WASHINGTON – As public anger over high fuel prices and record oil company profits erupted across the nation, the major oil giants told lawmakers here that it’s all beyond their control.
“Don’t punish our industry for doing its job well,” said James Mulva, CEO of ConocoPhillips, at a Capitol Hill hearing as he fought to halt a Democratic effort to cut oil industry tax breaks that amount to about $2 billion a year, supposedly to encourage oil exploration and drilling.
The Senate Finance Committee called upon the heads of the five largest oil companies to testify about proposals by President Obama and Senate Democrats that would repeal their tax breaks. The top executives of Exxon Mobil, Shell, ConocoPhillips, BP America and Chevron, knowing that 90 percent of Americans favor ending what amounts to welfare for corporations, visibly squirmed as they tried to answer tough questions.
Sen. Ron Wyden, D-Ore., played a video of a 2005 hearing in which oil company executives said they did not need incentives to encourage oil exploration when oil was $55 a barrel. “If your company didn’t need incentives to drill for oil at $55 a barrel, how in the world can you possibly need incentives when oil is at $100 a barrel?” Wyden asked.
Mulva’s response was that oil companies should receive tax breaks available to other industries.
Sen. Max Baucus, D-Mont., chairman of the committee, told the CEOs, “Given profits of $35 billion in just the first quarter alone, it’s hard to find evidence that repealing these subsidies would cut domestic production or cause layoffs.”
One CEO all but admitted that the subsidies, paid for by American taxpayers, amount to U.S. workers funding global oil company profiteering.
“Stated simply, oil is a global commodity,” Shell Oil Co. President Marvin Odum said. “With worldwide economic recovery under way, demand is on the rise, sending prices upward.”
He implied that soaring prices are simply driven by the marketplace. But others believe otherwise.
President Obama, three weeks ago, urged Congress to repeal tax breaks for the big oil companies.
The Obama administration announced last month that it is having the Justice Department investigate the energy markets for evidence of manipulation of oil and gas prices.
“The attorney general is putting together a team whose job it is to root out any cases of fraud or manipulation in the oil markets that might affect oil process – and that includes the role of traders and speculators,” the president said at a Nevada town hall meeting.
Estimates by many market analysts are that $30 or more of the $100-per-barrel price of oil is due this speculative trading.
Trying to turn the tables and show that Democrats were taking political advantage of an unpopular industry, the panel’s top Republican, Sen. Orrin Hatch of Utah, displayed a large photo of a dog standing on top of a pony, which , he said, characterized the hearing.
Hatch, who favors subsidies for oil companies while backing cuts in Medicare, received more than $250,000 in campaign contributions from Big Oil during the last election cycle.
While the Senate hearing took place, Republican lawmakers in the House prepared to ram through a bill to speed up oil drilling in the Gulf of Mexico and to permit new drilling in Southern California, along the East Coast and in Alaska.
Nothing in the GOP bill addresses concerns by environmentalists who say the permanent effects of last year’s BP spill in the Gulf of Mexico haven’t even begun to be fully measured.
Worker safety advocates also note that nothing has yet been done to address the fact that workers who drill for oil in U.S. waters are four times more likely to die than workers drilling for oil in European waters.