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WASHINGTON -- Senior executives from the five largest U.S. oil companies defended their record profits in the face of record energy prices, along with the need for $18 billion in tax breaks and unrestricted access to reserves, before the Select Committee on Energy Independence and Global Warming yesterday, The Associated Press reported.
The oil executives were met with skepticism from committee chairman, Rep. Ed Markey (D. Mass.).
"On April Fool's Day, the biggest joke of all is being played on American families by Big Oil," he said.
In defending the industry's profits, J.S. Simon, senior vice president of ExxonMobil Corp., which made a record $40 billion last year, told the committee, "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." He added: "We depend on high earnings during the upcycle to sustain ... investment over the long-term, including the downcycles."
However, the upcycle has been going on too long, according to Rep. Emanuel Cleaver (D-Mo). "The anger level is rising significantly," he was quoted as saying by the AP.
Responding to frustration from American consumers on record energy prices, John Hofmeister, president of Shell Oil Co., echoed remarks by the other four executives including representatives of BP America Inc., Chevron Corp. and ConocoPhillips, the AP reported.
"I heard what you are hearing. Americans are very worried about the rising price of energy," he said.
Rep. James Sensenbrenner of Wisconsin, the committee's ranking Republican, asked what would bring lower energy prices.
"We need access to all kinds of energy supply," said Robert Malone, chairman of BP America, adding that 85 percent of the country's coastal waters are off limits to drilling, the report stated.
"We face a new reality, volatility, high prices, greater competition for resources," Peter Robertson, vice president of Chevron Corp., said at the hearing, adding that he understands that "Americans see the pain" of $100-a-barrel oil, the AP reported.
Setting the background for the meeting was the latest report by the federal Energy Information Administration (EIA), issued earlier this week, which showed that the U.S. retail price for gasoline hit a new record of $3.29 per gallon, rising 3.1 cents during the past week, Reuters reported. The rise was attributed to high crude oil costs being passed along to the retail pumps, the agency stated.
Meanwhile, the American Petroleum Institute (API) issued its view ahead of the meeting, trying to rebut criticism that the oil industry is to blame for record gasoline prices, Dow Jones Newswires reported.
Crude oil costs represent around 70 percent of the cost of gasoline, and that with the addition of state taxes, "which is the next most significant cost -- you can see why we're in a pretty high price environment," Red Cavaney, API president, said in a media teleconference cited by Dow Jones.