Congress questions Big Oil’s big profits

updated 7:56 p.m. ET April 1, 2008

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., the nation’s biggest, and four other oil companies said they know fuel costs are hurting people, but they argued it’s not their fault and 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, suggested Cleaver, who said his recent trip back to Missouri during a two-week congressional recess taught him one thing: “The anger level is rising significantly.”

“I heard what you are hearing. Americans are very worried about the rising price of energy,” said John Hofmeister, president of Shell Oil Co., echoing remarks by the other four executives including representatives of BP America Inc., Chevron Corp. and ConocoPhillips.

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.

What would bring lower prices? asked Rep. James Sensenbrenner of Wisconsin, the committee’s ranking Republican

“We need access to all kinds of energy supply,” replied Robert Malone, chairman of BP America, adding that 85 percent of the country’s coastal waters are off limits to drilling.

But 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.

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