On May 21, as oil prices leaped to an unprecedented $133 a barrel, Big Oil’s biggest executives got grilled on the Senate floor. “Where is the corporate conscience?” Sen. Dick Durbin asked execs from ExxonMobil, Chevron, BP America, Shell Oil and ConocoPhilips. Together the five companies earned $36 billion during the first three months of 2008. Their answers trotted out all the usual propaganda tactics…
Baited about their obscene salaries, they blame Congress for daring to keep the Arctic National Wildlife Refuge and other protected areas out of their hands—or even daring to think about raising taxes. AP, May 21:
It was the second time this year the executives had been summoned to testify before Congress. When they came in early April oil cost about $98 a barrel.
This time the exchanges got personal.
Simon was asked what his total compensation was at Exxon, a company that made $40.6 billion last year. Simon replied it was $12.5 million.
John Lowe, executive vice president of ConocoPhillips Co., said he didn’t recall his total compensations. So did Peter Robertson, vice chairman of Chevron Corp. Hofmeister said his was “about $2.2 million” but was not among the top five salaries at his company’s international parent. Robert Malone, chairman of BP America Inc., put his “in excess of $2 million.”
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, appearing under oath, cited tight global supplies with scant spare production capacity and the fact that large areas of land and offshore waters remain offlimits to drilling. And they said they’re worried Congress was talking of requiring the five companies to pay more taxes.
“I urge you to resist these punitive policies,” said Hofmeister.
Don’t forget the obligatory (if slightly veiled) jab at the Arabs and OPEC for having the temerity to place their national interests above the USA’s inalienable right to cheap oil. CNN, May 21:
“You have to sense what you’re doing to us – we’re on the precipice here, about to fall into recession,” said Sen. Richard Durbin, D-Ill. “Does it trouble any one of you – the costs you’re imposing on families, on small businesses, on truckers?”
The executives said it did, and that they are doing all they can to bring new oil supplies to market, but that the fundamental reasons for the surge in oil prices are largely out of their control.
“We cannot change the world market,” said Robert Malone, chairman and president of BP America Inc. “Today’s high prices are linked to the failure both here and abroad to increase supplies, renewables and conservation.”
Malone’s remarks were echoed by John Hofmeister, president of Shell.
“The fundamental laws of supply and demand are at work,” said Hofmeister. The market is squeezed by exporting nations managing demand for their own interest and other nations subsidizing prices to encourage economic growth, he said.
Meanwhile, OPEC, if you ask them, will similarly say the situation is out of their hands. Next comes the anti-communist card. Anything short of ultra-savage capitalism is creeping socialism:
In addition, Hofmeister said access to resources in the United States has been limited for the past 30 years. “I agree, it’s not a free market,” he said.
The executives pushed the idea that large parts of the U.S. that are currently closed to drilling – like sections of Alaska, the Rocky Mountains and the continental shelf – should be opened.
“The place to start the free market is in our own country,” said one executive. [The drilling ban] sets the stage for OPEC to do what we are doing in our own country, and that is effectively limiting supplies.”
“To me it was just a litany of complaints that you are all just hapless victims of a system, you blame one thing or another, which most people would say is just simply the cost of doing business,” [Sen. Dianne] Feinstein said. “Yet you rack up record profits, record profits, quarter after quarter after quarter, and apparently have no ethical compass about the price of gasoline.”
Peter J. Robertson, the vice chairman of Chevron, replied: “I don’t feel like a victim at all.”
“I feel very proud of the fact that we are investing all of our earnings,” he said. “We invest in future supplies for the world, so I am very proud of that.”
In other words, if we make things too onerous for them, Atlas will shrug, and everything will go to hell.
Time to call their bluff.