WASHINGTON — The nation's top oil executives on Tuesday refused to take the blame for skyrocketing oil prices and instead urged Congress to open up previously off-limits areas such as Arctic National Wildlife Refuge for exploration.
Five executives spent three hours fielding questions from a House select committee probing gasoline prices and oil company strategies for investing in alternative fuel technologies.
"For too long, this administration's energy policy has led to tax breaks for Big Oil, and tough breaks for American families," said Rep. Ed Markey, D-Mass, chairman of the Select Committee on Energy Independence and Global Warming. "American consumers shouldn't have to break the bank to fill the tank. The American people deserve answers and it is time for Big Oil to go on record about these record prices."
The oil industry denounced the hearing as "political theater" before it even started.
"Assaulting an American industry with punitive taxes, additional federal renewable fuel mandates that may have a negative impact on supply and actually increase greenhouse gas emissions, and the exploitation of its executives for just another Capitol Hill photo op is hardly a remedy that will produce the desired relief for consumers," said Charles Drevna, president of the National Petrochemical and Refiners Association.
But while Markey at one point pressed ExxonMobil's senior vice president, Stephen Simon, for better answers on how much money the company spends researching alternative fuels, Tuesday's hearing failed to take an accusatory tone.
The oil companies stayed on the offensive, blaming high consumer gas prices on a myriad of factors, but mostly on speculation and the declining value of the U.S. dollar.
Republicans and Democrats alike warned the executives that there would be a backlash against the companies and their record profits.
"The anger level is rising significantly," Rep. Emanuel Cleaver, D-Missouri, told the executives. "Your approval ratings are lower than ours, and that's damn low."
Exxon, the world's most profitable publicly traded corporation, was most defensive about its profits, but took a hard line with the committee on legislation that would rescind an $18 billion tax break for the five biggest oil companies and use the money to encourage investment in renewable and alternative energy. In addition to Exxon, the committee heard from Shell, BP, Chevron and ConocoPhillips.
Earnings in a commodity-based business are cyclical, warned Simon, and profits in high times help the oil companies through leaner periods. Exxon's U.S. tax bill exceeded its U.S. earnings by $19 billion over the past five years, Simon said.
"Government mandates and subsidies distort market forces and impede technological innovation," he said. "Raising taxes on oil and gas production to subsidize alternatives will likely lead to less overall energy production, not more."
Overall, though, the oil companies tried to put a friendly face on the amount of money they're spending on developing U.S. oil and gas resources as well as alternative fuels research. But they also warned that for the foreseeable future, the U.S. — and the world — will continue to depend on fossil fuels even as new technologies are developed.
BP is spending $30 billion over the next five years on expanding natural gas production in the Rocky Mountains, on Gulf Coast development and on infrastructure improvements to Alaska's North Slope oil fields, said Robert Malone, chairman and president of BP America.
"The oil and gas development can occur in an environmentally responsible way," said John Hofmeister, president of Shell Oil Company. "In 2006, Congress opened new areas of the Gulf of Mexico to exploration and development. More such access is warranted so that U.S. consumers can have access to U.S. natural resources."
Surveys of the available resources in the outer continental shelf are based on 30-year-old technology and should be updated, Simon said, and the government could sponsor new seismic surveys.
Sen. Lisa Murkowski, who last month introduced legislation that would open up the Arctic National Wildlife Refuge to development if oil prices hit $125 a barrel, called on her colleagues to consider her bill.
“There is a lot of hand wringing in Washington about what to do about record high oil prices that are strangling our economy," Murkowski said Tuesday. "America should produce our own oil to send a signal that we are willing to increase our own supplies and drive down prices."
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