NEW YORK -- After admitting it wasn't easy nailing down a Big Oil exec to discuss gasoline prices on The Today Show, Matt Lauer grilled ExxonMobil chairman and CEO Rex Tillerson on the morning news show, taking him to task for the rising prices, the company's record profits and the industry's responsibility to the general public.
A cool Tillerson took the questions in stride while noting that gasoline pricing is a complex issue. Responding to a question about recent oil company mergers making it easier to control prices at the pump, Tillerson [image-nocss] said competition has actually become more intense in recent years. There have been more entries of new participants into the retail fuels business from grocers, hypermarkets and petropreneursas we call themlike RaceTrac, QuikTrip and Wawa, he said. It's a very competitive business at the pump.
Tillerson noted that only 30% of ExxonMobil's record quarterly profits were earned in the United States and that those profits come from a wide range of business ventures, from oil exploration to retail gasoline sales.
Before answering questions submitted by viewers of the NBC program, Tillerson offered some empathy for gasoline consumers. I understand when people pull up to the pump, they don't like the prices, he said. It's creating a lot of problems for people's household budgetsand I understand it's very difficult for a lot of families. But the alternative of not having the gasoline at all, of having long lines at the pump, I don't think is one that people find very attractive either.
To view the complete Tillerson interview, click here.
Meanwhile, the U.S. House of Representatives yesterday approved criminal penalties and fines of up to $150 million for energy companies caught price gouging, reported the Associated Press.
With bipartisan support, the House approved on a 389 to 34 vote a measure that would create a price-gouging law and permit large fines and jail time for violators. The legislation, offered by Representative Heather Wilson (R-N.M.), calls for penalties of up to $150 million for refiners and other wholesalers and $2 million for retailers. The Senate has yet to consider the legislation.
The House rejected a Republican bill that supporters said would make it easier to build refineries in hopes of easing tight gasoline supplies. All but 13 Democrats opposed the measure, intended to quicken the permitting process. They said it would not bring down gasoline prices, could lessen environmental protection and usurp local say where refineries go.
Representative Rick Boucher (D-Va.) said the problem was not a delay in permitting. "The real reason we have a refinery shortage is the companies that own refineries are profiting enormously from the...refinery bottlenecks," he said.
Republicans branded Democrats as obstructionists on energy. The vote, 237 to 188, fell short of the two-thirds needed to pass under special procedures.
Rep. Joe Barton (R-Texas), a leading supporter of the refinery bill, promised to bring it back, possibly next week, under rules that require a simple majority for approval. "There is not a panacea of short-term solutions to the [gasoline] price situation today because [demand drives price]," Barton said at a news conference. He said the government could set price controls or release large amounts of oil from the U.S. emergency reserve. But he opposes both ideas and said they would cause other problems.
Senate Majority Leader Bill Frist's proposal to give people a $100 rebate checks was all but abandoned Wednesday, ridiculed even by members of his own party as insulting and inadequate. Also seeming to lose steam was a Democratic proposal for a 60-day "holiday" from the 18.4-cent per gallon federal tax on gasoline.
Under Wilson's bill, the Federal Trade Commission (FTC) and Justice Department would have power over energy price gouging. The legislation directs the FTC to define price gouging. The measure would cover marketers of gasoline, diesel fuel, crude oil and heating fuel.
About half of the states have some price gouging statutes, but enforcement and penalties vary widely. State attorneys general have lobbied for a federal price gouging law. Nationally there is no common definition of price gouging, Arizona Attorney General Terry Goddard told a Senate hearing in November. He said some states have laws that apply only to emergencies, while others allow up to 20% price increases.
Jerry Taylor, senior fellow at the Cato Institute, said of the anti-gouging legislation: While this bill will be sure to please the tar-and-pitchfork crowd, it's idiotic from an economic standpoint. Price gouging means charging what the market will bear, which means charging free market prices. Accordingly, if truth in advertising laws applied to Congress, HR 5253 would be titled the Ban Capitalism in Gasoline Markets Act of 2006.' No good will come of this. If the FTC takes its directive seriously, it will have the effect of increasing fuel prices because conservation that might otherwise have occurred in response to high prices will not occur. Laws that increase demand over what it otherwise might have been will increase gasoline prices. It is a law of economic gravity.
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