Specter and Co. grill big-oil execs on record gas prices, companies' profit
MEMORIAL DAY weekend is the traditional start of the grilling season. But with gas prices cracking the once-unthinkable $4-a-gallon in Philadelphia and elsewhere, and on the day that crude oil topped $134 a barrel, it was squirming multimillionaire oil execs that were getting raked over the coals in Washington.
MEMORIAL DAY weekend is the traditional start of the grilling season.
But with gas prices cracking the once-unthinkable $4-a-gallon in Philadelphia and elsewhere, and on the day that crude oil topped $134 a barrel, it was squirming multimillionaire oil execs that were getting raked over the coals in Washington.
And manning the skewers was an angry Senate Judiciary Committee, including Philly's own GOP Sen. Arlen Specter, who demanded to know why consumers are suffering while oil companies are making obscene profits.
Specter, a former Philly district attorney, was in full prosecutorial mode as he challenged ExxonMobil's senior vice president J. Stephen Simon to explain why the company's profits have soared since 2002.
He said he and his colleagues were puzzled over how a company can go from earning $11.5 billion in 2002 to $40.6 billion last year.
"With the consumers suffering so drastically, not only at the pump but big issues on heating oil for the elderly - especially in a state like mine, Pennsylvania - don't you think that gives some cause for wonderment and questioning as to why profits have gone up so high?"
The executives of the five major U.S. oil companies, which reported total profits of $36 billion in the first three months of the year - were summoned before the committee to answer that question. They said, essentially: "Don't blame us - it's the law of supply and demand."
That didn't satisfy the senators.
You have "just a litany of complaints that you're all just hapless victims of a system," said Sen. Dianne Feinstein, D-Calif. "Yet you rack up record profits . . . quarter after quarter after quarter."
The senators cited the pain that high energy prices are causing farmers, small businesses and people trying to find a way to afford a vacation trip this summer.
"Is there anybody here that has any concerns about what you're doing to this country with the prices that you're charging and the profits that you're making?" demanded Sen. Dick Durbin, D-Ill
The well-paid executives, sitting shoulder to shoulder in the hearing room, were momentarily tongue-tied.
Finally, Exxon's Simon said: "Senator, we have a lot of concern about that. And we're doing all we can to put downward pressure on prices."
Earlier, Simon had conceded that "in absolute terms" profits have been huge. But, he said: "They must be viewed in the context of the massive scale of our industry."
High earnings "in the current up cycle" are needed for investments in the long term, including when profits will be down.
Sen. Patrick Leahy, D-Vt., chairman of the committee, lapsed into sarcasm when he said: "Current up cycle. That's a nice term when people can't afford to go to work" because gasoline is costing so much.
"The fundamental laws of supply and demand are at work," said John Hofmeister, chairman of Shell Oil Co. He acknowledged that since it's something the oil companies have been saying for some time, the explanation may sound "repetitive and uninteresting."
The senators assured the executives they were interested.
"People listening just don't get it," said Sen. Herb Kohl, D-Wis. "When demand isn't going crazy, why are prices going crazy?"
As the hearing progressed, runaway oil prices blew past $130 a barrel for the first time - and kept going, topping an astounding $134 in after-hours trading last night.
Average prices nationally for a gallon of gas reached $3.80, but at some stations in the Philadelphia area, the price reached - and exceeded - $4.
The hearing was to focus on legislation being considered by Congress, such as a measure that would give the U.S. the ability to bring price-fixing complaints against members of OPEC, the cartel of oil-producing nations.
The oil executives expressed the view that such a law wouldn't have much effect.
At one point during the three-hour hearing, a giant photo was produced showing President Bush shaking hands with Saudi Arabia's King Abdullah, who last week rejected U.S. calls for significant new production to lower prices.
Early in the hearing, the senators had the executives squirming when they were asked how much money they made. Several listed salaries and compensation between $2 million and $5 million a year.
But John Lowe, executive vice president of ConocoPhillips, couldn't remember his exact salary.
"I wish I made enough money that I didn't know how much I make," said Leahy, to guffaws from the other senators. *
Daily News wire services contributed to this report.