In heated hearings, oil bosses defend big profits

updated 7:07 p.m. ET Nov. 9, 2005

WASHINGTON - The Senate hearing had yet to begin when a dispute erupted over whether the top executives of five major oil companies should testify under oath about their record profits.

Democrats wanted it that way, but Republicans balked, calling such a move a needless photo op that smacked of grandstanding. So no oath was taken.

In the three hours that followed, the executives, whose companies and parent corporations earned $32.8 billion during the last quarter, provided little beyond what the industry has been saying for weeks: Their profits are huge because the industry is huge; the companies are ready to invest billions of dollars to get more oil; and if Congress tries to punish them by imposing a windfall profits tax, it will only lead to fewer such investments.

The oil executives found little sympathy from senators, who said their constituents are suffering from high energy prices while Big Oil makes big profits.

Sen. Barbara Boxer, D-Calif., cited multimillion-dollar bonuses — atop multimillion-dollar salaries and stock options — the executives are getting while “working people struggle” to pay for gasoline and face the specter of soaring home heating bills.

“People are concerned about fairness and justice at a time of sacrifice,” Boxer told the executives. “Your sacrifice appears to be nothing.”

None of the executives responded.

There is a “growing suspicion that oil companies are taking unfair advantage,” said Pete Domenici, R-N.M. “The oil companies owe the American people an explanation.”

Talking to reporters after the executives were dismissed, Domenici praised them for answering all the questions but added, “The question of gouging still remains” a mystery.

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, the world’s largest publicly traded oil company, earned nearly $10 billion in the third quarter. Raymond was joined at the witness table by the chief executives of Chevron Corp., ConocoPhillips, BPAmerica Inc., which is a division of BP PLC, and Shell Oil Co., a division of Royal Dutch Shell PLC.

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.

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