Congress grills oil execs on record pump prices

1/04/2008 - 19:05

By Chris Baltimore

WASHINGTON (Reuters) - The U.S. Congress dragged in executives from five international oil companies on Tuesday to explain why they should not be blamed for record-high gasoline prices after booking profits of $123 billion in 2007.

Executives from Exxon, Chevron Corp , ConocoPhillips , BP Plc and Royal Dutch Shell appeared before the panel in a spectacle not seen since Congress investigated energy price spikes in the wake of the 2005 hurricanes that blasted the vast oil infrastructure along the

U.S. Gulf Coast.

"The American people deserve answers and it is time for Big Oil to go on the record about these record prices," said Rep. Ed Markey of Massachusetts, a long-time oil industry critic and chairman of the House Select Committee on Energy Independence and Global Warming.

U.S. average pump prices have risen steadily since the beginning of 2008 and this week hit a record $3.29 a gallon. Gasoline could eclipse $4 a gallon when the peak summer driving season starts according to some forecasts.

Rising pump prices have added pressure on a U.S. economy already beleaguered by an imploding housing market and recession fear as oil company profits have surged.

"(They are) reaping a major financial windfall," Markey said, pointing to Exxon Mobil Corp's 2007 profit of $40 billion, the biggest in U.S. corporate history.

Executives from the companies said factors beyond their control had driven prices up -- mainly crude oil prices that have leapt over five-fold since 2002 to a record $111.80 a barrel last month.

"Given that the largest contributor to the cost of gasoline is crude oil, this has translated into record-high gasoline prices," Peter Robertson, vice chairman of No. 2 U.S. oil company Chevron, said in testimony.

Markey supports legislation that would strip about $18 billion in tax breaks from the five biggest U.S. oil companies and put funds toward planet-friendly energy alternatives like wind and solar.

Such legislation has passed the House of Representatives twice, but has stalled in the Senate amid resistance from energy companies and their Congressional allies.

"Imposing punitive taxes on American energy companies ... will discourage the sustained investments needed to continue safeguarding U.S. energy security," Exxon senior vice president Stephen Simon said in testimony.

Markey asked why the company has not invested more in renewable energy sources despite ongoing calls for greater energy flexibility.

"Putting more money into something does not necessarily equal progress," Simon responded, pointing to a study that Exxon supports at Stanford University with $100 million in funding over a decade.

House Republican leader John Boehner mocked the hearing as a "politically motivated, made for TV" event.

(Reporting by Chris Baltimore; Editing by David Gregorio)

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