Exxon, BP, Chevron and Shell executives grilled during House hearing on gas prices and windfall profits

WASHINGTON — Top executives at major U.S. oil companies defended themselves on Wednesday against allegations that they are exploiting international energy markets to rack up huge profits while U.S. consumers suffer at the pumps.

Darren Woods, president and CEO of Irving-based Exxon Mobil Corp., pointed to how the pandemic so completely crushed oil demand that crude prices briefly dipped into negative territory, a situation that pushed many operators in the sector to close their doors or reduce their capital expenditure. .

This has helped create the current imbalance of supply and demand which has no silver bullet, he said, given the industry has to spend heavily every year just to keep production at the same level. level.

“That’s why even at the height of the pandemic, when oil prices crashed and ExxonMobil lost $22 billion, we continued to invest to increase supply,” Woods said. “It was not without risk and was often criticized.”

Woods testified alongside representatives of five other major oil companies at a House Energy and Commerce Committee oversight subcommittee hearing on “price gouging” aimed at shed light on the role oil companies in exorbitant gas prices.

He was joined at the witness table by representatives from BP America Inc., Chevron Corp., Devon Energy Corp., Pioneer Natural Resources Co. and Shell USA Inc.

The hearing comes as Democrats scramble to blunt voter anger over inflation in general and gas prices in particular. The party faces a potentially difficult midterm election cycle that could wipe out its narrow majorities in Congress. Republicans took the opportunity to pound on the Biden administration’s energy policies, which they denounced as an obstacle to more domestic production.

GOP lawmakers oppose Biden’s cancellation of the Keystone XL pipeline, his decision to suspend oil and gas leasing on federal lands and other proposals to replace the country’s use of fossil fuels by renewable energy sources.

Democrats responded in part by pointing to the role of the economic rebound and Russia’s invasion of Ukraine in driving up gasoline prices.

President Joe Biden has sought to lower prices with releases from the Strategic Petroleum Reserve. Last week it announced that a whopping million barrels per day would flow from the SPR over the next six months, describing it as a “bridge of war” until production could ramp up later in the year. . He called on oil companies making their biggest profits in years to be patriotic and use the money to increase production.

He also proposed a “use it or lose it” policy under which companies would pay well fees on federal leases they refuse to bring into production.

Wednesday’s hearing could help lay the groundwork for legislation along these lines and other proposals, such as imposing new windfall taxes on the industry and using the money to provide relief to consumers.

Democrats cited a recent survey of 139 oil and gas companies in which 50% of all major companies said they intended to increase production by no more than 5%. A majority cited investor pressure as the main reason limiting the increase in production.

Rep. Frank Pallone Jr., DN.J., chairman of the full committee, said the companies represented at the hearing made more than $75 billion in profits last year and send much of that money back to investors.

“We’re here to get answers from big oil companies on why they’re ripping off the American people,” Pallone said. “In an era of record profits, Big Oil is refusing to increase production to provide the American people with much-needed relief at the gas pump.”

The main Republican on the committee of the whole, Rep. Cathy McMorris Rodgers of Washington, said the hearing was nothing more than a distraction from Democratic efforts to force a transition to renewable energy that has resulted in more expensive oil.

“President Biden needs cover for his war on American energy that has sent gas prices soaring,” McMorris Rodgers said.

Democrats repeatedly lobbied executives on whether they would shift money from stock buybacks and dividends to relieve consumers, and executives repeatedly responded that they intended to continue to reward shareholders while increasing production.

Woods said Exxon’s plans for the Permian Basin in Texas and New Mexico call for a 25% increase in production from 2021, which was already up 25% from 2020.

“In fact, we expect our total oil production this year to be the highest in 15 years,” Woods said.

Rep. Lizzie Fletcher, D-Houston, said she was disappointed the hearing featured more political pointing than practical solutions.

Republicans are wrong to blame high gas prices on Biden’s actions such as the cancellation of the Keystone XL pipeline permit, she said, noting that oil that would have passed through that pipeline is making its way onto the market by other means. But she also defended the importance of the oil industry and berated fellow Democrats for blocking her bid to buy oil for the SPR at the start of the pandemic after prices fell.

“If we had those reservations today, our country would be in a much better position,” Fletcher said. “As policymakers, we need to take energy policy seriously and stop using it as a political weapon.”

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