Congressional outrage fuels hearing on high gas prices

By:  Kyung M. Song, Seattle Times
Source: The Seattle Times

WASHINGTON -- If only cars and trucks ran on congressional outrage, motorists might be paying a lot less at the pump.

The leaders of America's five largest oil companies braved a three-hour Senate hearing Thursday to testify on an unfortunate pair of topics: billions of dollars of tax breaks for the oil industry and the recent surge in gasoline prices.

Democratic members of the Senate Finance Committee grilled the executives of Chevron, Shell, BP America, Exxon Mobil and ConocoPhillips to justify tax subsidies for their industry while drivers in many parts of the country are paying more than $4 a gallon.

The hearing is part of a larger push by Democrats to reduce or repeal $85 billion in tax deductions and credits for oil companies, and possibly using it to offset the federal deficit. Some Democrats, including Sens. Maria Cantwell and Patty Murray, also are calling for curbs on speculative trading on oil they blame for the sharp run up in gase prices.

Ron Wyden, D-Ore., and Charles Schumer, D-NY, led off the attacks Thursday morning. Wyden played a video snippet from a 2005 congressional hearing of oil executives testifying that tax incentives for oil exploration were unnecessary because oil was selling at $55 a barrel then. How on earth, Wyden asked, could the companies defend the subsidies today, when oil is trading at more than $100 a barrel?

Schumer's query was simpler. He asked James Mulva, chairman and chief executive of ConocoPhillips, if tax breaks for oil companies were more important than using the money for student financial aid.

"Can you answer that? Yes or no?" Schumer demanded.

When Mulva hemmed and dodged, Schumer rephrased: "Do you think anyone who advocates cutting these subsidies are un-American? Yes or no?"

When Cantwell's turn came, she asked the executives how much the run up in gas prices was based on supply and demand and how much by profiteering by oil futures speculators.

Rex Tillerson, Exxon's chief executive, replied that the line isn't always sharply drawn between speculation and risk managment. For instance, the day after the outbreak of political unrest in Libya, a major producer of high-quality crude oil, prices shot up by $12 a barrel, Tillerson said.

But Cantwell later managed to elicit an estimate by Tillerson that, barring volatilties in supplies or obstacles to drilling, oil might be trading nearer to $60 or $70 a barrel.