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MILWAUKEE--Gov. Jim Doyle used the state’s subpoena authority to compel oil company executives to meet at the University of Wisconsin-Milwaukee’s School of Continuing Education and explain why gas prices rose by nearly 70 cents the day after Hurricane Katrina struck the Gulf Coast, reported Greater Milwaukee Today .
The chief executives of British Petroleum, Chevron, ConocoPhillips, ExxonMobil, and Shell Oil companies did not attend the hearing, as they did before a recent Congressional hearing, and sent in their place executives who were largely familiar with the wholesale side of their business and made it clear they could make no commitments for their companies, according to the report.
A panel of state officials, comprised of Rod Nilsestuen, secretary of the Department of Agriculture, Trade and Consumer Protection; Kimberly Walker, an administrator for the Department of Administration, and Burnie Bridge, an administrator for the Department of Health and Family Services, asked the group questions about why the energy rates rose so quickly, where the profits went, and whether the oil companies would redirect some of those profits to state users of natural gas and gasoline, Greater Milwaukee Today reported.
"A family with an annual income of $40,000 per year will pay an extra $2,000 next year in gas," Doyle said in his opening remarks. "There was $113 million made in the six weeks after Hurricane Katrina in elevated prices and we were told it was because of gas shortages. But I didn’t see people waiting in lines. After the quarterly [oil company] profits report came out, it became pretty clear where the money went."
Brent Faulk, vice president of Natural Gas Trading for Chevron USA, explained that one-third of the country’s natural gas production was ruined in the Gulf. "While production was stalled and slowly recuperating, the demand increased, making prices go up," he said. As they recover, demand grows faster than supply, making the market extremely tight. He said consumers must be patient in waiting for price stability, reported WisPolitics.com.
The future of the market is unclear, each exec testified, but all agreed that reinvesting profits is the key to growth in the market and the best way to prevent future crises. The response didn’t satisfy the panelists, according to the WisPolitics.com report.
Nancy Carter, senior vice president of logistics for BP America, mentioned the company donated fuel to New Orleans and increased its level of charitable donations by $12 million. She then agreed to take the state officials’ request for energy assistance back to her company for consideration. The other four executives agreed to do the same and promised to have a response by the end of December, WisPolitics.com reported.