Senate Questions Oil Execs

[custosnox]

The real question here though is this: are they going to do anything about it?

http://www.tulsanow.org/forum/topic.asp?TOPIC_ID=9666

quote:
WASHINGTON - Top executives of the five largest oil companies tried to shift anger over high prices to a debate over supplies Wednesday, leading a senator to accuse them of acting like "hapless victims" while racking up record profits.

Patrick Leahy, D-Vt., told the executives there's "a disconnect" between normal supply and demand and the skyrocketing price of oil — surpassing $130 a barrel even as the oil leaders testified — that the industry has yet to explain.

J. Stephen Simon, executive vice president of Exxon Mobil Corp., said profits have been huge "in absolute terms" but must be viewed in the context of the massive scale of the industry." He also said high earnings are needed "in the current up cycle" to pay for investments in the long term when profits will be down.

"'Current up cycle,' that's a nice term," replied Leahy with sarcasm, "when people can't afford to go to work" because gasoline is costing close to $4 a gallon.

He asked Simon what his total compensation was at Exxon, a company that made $40 billion last year. Simon replied it was $12.5 million annually.

Two other executives, John Lowe, executive vice president of ConocoPhillips Co., said he didn't recall his total compensations as did Peter Robertson, vice chairman of Chevron Corp. John Hofmeister, president of Shell Oil Co., said his was "about $2.2 million" but was not among the top five salaries at his company's international parent. Robert Malone, chairman of BP America Inc., put his compensation at "in excess of $2 million."

Sen. Arlen Specter, R-Pa., said Exxon's annual profits increased from $11.5 billion to $40.6 billion in the past five years and there was no explanation for "why profits have gone up so high when the consumer is suffering so much."

The five companies earned $36 billion in the first quarter of this year.

The executives, appearing under oath before the Senate Judiciary Committee, said they know high prices are hurting people, but they said the cause is not company profits but global supply and demand. And they sought to use their appearance before Congress to argue against new taxes on their industry

"I urge you to resist these punitive policies," said Hofmeister.

Senate Democrats recently announced an energy package that would tax "windfall" profits of the five companies. That might have public appeal, Lowe told the senators, but oil companies should not be viewed as "a scapegoat" for high prices.

That was not what many senators wanted to hear.

You have "just a litany of complaints that you're all just hapless victims of a system," Sen. Dianne Feinstein, D-Calif., told the executives. "Yet you rack up record profits ... quarter after quarter after quarter."

"I'm sorry to sound like a victim. I don't feel like a victim at all," replied Robertson of Chevron, saying that he was proud of his company's investments in future supply.

Sen. Richard Durbin, D-Ill, accused the corporate executives of ignoring the plight of people suffering because of high energy prices. "Where is your corporate conscience?" he asked them.

"The issue is simple," said Leahy. "People we represent are hurting, the companies you represent are profiting."

[Wilbur]

I find in interesting that all of the Senators who are complaining in this article are Democrats.  They complain, in a capitalist system, that certain companies make too much money.  How many of those same Senators have investments in those same companies who are making too much money?  Why do they complain that a certain industry is making too much money?  Where were these same Senators when the energy industry was in the tank?  Where?  Granting tax exemptions, which now they complain is unfair.  Pass a tax increase, and that increase gets paid by the end user, which is you and me!

[Gaspar]

quote:Originally posted by Wilbur

I find in interesting that all of the Senators who are complaining in this article are Democrats.  They complain, in a capitalist system, that certain companies make too much money.  How many of those same Senators have investments in those same companies who are making too much money?  Why do they complain that a certain industry is making too much money?  Where were these same Senators when the energy industry was in the tank?  Where?  Granting tax exemptions, which now they complain is unfair.  Pass a tax increase, and that increase gets paid by the end user, which is you and me!

++1

The current Oil company profit stands at 4 cents a gallon (as testified yesterday).  They are attacking a hand full of CEOs for their salaries.  Nothing but a political circus.  It's just sad! []

[cannon_fodder]

+1 Wilbur.

My favorite moment was when Feinstein said:

"So you are just helpless victims here, that's what I'm hearing."

Really Senator?  And you are what... powerless to influence energy policy?  YOU MAKE THE RULES THEY PLAY BY!

A dog and pony show, nothing more.  Actually doing anything would sap billions from pension funds and raise the price of fuel.  Just talking about it has driven oil prices hire... so thanks for the show.

[FOTD]

The quickest way to double your money is to fold it in half and put it back in your pocket

[sauerkraut]

Yep, I just heard oil hit $135.00 a barrel today. We need to drill for our own oil, OPEC is cutting back production to keep prices high plus the falling dollar = $5.00 a gallon gasoline very soon. We have cut back oil use but OPEC just cuts back production to keep supplies tight the only answer is to drill for our own oil.[]

[custosnox]

and I just realized that I copied and pasted the link for the forum instead of the article. Doh!!  Guess I've got to dig to find the right link now.  

quote: Originally posted by Gasper The current Oil company profit stands at 4 cents a gallon (as testified yesterday).

