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<< Previous   of   Next >> Evan Vucci / Associated Press  (click to enlarge) Shell Oil chairman John Hofmeister testifies on Wednesday before the Senate Judiciary Committee hearing on oil prices.   ADVERTISEMENT   Related Stories • Dammit, dammit, dammit 5/22/08   CONTACT THE HERALD Do you have a news tip? newstips@heraldnet.com | 425.339.3400   Published: Thursday, May 22, 2008 Big Oil's honchos grilled by Congress Senators demand to know how the top five petroleum companies can justify their billions in profits Associated Press WASHINGTON -- On a day oil prices leaped to unheard-of highs, senators lined up Big Oil's biggest executives and pummeled them with complaints that they're pretending to be "hapless victims" while raking in record profits. "Where is the corporate conscience?" Sen. Dick Durbin, D-Ill., asked the top executives of the five largest U.S. oil companies. It's all about economics, came the reply. Supply and demand. The company leaders tried to shift attention from motorists' anger over $4-a-gallon gasoline to a debate over new areas for drilling. But senators at the Judiciary Committee hearing weren't having any of that. They wanted to press the executives about public anguish over paying $60 or more to fill up a car's gas tank. "People we represent are hurting, the companies you represent are profiting," Sen. Patrick Leahy, D-Vt., told the executives. He said there's a "disconnect" between legitimate supply issues and the oil and gasoline prices motorists are seeing. The executives, sitting shoulder to shoulder in the hearing room, said they understood people were hurting, but they tried to blunt the emotion with economic analysis. Profits have been huge "in absolute terms," conceded Stephen Simon, executive vice president of Exxon Mobil Corp., but they "must be viewed in the context of the massive scale of our industry." And high earnings "in the current up cycle" are needed for investments in the long term, including when profits will be down. " 'Current up cycle,' that's a nice term when people can't afford to go to work" because gasoline is costing so much, Leahy replied. "The fundamental laws of supply and demand are at work," said John Hofmeister, chairman of Shell Oil Co., acknowledging it is something the oil industry has been saying for some time. Hofmeister was joined by executives of Exxon Mobil Corp., Chevron Corp., BP America Inc. and ­ConocoPhilips Co. Together the five companies earned $36 billion in the first three months of this year. As the executives sought to explain their profits and why prices are so high, the global oil markets were moving into new, uncharted highs, touching $133 a barrel for the first time. The national average price of a gallon of gasoline hit $3.80, with $4 showing up in more places. Crude prices increased even more in late electronic trading Wednesday, hitting $134 for the first time. Sen. Arlen Specter, R-Pa., noting that Exxon's profits had nearly quadrupled from $11.5 billion in 2002, said he had heard nothing from the oilmen that would explain "why profits have gone up so high when the consumer is suffering so much." The executives cited tight global supplies with scant spare production capacity and the fact that large areas of land and offshore waters remain off limits to drilling. And they said they're worried Congress was talking of requiring the five companies to pay more taxes. "Is there anybody here that has any concerns about what you're doing to this country with the prices that you're charging and the profits that you're taking?" Durbin asked. The titans of America's oil industry sat quietly for a moment. "Senator," replied Exxon's Simon, "we have a lot of concern about that. And we're doing all we can to put downward pressure on prices."

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