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The Senate Oil Patch

by @ 4:41 pm on November 9, 2005. Filed under Gas Prices, Oil Prices

All day today, several self-important Sentaors have been questioning oil industry executives about the increase in gas prices and oil company profits over the past several months.

For the nation’s top oilmen, it was a new and uncomfortable reality. They were summoned by the Republican leadership of the Senate and appeared this morning before two congressional panels to explain why prices climbed as high as they did and what they intend to do with their companies’ soaring profits. The executives sought to persuade legislators not to take tough punitive action.

I suppose that the Senators aren’t looking for an explanation about how changes in supply and demand caused gas prices to rise and that the increase in profits means that these companies are doing a good job for the shareholders. No, they’re looking for someone to blame and “Big Oil” is the easy target, just like the drug companies were several years ago.

Sen. Pete V. Domenici (R-N.M.) told the executives this morning, “I expect the witnesses to answer whether you think your current profits are excessive and to talk about what they intend to do with the reserves and the profit accumulations that they have. . . . The oil companies owe the country an explanation.”

Umm, no Senator they don’t owe the country anything…..except perhaps to continue making those huge profits and providing us with the oil and gas that runs our economy. As for the Senators question, there is, of course, no correct answer to it. If the executives say that they do believe their profits are excessive, they’ve fallen into the trap. If they say that they don’t think they’re excessive, they look like greedy plutocrats. The galling thing is that this is a Republican saying this nonsense.

At today’s joint hearing of the Senate Energy and Natural Resources Committee and the Commerce, Science and Transportation Committee, held at the request of Majority Leader Bill Frist (R-Tenn.), Republicans sought to show that they can be tough with oil companies.

So this is all a show trial Senator Frist ? If that’s all it was, maybe it wouldn’t be so bad, but it plays right into the hand of those who actually want to “do something” about this non-existent problem.

Democrats tried to show they could be tougher. They demanded that the executives from Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Shell Oil Co. and BP America Inc. be sworn in. That occurred when Congress held a hearing with oil executives in 1974 to explore energy shortages and high prices, resulting in front-page images of the officials with their right hands in the air

(….)

The Democrats also sought to draw comparisons between the oil executives’ salaries and those of average Americans. Sen. Barbara Boxer (D-Calif.) presented a chart listing the executives’ compensation and pointed out that each earned bonuses that were more than “155 times greater than the typical American’s yearly salary.”

So what Senator ? Does the fact that these men happen to be running multi-billion dollar companies, and quite skillfully so, not matter at all ? Since when does one person’s wages depend on whether they are “fair” in comparison to the average Americans ?

Not all of the executives were intimidated by the pomposity of the men and women on the other side of the Committee table:

David J. O’Reilly, chief executive of Chevron, submitted testimony that calls for opening Alaska’s Arctic National Wildlife Refuge to drilling, along with the continental shelves. Raymond said that any new “wind-fall” taxes could dampen oil companies’ efforts toward developing more domesting energy sources.

“For too long, Americans have been led to believe they can enjoy low oil and gasoline prices with less exploration and refining,” O’Reilly said in his statement. “The hurricanes have shown that this equation is not sustainable.”

Wise words, but I doubt the Senators will listen.

Meanwhile, what does the White House have to say about all this ?

“Energy prices have been too high and energy companies have realized significant increases in profits,” said spokesman Scott McClellan. “It’s important that the private sector be good corporate citizens and invest in the energy infrastructure and support those who are in need.”

Apparently, the economic nuttiness in the GOP is reaching all the way to the Oval Office. As James Joyner said earlier today:

The only thing sillier is the notion that CEOs of major companies should “sacrifice” because some people are having trouble affording $3 a gallon gasoline. What sacrifice has Sen. Boxer made?

Something tells me she’s not driving a Prius.

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