The problem I've got with this is this

quote:
Sen. Arlen Specter, R-Pa., said Exxon's annual profits increased from $11.5 billion to $40.6 billion in the past five years and there was no explanation for "why profits have gone up so high when the consumer is suffering so much."

The five companies earned $36 billion in the first quarter of this year.

[custosnox]

Now this is interesting, came across this one while looking for the other.

http://us.rd.yahoo.com/dailynews/fc/Business/oil_and_gas/news_stories/SIG=124d11i63;_ylt=Al6ymid58NQ3Jz4QPVoBpGlv24cA/*http://money.cnn.com/2008/05/21/news/economy/oil_hearing/index.htm?postversion=2008052112

quote:
NEW YORK (CNNMoney.com) -- Amid increasing public outcry over record-shattering oil and gas prices, senators on Wednesday hauled industry executives in to testify about the recent runup.

The Senate Judiciary Committee called the hearing to explore the skyrocketing price of oil, which jumped over $4 a barrel to a new record of over $133. The committee grilled executives from Exxon Mobil (XOM, Fortune 500), ConocoPhillips Co. (COP, Fortune 500), Shell Oil Co. (RDSA), Chevron (CVX, Fortune 500) and BP (BP) as to how their companies can in good conscience make so much money, while American drivers pay so much at the pump.

"You have to sense what you're doing to us - we're on the precipice here, about to fall into recession," said Sen. Richard Durbin, D-Ill. "Does it trouble any one of you - the costs you're imposing on families, on small businesses, on truckers?"

The executives said it did, and that they are doing all they can to bring new oil supplies to market, but that the fundamental reasons for the surge in oil prices are largely out of their control.

"We cannot change the world market," said Robert Malone, chairman and president of BP America Inc. "Today's high prices are linked to the failure both here and abroad to increase supplies, renewables and conservation."

Malone's remarks were echoed by John Hofmeister, president of Shell.

"The fundamental laws of supply and demand are at work," said Hofmeister. The market is squeezed by exporting nations managing demand for their own interest and other nations subsidizing prices to encourage economic growth, he said.

In addition, Hofmeister said access to resources in the United States has been limited for the past 30 years. "I agree, it's not a free market," he said.

The executives pushed the idea that large parts of the U.S. that are currently closed to drilling - like sections of Alaska, the Rocky Mountains and the continental shelf - should be opened.

"The place to start the free market is in our own country," said one executive. [The drilling ban] sets the stage for OPEC to do what we are doing in our own country, and that is effectively limiting supplies."

John Lowe, executive vice president of ConocoPhillips, said Congress should enact a balanced energy policy. In addition to lifting the drilling ban, such a policy could include measures to encourage alternative energy sources, remove the ethanol tariff, promote energy conservation, cut regulations around refining.

"We must work together to find a real solution," said Lowe. "U.S. oil companies should be viewed not as scapegoats, but as assets."

The executives also named several things that Congress should not do, first among them being a hike in taxes or an undoing of the mergers of the late 1990s.

"Americans need companies that can effectively compete for access to new resources," said Peter Robertson, vice chairman of Chevron. "Punitive measures that weakened us in the face of international competition are the wrong measures."

The executives also frowned on a recently passed House bill giving the Justice Department the power to sue OPEC, saying it would have little effect in boosting production.

The testimony was colored by a few outbursts of protest from members of the public. Before the hearing even began, a heckler in the crowd shouted: "Stop ripping off the American public - bring these oil prices down."

The panel took issue with the amount of money oil firms are investing in finding oil, and investing in renewables.

"You know how much cash you have on hand compared to capital investment," said Durbin. "They are begging us for more refineries, for more exploration, when their refineries are only operating at 85 percent."

Chevron's Robertson said the issue wasn't really one of refining, and more just the price of crude.

We are investing all we can [in finding new oil] given the limitations of access and our own human capacity," he said. "We have adequate refined capacity, inventories are at an all time high. The issue is the price of crude."

Committee Chairman Sen. Patrick Leahy, D-Vt., likely summed up the feeling of many senators on the panel.

"The people we represent are hurting, while your companies are profiting," he said. "We need to get some balance."

Congress: Familiar ground for execs

The hearing marked the second time in as many months that top oil industry officials have been called before Congress.

In April, roughly the same lineup defended their firms before a House committee. The hearing was ostensibly called to ask the executives why they needed some $18 billion in federal subsidies in light of their record profits, but quickly became a Q&A on bigger questions in the energy business.

