Big Oil defends its big profits to Congress

April 1, 2008 2:24:57 PM PDT
Top executives of the five biggest U.S. oil companies met with skeptical lawmakers Tuesday, and defended their huge corporate profits, claiming they're in line with other industries.Members of congress asked them to explain soaring fuel prices amid huge industry bottom lines, and to explain why companies are not investing more to develop renewable energy source such as wind and solar.

The executives claimed to understand that high energy costs are hurting consumers, but argued their profits, $123 billion last year, are not outrageous.

"On April Fool's Day, the biggest joke of all is being played on American families by Big Oil," Congressman Edward Markey of Massachussetts said as his committee began hearing from the execs.

With drivers paying a national average of $3.29 a gallon at the pump and global oil prices remaining above $100 a barrel, the executives were hard pressed to defend their companies.

Alluding to the fact that congressmen often don't rate very high in opinion polls, Congressman Emanual Cleaver of Missouri told the executives: "Your approval rating is lower than ours and that means your down low."

"I heard what you are hearing. Americans are very worried about the rising price of energy," said John Hofmeister, president of Shell Oil Co., echoing remarks by the other four executives from Exxon Mobil Corp., BP America Inc., Chevron Corp., and ConocoPhillips.

But the executives told lawmakers that while their companies do earn tens of billions of dollars, they also invest tens of billions in exploration and oil production activities.

"Our earnings, though 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," said J.S. Simon, Exxon Mobil's senior vice president.

But Markey asked Simon why Exxon Mobil hasn't followed the other companies in investing in alternative energy. The four other companies reported spending as much as $3.5 billion in recent years on solar, wind, biodiesel and other renewable projects.

"Why is Exxon Mobil resisting the renewable revolution," asked Markey.

Simon said his company, which earned $40 billion last year, had provided $100 million on research into climate change at Stanford University, but that current alternative energy technologies "just do not have an appreciable impact" in addressing "the challenge we're trying to meet."

The executives said the companies already are spending billions of dollars - more than $3.5 billion over the last five years - on renewable fuels such as wind energy and biodiesel, but rejected any tax increases.

"Imposing punitive taxes on American energy companies, which already pay record taxes, will discourage the sustained investment needed to continue safeguarding U.S. energy security," Simon insisted.