WASHINGTON (Reuters) - U.S. lawmakers on Tuesday took oil industry executives to task for booking huge profits on record gasoline prices while not investing more in renewable energy to help wean the country off foreign oil.
Congress dragged in executives from five international oil companies to explain why they should not forfeit $18 billion in tax breaks after posting profits of $123 billion in 2007.
Executives from Exxon Mobil, Chevron Corp, ConocoPhillips, BP Plc and Royal Dutch Shell testified before the panel in a spectacle not seen since Congress investigated energy price spikes in the wake of the 2005 hurricanes that blasted the vast oil infrastructure along the U.S. Gulf Coast.
“The American people deserve answers and it is time for Big Oil to go on the record about these record prices,” said Rep. Ed Markey of Massachusetts, a long-time oil industry critic and chairman of the House Select Committee on Energy Independence and Global Warming.
U.S. average pump prices have risen steadily since the beginning of 2008 and this week hit a record $3.29 a gallon. Gasoline could eclipse $4 a gallon when the peak summer driving season starts, according to some forecasts.
Rising pump prices have put additional pressure on a U.S. economy already beleaguered by an imploding housing market and recession fears as oil company profits have surged.
Executives from the companies said factors beyond their control had driven prices up -- mainly crude oil prices that have leapt over five-fold since 2002 to a record $111.80 a barrel last month.
“Given that the largest contributor to the cost of gasoline is crude oil, this has translated into record-high gasoline prices,” Peter Robertson, vice chairman of No. 2 U.S. oil company Chevron, said in testimony. Crude oil costs account for about 70 percent of the price of gasoline.
Democrats were eager to blame rising oil prices on the executives, though House Republican leader John Boehner mocked the hearing as a “politically motivated, made for TV” event.
“Your approval rating is lower than ours and that means you are down low,” said Rep. Emanuel Cleaver, Missouri Democrat. “Whatever happened to shame?”
In questioning, Markey grilled Exxon senior vice president Stephen Simon on why the biggest U.S. oil company was not investing more in renewable energy sources after logging a 2007 profit of $40 billion, the biggest in U.S. corporate history.
“Putting more money into something does not necessarily equal progress,” Simon said, pointing to a $100 million investment Exxon has made with Stanford University for clean energy research.
“That just doesn’t work,” Markey said, challenging companies to put 10 percent of their annual profits toward renewable energy sources. “OPEC has us over a barrel and you say you’re going to study the issue for another 10 years.”
Markey supports legislation that would strip about $18 billion in tax breaks from the five biggest U.S. oil companies and put funds toward planet-friendly energy alternatives like wind and solar.
Such legislation has passed the House of Representatives twice, but has stalled in the Senate amid resistance from energy companies and their Congressional allies.
“Imposing punitive taxes on American energy companies ... will discourage the sustained investments needed to continue safeguarding U.S. energy security,” Simon said.
Markey said lawmakers will likely call oil executives up to Capitol Hill again in coming months if gasoline prices don’t fall.
“They are going to be the winners of the most frequent visitors to Washington contest,” he told reporters.
Editing by Russell Blinch and Jim Marshall