Lawmakers criticized the firms for not investing enough in finding new oil and developing renewable resources and told them, in thinly disguised terms, that they'd be forced to enact extra profit taxes if Big Oil continued to post such large earnings.

The oil men said they're making business decisions in the best interest of their shareholders. They repeated their often-stated position that the best way to lower prices and bring more oil to market is to open up wide swaths of the U.S. that are currently off-limits to drilling.

Although lawmakers don't vote on energy issues strictly along party lines, Democrats generally want to increase taxes on Big Oil and use the money to fund renewable energy research.

Republicans generally favor opening up the Alaska Wildlife Refuge, large parts of the Rocky Mountains, and areas off the east and west coast that have been closed to drilling since the 1970s following a public backlash after several big oil spills.

The parties are widely apart on the issues - a Republican effort to expand drilling recently failed in the Senate - and a compromise is not expected soon.

But both the Democrat and Republican proposals are long-term solutions that would have little impact on the nation's energy picture for several years, if not decades.

In the short run, experts say there's little politicians can do to bring down the price of gas.

Recent proposals to suspend the gas tax from the Democratic presidential contender Hillary Clinton and presumed Republican nominee John McCain were roundly criticized for leaving the government with a cash shortfall while possibly encouraging more driving, and by extension higher prices.

A measure to stop filling that nation's Strategic Petroleum Reserve was enacted last week with wide bipartisan support, but has done nothing so far to stem surging crude prices.

Are you feeling the pinch of gas prices? Tell us how gas prices are affecting you and what you're doing to cope. Send us your photos and videos, or email us to share your story.

First Published: May 21, 2008: 10:17 AM EDT

[OUGrad05]

quote:Originally posted by custosnox

The real question here though is this: are they going to do anything about it?

http://www.tulsanow.org/forum/topic.asp?TOPIC_ID=9666

quote:
WASHINGTON - Top executives of the five largest oil companies tried to shift anger over high prices to a debate over supplies Wednesday, leading a senator to accuse them of acting like "hapless victims" while racking up record profits.

Patrick Leahy, D-Vt., told the executives there's "a disconnect" between normal supply and demand and the skyrocketing price of oil — surpassing $130 a barrel even as the oil leaders testified — that the industry has yet to explain.

J. Stephen Simon, executive vice president of Exxon Mobil Corp., said profits have been huge "in absolute terms" but must be viewed in the context of the massive scale of the industry." He also said high earnings are needed "in the current up cycle" to pay for investments in the long term when profits will be down.

"'Current up cycle,' that's a nice term," replied Leahy with sarcasm, "when people can't afford to go to work" because gasoline is costing close to $4 a gallon.

He asked Simon what his total compensation was at Exxon, a company that made $40 billion last year. Simon replied it was $12.5 million annually.

Two other executives, John Lowe, executive vice president of ConocoPhillips Co., said he didn't recall his total compensations as did Peter Robertson, vice chairman of Chevron Corp. John Hofmeister, president of Shell Oil Co., said his was "about $2.2 million" but was not among the top five salaries at his company's international parent. Robert Malone, chairman of BP America Inc., put his compensation at "in excess of $2 million."

Sen. Arlen Specter, R-Pa., said Exxon's annual profits increased from $11.5 billion to $40.6 billion in the past five years and there was no explanation for "why profits have gone up so high when the consumer is suffering so much."

The five companies earned $36 billion in the first quarter of this year.

The executives, appearing under oath before the Senate Judiciary Committee, said they know high prices are hurting people, but they said the cause is not company profits but global supply and demand. And they sought to use their appearance before Congress to argue against new taxes on their industry

"I urge you to resist these punitive policies," said Hofmeister.

Senate Democrats recently announced an energy package that would tax "windfall" profits of the five companies. That might have public appeal, Lowe told the senators, but oil companies should not be viewed as "a scapegoat" for high prices.

That was not what many senators wanted to hear.

You have "just a litany of complaints that you're all just hapless victims of a system," Sen. Dianne Feinstein, D-Calif., told the executives. "Yet you rack up record profits ... quarter after quarter after quarter."

"I'm sorry to sound like a victim. I don't feel like a victim at all," replied Robertson of Chevron, saying that he was proud of his company's investments in future supply.

Sen. Richard Durbin, D-Ill, accused the corporate executives of ignoring the plight of people suffering because of high energy prices. "Where is your corporate conscience?" he asked them.

"The issue is simple," said Leahy. "People we represent are hurting, the companies you represent are profiting."

What's congress going to do about it? This is nothing more than a political circus to try and keep their elected seats.  Thats it.  The oil companies dont control the price of oil anyone with any semblence of knowledge knows this.  Which means the politicians must be doing one thing....pandering...

Who would have expected that?  Pandering in an election year on an issue they have no control over?  The real problem is the  way the people and our government got relaxed with cheap energy in the 1990s.  Now its biting us in the donkey and instead of taking the blame we're trying to pass the buck...

