Oil Company Execs Defend Huge Profits

Bless Boxer! notice the drop in oil prices? geez... louise...

Oil Company Execs Defend Huge Profits
http://news.yahoo.com/s/ap/20051109/ap_on_go_co/
congress_oil&printer=1;_ylt=Al0oAt29lVm4XQ_CiMBgud6MwfIE;_ylu=X3oDMTA3MX
N1bHE0BHNlYwN0bWE-

By H. JOSEF HEBERT, Associated Press Writer 6 minutes ago

Oil executives sought to justify their huge profits under tough
questioning Wednesday, but they found little sympathy from senators
who said their constituents are suffering from high energy prices.

"Your sacrifice appears to be nothing," Sen. Barbara Boxer (news,
bio, voting record), D-Calif., told the executives, citing
multimillion-dollar bonuses the officials are receiving amid soaring
prices at gasoline pumps and predictions of more of the same for
winter heating bills.

There is a "growing suspicion that oil companies are taking unfair
advantage," said Sen. Pete Domenici (news, bio, voting record), R-
N.M. "The oil companies owe the American people an explanation."

The executives represented five major companies that, along with
their global parent corporations, earned more than $32.8 billion
during the July-September quarter. Consumers, meanwhile, saw gasoline
prices soar beyond $3 a gallon in the aftermath of supply disruptions
caused by Hurricanes Katrina and Rita.

Lee Raymond, chairman of ExxonMobil Corp., the world's largest
publicly traded oil company, acknowledged the high gasoline and home
heating prices "have put a strain on Americans' household budgets,"
but he defended his company's profits. Petroleum earnings "go up and
down" from year to year and are in line with other industries when
compared with the industry's enormous revenues.

It would be a mistake, said Raymond, for the government to impose
"punitive measures hastily crafted in response to short-term market
fluctuations." They would probably result in less investment by the
industry in refineries and other oil projects, he said.

ExxonMobil earned nearly $10 billion in the third quarter. Raymond
was joined at the witness table by the chief executives of Chevron
Corp., ConocoPhillips Co., BP America Inc. and Shell Oil Co.

But senators pressed the executives to explain why gasoline prices
jumped so sharply in the aftermath of Hurricane Katrina, when prices
at the pump in some areas soared by $1 a gallon or more overnight.

Sen. Bill Nelson (news, bio, voting record), D-Fla., asked why the
industry didn't freeze prices, as it did after the Sept. 11, 2001,
terrorist attacks.

"We had to respond to the market," replied Chevron chairman David
O'Reilly.

Raymond said that after Sept. 11 "the industry wasn't concerned about
whether there was adequate supply," as it was after this year's Gulf
storms. By keeping prices higher, adequate supplies were assured, he
maintained.

Democrats said that during the storm 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 his company had issued guidelines "to minimize the
increase in price" but added, "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 ExxonMobil was
not price gouging.

A number of Democrats have called for windfall profits taxes on the
industry. Other senators, including Majority Leader Bill Frist, R-
Tenn., have said it may be time to enact a federal law on price gouging.

Some Republican and Democratic lawmakers have suggested that the oil
companies should funnel some of their earnings to supplement a
federal program that helps low-income households pay heating bills.

That brought a cool reception from the executives.

"As an industry we feel it is not a good precedent to fund a
government program," said James Mulva, chairman of ConocoPhillips.

The head of the Federal Trade Commission said a federal price-gouging
law "likely will do more harm than good."

"While no consumers like price increases, in fact, price increases
lower demand and help make the shortage shorter-lived than it
otherwise would have been," FTC Chairman Deborah Platt Majoras told
the hearing.

"That's an astounding theory of consumer protection," replied Sen.
Ron Wyden (news, bio, voting record), D-Ore.

Mulva of ConocoPhillips said, "We are ready open our records" to
dispute allegations of price gouging. ConocoPhillips earned $3.8
billion in the third quarter, an 89 percent increase over a year
earlier. But Mulva said that represents only a 7.7 percent profit
margin.

"We do not consider that a windfall," he said Mulva.

Chevron's O'Reilly attributed the high energy prices to tight
supplies even before the hurricanes struck. He said his company is
"investing aggressively in the development of new energy supplies."

Shell earned $9 billion in the third quarter, said John Hofmeister,
president of Shell Oil Co., but he said the company's investment in
U.S. operations over the last five years was equal to its income from
U.S. sales.

"We respectfully request that Congress do no harm by distorting
markets or seeking punitive taxes on an industry working hard to
respond to high prices and supply shortfalls," said Hofmeister.