Oil execs defend huge profits before Senate
Posted 21 May 2008 - 03:49 PM
WASHINGTON - Top executives of the five largest oil companies tried to shift anger over high prices to a debate over supplies Wednesday, leading a senator to accuse them of acting like â€œhapless victimsâ€ while racking up record profits.
Patrick Leahy, D-Vt., told the executives thereâ€™s â€œa disconnectâ€ between normal supply and demand and the skyrocketing price of oil â€” surpassing $130 a barrel even as the oil leaders testified â€” that the industry has yet to explain.
J. Stephen Simon, executive vice president of Exxon Mobil Corp., said profits have been huge â€œin absolute termsâ€ but must be viewed in the context of the massive scale of the industry.â€ He also said high earnings are needed â€œin the current up cycleâ€ to pay for investments in the long term when profits will be down.
â€œâ€™Current up cycle,â€™ thatâ€™s a nice term,â€ replied Leahy with sarcasm, â€œwhen people canâ€™t afford to go to workâ€ because gasoline is costing close to $4 a gallon.
He asked Simon what his total compensation was at Exxon, a company that made $40 billion last year. Simon replied it was $12.5 million annually.
Two other executives, John Lowe, executive vice president of ConocoPhillips Co., said he didnâ€™t recall his total compensations as did Peter Robertson, vice chairman of Chevron Corp. John Hofmeister, president of Shell Oil Co., said his was â€œabout $2.2 millionâ€ but was not among the top five salaries at his companyâ€™s international parent. Robert Malone, chairman of BP America Inc., put his compensation at â€œin excess of $2 million.â€
Sen. Arlen Specter, R-Pa., said Exxonâ€™s annual profits increased from $11.5 billion to $40.6 billion in the past five years and there was no explanation for â€œwhy profits have gone up so high when the consumer is suffering so much.â€
The five companies earned $36 billion in the first quarter of this year.
The executives, appearing under oath before the Senate Judiciary Committee, said they know high prices are hurting people, but they said the cause is not company profits but global supply and demand. And they sought to use their appearance before Congress to argue against new taxes on their industry
â€œI urge you to resist these punitive policies,â€ said Hofmeister.
Senate Democrats recently announced an energy package that would tax â€œwindfallâ€ profits of the five companies. That might have public appeal, Lowe told the senators, but oil companies should not be viewed as â€œa scapegoatâ€ for high prices.
That was not what many senators wanted to hear.
You have â€œjust a litany of complaints that youâ€™re all just hapless victims of a system,â€ Sen. Dianne Feinstein, D-Calif., told the executives. â€œYet you rack up record profits ... quarter after quarter after quarter.â€
â€œIâ€™m sorry to sound like a victim. I donâ€™t feel like a victim at all,â€ replied Robertson of Chevron, saying that he was proud of his companyâ€™s investments in future supply.
Sen. Richard Durbin, D-Ill, accused the corporate executives of ignoring the plight of people suffering because of high energy prices. â€œWhere is your corporate conscience?â€ he asked them.
â€œThe issue is simple,â€ said Leahy. â€œPeople we represent are hurting, the companies you represent are profiting.â€
Posted 21 May 2008 - 03:56 PM
Posted 21 May 2008 - 04:37 PM
Posted 21 May 2008 - 07:13 PM
Posted 21 May 2008 - 07:30 PM
| Originally Posted by Christa |
I might be dense here...but it seems like every time this conversation is had, it goes the same way. "It's not our fault prices are so high, we can't help it if our profits are so large...." Doesn't it seem obvious? Cut your profit margin & pass the savings on to the consumer?? I know there is a supply/demand side to this...we as a nation have chosen not to compromise our protected regions by drilling for oil. I suppose we, by default ,accept the consequence of paying higher prices because we must source outside of our own country. Any one have any thoughts??
Personally I would like us to invest in making an alternative fuel. It would be so nice to cut the Middle East completely out. You know, I just read an article that by 2010 Nissan will begin rolling out electric cars but many fear that if Americans went this route we would strain our electricity grid and causing black outs. So whattagonnado?
What if gas cost $10 a gallon? - MSN Money
Posted 21 May 2008 - 07:31 PM
As far as gas prices I don't think this will make a difference but its good that the companies are being put on the spot.
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