Also when did it become a crime to make money?  If thats the precedent being set in this nation it wont last another 50 years.

[bokworker]

Revenues are up because the price of oil is up... oil execs don't set the price. Profits are up because their inventory, oil in the ground, is carried at cost. As revenues increase and the cost of the inventory stays the same then profits go up. While the cost to get oil out of the ground has increased it has not increased by the amount that the end orice of the commodity has increased. The oil companies are merely reaping the benefit of the "market" setting a higher price for oil they already have.... the reverse has been true in the past and mey very well be true again at some point in the future.

One other point, if it is so damn easy, and riskless, to make these "obscene" profits then just get out there and do it yourself. Like Western Oil used to say, "if you don't have an oil well, get one"

[cannon_fodder]

If you hate oil companies, lets put that hate to good work and make them bid for their own destruction.

Open up the drilling in ANWR to competitive bidding.  That is worth nearly a BILLION in direct revenue to the federal government.  Take that money towards green initiatives, inducement prices, and other research to make alternative energy sources more viable.  A win win.

And if the oil companies catch on and try to get their money back  by forming a "green" division then they can come out WAY ahead in the bargain.

BUT, that makes too much sense.  Economically.  Short term energy policy and long term energy policy.  Plus, it doesn't blame all the problems on anyone.

[OUGrad05]

quote:Originally posted by cannon_fodder

If you hate oil companies, lets put that hate to good work and make them bid for their own destruction.

Open up the drilling in ANWR to competitive bidding.  That is worth nearly a BILLION in direct revenue to the federal government.  Take that money towards green initiatives, inducement prices, and other research to make alternative energy sources more viable.  A win win.

And if the oil companies catch on and try to get their money back  by forming a "green" division then they can come out WAY ahead in the bargain.

BUT, that makes too much sense.  Economically.  Short term energy policy and long term energy policy.  Plus, it doesn't blame all the problems on anyone.

your major energy companies already have green divisions in some cases quite large.  COP and XOM both have large renewables divisions that are fully funded.

On principle I'm in favor of ANWR drilling but we've probably got a lot more oil off the continental shelf and in the shale formations.  ANWR is a big question mark at this point.  There's only been one well ever drilled in ANWR and its pretty secretive.

[Gaspar]

I love how reality and logic starts to creep in when quiet thought-full discourse takes place.

In an attempt to pander, the senate hurled insults and blame on some of the worlds most successful capitalists.  The result was that the american public (including the distinguished members of our own TulsaNow forum) learned the difference between profit, and profit-margin.

Now Durban, Leahy, Specter and Feinstein all look like fools.  They were relying on an ignorant constituency praising them for taking on "big oil."  

What they got, was a very inquisitive, intelligent american public, turning their anger on the policies that are actually responsible for causing market shortages and allowing the inflation of prices.

I think we will start supplying and refining our own oil soon.  The very people who have spent a lifetime fighting against it, have now made it inevitable.  

I salute you!

[OUGrad05]

quote:Originally posted by Gaspar

I love how reality and logic starts to creep in when quiet thought-full discourse takes place.

In an attempt to pander, the senate hurled insults and blame on some of the worlds most successful capitalists.  The result was that the american public (including the distinguished members of our own TulsaNow forum) learned the difference between profit, and profit-margin.

Now Durban, Leahy, Specter and Feinstein all look like fools.  They were relying on an ignorant constituency praising them for taking on "big oil."  

What they got, was a very inquisitive, intelligent american public, turning their anger on the policies that are actually responsible for causing market shortages and allowing the inflation of prices.

I think we will start supplying and refining our own oil soon.  The very people who have spent a lifetime fighting against it, have now made it inevitable.  

I salute you!

We will never be able to meet our own demand for oil...however I think your point is spot on.  Why did CAFE standards go unchanged from 1987 till 2006?  Oh yeah because policy makers didn't give a **** from 1987 to 2002 because oil was cheap.  Now that its expensive and it may cost them their jobs they're being overzealous pricks and will destroy incentive for companies to make money.  

We desperately need to increase mileage requirements on vehicles and the new CAFE standards will help a lot but may require upward revisions if we truly want to minimize the effect oil has on our daily lives.  I do not think we'll ever see 2 dollar a gallon gasoline again. 2.50 or 2.75 may be possible in 2012 if world production capacity catches up with world demand.  Otherwise we may be at 4 bucks a gallon for the rest of our lives.  The solution?  Be more efficient, get some mass transit and minimize our use of oil and fossil fuels.

[Conan71]

I fail to see how a windfall profits tax would benefit the consumer unless the government confiscates the profit as a tax and uses the revenue to subsidize pump prices for gas and diesel.

Anyone care to chime in and explain what this would accomplish, because I don't see there being any benefit to the average consumer.