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Oil execs to Congress: Don't blame us
Topic Started: Apr 1 2008, 09:31 PM (106 Views)
Dandandat
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Time to put something here
Quote:
 

Oil execs to Congress: Don't blame us for energy woes

http://www.sfgate.com/cgi-bin/article.cgi?...1/MNU7VU217.DTL

Executives from the San Ramon-based Chevron Corp. and four other major oil companies defended their record profits Tuesday before a hostile Congress led by Democrats, who criticized the oil giants for doing little to cut gas prices or invest in renewable energy.

Exxon Mobil Corp. Senior Vice President Stephen Simon, whose company recorded the largest profit in U.S. history last year at $40.6 billion, said in a boom-and-bust industry his firm needed the huge profits to pay for future oil development.

"We depend on high earnings during the up cycle to sustain this level of investment over the long-term, including the down cycles," Simon told the House Select Committee on Energy Independence and Global Warming.

Simon said that already pay record taxes and any increase "will discourage the sustained investment needed to continue safeguarding U.S. energy security," said Simon. He said over the past five years Exxon Mobil's U.S. tax bill exceeded its U.S. earnings by $19 billion.

But lawmakers noted that Exxon Mobil had also used much of its recent profits to buy back stock, making the remaining shares more valuable for investors. Democrats said the record earnings came at the expense of consumers, who are already reeling as the economy slows.

"This whole situation has been nothing more than manipulation around greed," said Rep. John Larson, D-Conn.

The hearing came as the price of regular unleaded gasoline hit a new record high, $3.29 a gallon yesterday, according to the American Automobile Association.

Oil prices recently spiked to an all-time high of $111 a barrel, although they have since fallen to closer to $100 a barrel. Analysts are now warning that as the summer driving season approaches, gas prices could rise to $4 a gallon.

Independent truck drivers staged protests around the country Tuesday against the rising cost of diesel fuel, complaining that they can no longer make a living when it costs more than $1,000 to fill up their tanks.

The oil companies are starting to feel the public's anger over the rising prices. Rep. Rep. Emanuel Cleaver, D-Mo., told the executives, "Your approval rating is lower than ours and that means you're down low."

Even some Republicans chided the oil companies for not doing more to ease costs for consumers. "With your record high profits, have you thought about lowering your prices?" asked Rep. Greg Walden, R-Ore.

The oil company officials said rising energy prices were largely the result of factors outside of their control: surging global demand for oil led by the growing economies of China and India; geopolitical instability in the Middle East and Nigeria; and the weak dollar, which makes imports more expensive.

But Chevron Vice Chairman Peter Robertson acknowledged that would be of little comfort to consumers.

"All Americans feel the pain of $100 oil," Robertson said.

The oil company executives claimed their record profits last year were in line with other industries, noting that oil and gas firms earned an average of 8.3 cents per dollar of sales, compared with 7.8 cents per dollar for the Dow Jones average.

But the sheer size of its profits, the oil industry outpaced other sectors. While the five biggest oil companies last year made $123.3 billion last year, the five biggest pharmaceutical companies earned $48.2 billion and the top five defense contractors earned $15.5 billion, according to an Associated Press analysis.

The oil company executives - figuring the best defense is a good offense - said Congress also was to blame for refusing to open the Arctic National Wildlife Refuge and offshore areas along the Outer Continental Shelf to drilling, which could boost domestic supplies of oil.

"Other countries are working cooperatively with their energy industries to ensure their supply," said John Hofmeister, president of Shell Oil. "Unless our domestic companies are allowed to compete on level ground, we run the risk of marginalizing the U.S. oil and gas industry and ultimately undermining U.S. energy supply."

Democrats are unlikely to entertain the idea anytime soon. The party is instead seeking to revoke $18 billion in tax breaks that a GOP-led Congress gave the oil industry, and give them to renewable energy producers. The House has twice passed the measure, but it has failed in the Senate.

Jay Inslee, D-Wash., said the idea of subsidizing the oil industry at time when it was reaping huge profits was absurd. "If you were going to give awards for taxpayer abuse, this would win the Heisman and the Oscar and the Nobel Prize," he said.

