WASHINGTON -- The same Major Oil executives that were on the U.S. Senate Judiciary Committee hot seat Wednesday received a similar grilling Thursday by the House Judiciary Committee. Chairman John Conyers Jr. (D-Mich.) and the Task Force on Competition Policy & Antitrust Laws held a hearing entitled Retail Gas Prices, Part 2: Competition in the Oil Industry.
The executives were Robert A. Malone, chairman and president of BP America Inc.; John Hofmeister, president of Shell Oil Co.; Peter J. Robertson, vice chairman of Chevron Corp.; John E. Lowe, executive vice president of exploration [image-nocss] and production for ConocoPhillips; and J. Stephen Simon, senior vice president of Exxon Mobil Corp. The committee also invited the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), who did not appear.
The executives reiterated much of what they had told the senators, said the Associated Press: The primary cause for high oil prices is tight supplies and growing demand, and that their profits—$36 billion during the first three months of the year—are not excessive given the size of their companies and the need for reinvestment to find more oil.
The executives urged more domestic oil and gas production by opening areas now off limits including large areas of federal offshore waters and the Arctic National Wildlife Refuge (ANWR) in Alaska, where billions of barrels of oil are located. "This persistent denial of access is costing American consumers right out of their pocket books," said Hofmeister.
Representative Steve Chabot (R-Ohio) said these policies have forced America to depend on foreign imports and to "rely on the mood of third-world dictators" and the "choppy waters of OPEC."
"Democrats have interfered continuously against our efforts to bring down gas prices," said Rep. Chris Cannon (R-Utah). "The availability of oil is vast," he said, according to a CNNMoney.com report. Congress should "get out of the way of industry and let them get on with producing oil."
At yet another hearing, this one convened by the House Select Committee on Energy Independence & Global Warming, U.S. Secretary of Energy Samuel Bodman rejected a call by some members of Congress to release oil from the Strategic Petroleum Reserve (SPR), the federal government's emergency stockpile, saying oil is needed to respond to future supply emergencies and not to influence prices.
Bodman also said that he does not believe that rampant market speculation is causing record high oil prices that reached a record $135 a barrel. He said it is a matter of supply and demand that can be traced to essentially flat global production over the last three years, reported AP.
Rep. Edward Markey (D-Mass.) said he did not understand why President Bush is not releasing oil from the SPR to force down prices. "We have 700 million barrels...that are ready to be deployed," he said. The president recently signed a bill to stop adding oil into the reserve.
But Bodman said he would not recommend oil being released from the reserve.
The stockpile, now 701 million barrels, "is meant to deal with...the physical interruption of the flow of oil to our country. We don't have that issue today," he told the committee.
Markey said the release of government oil is justified because "we're in an economic crisis" as high oil costs are driving gasoline to $4 a gallon and increasing other costs.
Bodman said viewed the problem as essentially one of production not keeping up with demand. Asked if he believed there was "rampant" speculation driving up oil prices, Bodman replied: "No. I don't."
The biggest problem, he said, is flat oil production and growing demand. Up to 2004, he said the world's producers pumped about 1 million barrels more oil each year, then production increased and so did demand. Demand continued to grow, but beginning in 2005 "there has been no change in global production" and "demand has outstripped supply."
"We have sopped up all the available spare [oil production] capacity in the system," said Bodman.
The world uses about 87 million barrels of oil a day, about a quarter of it in the United States. Energy experts have acknowledged that most producers have little ability to pump more oil. The exception is Saudi Arabia, which is producing about 9.4 million barrels a day and has the ability to increase that by about 2 million barrels a day but have declined to do so. Last week, the Saudis said they were boosting production by 300,000 barrels a day in June, but that was only to make up a decline in production by other OPEC countries.
Click hereto view the prepared testimony of the oil executives (click on names).
Click hereto view CSP Daily News coverage of the Senate hearing.
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