The Independent: US oil chiefs reject claims they are 'ripping off' customers: “A growing number of politicians believe a windfall tax should be levied to create a fund to help consumers pay for heating bills and also to be invested in developing green energy.”: Thursday 10 November 2005
By Katherine Griffiths in New York
Published: 10 November 2005
Senior executives from five of the world's largest oil companies were forced to defend themselves yesterday against accusations of exploiting consumers, in the wake of sky-high oil prices, and fend off calls for a windfall tax on record profits in the energy sector.
In a high-profile hearing on Capitol Hill, Lee Raymond, the chief executive of Exxon Mobil, and the US heads of BP and Royal Dutch Shell said the surge in oil and gas prices this year reflected market movements caused by extraordinary events including hurricanes, rather than price-rigging.
In a combative joint session of the Senate's energy and commerce committees, Republicans normally sympathetic to the oil industry joined Democrats to challenge the executives, saying their constituents were struggling to afford petrol and heating costs.
Pete Domenici, the Republican chairman of the Senate Energy Committee, said: "My constituents think somebody is rigging those prices and that they are getting ripped off."
Byron Dorgan, a North Dakota Democrat, asked why the federal government should not take back some of the money given to oil companies in the form of tax breaks in this year's energy bill. He has proposed a bill whereby a windfall tax would kick in on 50 per cent of revenues made when oil prices rise to more than $40 a barrel. The tax "would be the single biggest incentive on oil companies to do the right thing," Mr Dorgan said, which would include investing more money in finding new sources of energy.
Mr Domenici asked the executives, who included the heads of Chevron and ConocoPhillips, to explain the complex process for setting oil prices, to dispel consumers' suspicions that large oil companies have taken advantage of events to raise energy prices. Mr Raymond said the price is "set on the world market by willing buyers and sellers". He said Saudi Arabia plays a large role by setting monthly prices on crude extracted from the country's reserves.
Mr Raymond also said the oil industry's profits appeared to be excessive because of the size of the industry. "Our numbers are huge because the scale of our industry is huge," he said.
Exxon, the world's largest oil company, notched up profits of almost $10bn (£5.7bn) in the its third quarter, the largest quarterly profits ever recorded by a company. Profits at the top five oil companies jumped 52 per cent in the third quarter.
A growing number of politicians believe a windfall tax should be levied to create a fund to help consumers pay for heating bills and also to be invested in developing green energy.
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