The committee's chairman, Rep. Edward Markey, D-Mass., pressed Exxon Mobil's Simon to explain why his company couldn't commit 10 percent of its investments to renewable energy.

"Why is Exxon Mobil resisting the renewable revolution?" he asked.

Simon responded that Exxon Mobil had pledged $100 million to Stanford University for a project to study renewable energy and climate change. But he said until renewable sources become more economically competitive, the company will focus on its core oil business.

Pleasanton Democratic Rep. Jerry McNerney, whose district includes Chevron's headquarters, praised the company for investing in geothermal power. But he pressed Robertson on when the company will start to shift away from oil.

"What's your vision in the long term and the short term of your company's makeup in relation to oil versus alternative fuel technologies?" he asked.

Robertson noted that the U.S. Energy Information Agency has forecast that oil, coal and natural gas will provide about 86 percent of the world's energy needs over the next 25 years.

"So essentially we're going to be in a fossil fuel environment for some time," Robertson said. But he added that the company will invest $2.5 billion over the next two years in renewables and its growing energy efficiency consulting business.




"Simon said" :turtle:

"He said over the past five years Exxon Mobil's U.S. tax bill exceeded its U.S. earnings by $19 billion."

this means nothing with out other data to suport its relivence.

"Independent truck drivers staged protests around the country Tuesday against the rising cost of diesel fuel, complaining that they can no longer make a living when it costs more than $1,000 to fill up their tanks."

This bothers me the most from this artical.

Rep. Emanuel Cleaver, D-Mo., told the executives, "Your approval rating is lower than ours and that means you're down low."

its good to know that congress is not compleatly obliviuse.

"Robertson noted that the U.S. Energy Information Agency has forecast that oil, coal and natural gas will provide about 86 percent of the world's energy needs over the next 25 years.

"So essentially we're going to be in a fossil fuel environment for some time," Robertson said. But he added that the company will invest $2.5 billion over the next two years in renewables and its growing energy efficiency consulting business."


I find this to be a bad aditude for many current american companies. Its what doomed the old engery companies when oil came around and it looks like it will now doom the oil companies. They should be looking more long term.
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Admiralbill_gomec
UberAdmiral
I thought the other reason energy company chairmen were brought before congress was to browbeat them about not spending all of their profits developing so-called "alternative" energy sources. The article didn't mention it. The reason why energy companies are diving into so-called alternative energy (natural gas, solar, anything but nuclear) is because there's no real return in it for them. A company is, first and foremost, responsible to shareholders. Who are those shareholders? The individual investor, the mutual fund holder, or pretty much anyone who has a retirement plan.

(This lecture was not for Dante, but rather for those posters who immediately will fix blame on the "evil Bush regime and his cronies in the industry.")

EDIT: For Dante. I wish they'd look more long term as well, as I'm looking at companies like ExxonMobil to fund my retirement... in 15-20 years. Too many people want immediate results, and that's what drives a lot of policy.
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Admiralbill_gomec
UberAdmiral
Quote:
 
"He said over the past five years Exxon Mobil's U.S. tax bill exceeded its U.S. earnings by $19 billion."

this means nothing with out other data to suport its relivence.


I don't doubt it, but then again Exxon is a world-wide company. Not all earnings are taxed here, and we do have high corporate income taxes in the US. So, the statement is factually correct, but still spin.
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Dandandat
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Time to put something here
Admiralbill_gomec
Apr 2 2008, 10:14 AM
Quote:
 
"He said over the past five years Exxon Mobil's U.S. tax bill exceeded its U.S. earnings by $19 billion."

this means nothing with out other data to suport its relivence.


I don't doubt it, but then again Exxon is a world-wide company. Not all earnings are taxed here, and we do have high corporate income taxes in the US. So, the statement is factually correct, but still spin.

Its an interesting concept for global companies. While in school almost half of a global business class we took was centered on moving generated earnings in order to minimize tax exposure.

In simulation US earnings where always artificially lowered.
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