4 cents on the dollar

Defense: $15.5-billion profit on $229.59-billion revenue, or 6.8 cents on the dollar

Oil executives defend profits before Congress 04/01/08 [Last modified: Wednesday, November 3, 2010 11:18am]
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