With gasoline over $3 a gallon, Congress has questions

The executives, peppered with questions from skeptical lawmakers, said they understood that high energy costs are hurting consumers, but deflected blame, arguing that their profits ‘ $123 billion last year ‘ were in line with other industries.

‘On April Fool’s Day, the biggest joke of all is being played on American families by Big Oil,’ Rep. Edward Markey, D-Mass., said as his committee began hearing from the oil company executives.

With motorists 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 by lawmakers to defend their profits.

‘The anger level is rising significantly,’ said Rep. Emanuel Cleaver, D-Mo., relating what he had heard in his district during the recent two-week congressional recess.

Alluding to the fact that congressmen often don’t rate very high in opinion polls, Cleaver told the executives: ‘Your approval rating is lower than ours and that means you’re 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 rejected claims that their companies’ earnings are out of step with other industries and said that while they 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.

Executives from the largest U.S oil companies have been frequent targets of lawmakers, frustrated at not being able to do much to counter soaring oil and gasoline costs.

In November, 2005, Hofmeister and the top executives of the same companies represented Tuesday sat in a Senate hearing room to explain high prices and their huge profits.

The prices are of concern, Hofmeister said at the time, adding a note of optimism: ‘Our industry is extremely cyclical and what goes up almost always comes down,’ he told the skeptical senators on a day when oil cost $60 a barrel.

About six months later, when the cost of the same barrel reached $75, the executives were grilled again on Capitol Hill on their spending and investment priorities.

Recently oil prices reached a peak of $111 a barrel. While declining a bit in recent days, the price remains above $100 and there’s talk of $4 a gallon gasoline in the coming months.