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The New York Times: Oil Execs to Be Asked to Justify Profits: Posted Wednesday 2 November 2005

Published: November 1, 2005
Filed at 11:45 p.m. ET

WASHINGTON (AP) -- Top executives of three major oil companies will be asked by senators next week why some of their industry's estimated $96 billion in record profits this year shouldn't be used to help people having trouble paying their energy bills.

Lee Raymond, chairman of Exxon Mobil Corp., Jim Mulva, chief executive of ConocoPhillips, and John Hofmeister, president of the U.S. unit of Royal Dutch Shell PLC, will be among the industry executives to be questioned at a Senate hearing, according to congressional and industry officials.

The officials spoke on condition of anonymity because a final list of witnesses yet to be completed. The three companies together earned more than $22 billion during the July-September quarter this year when crude oil prices soared briefly to $70 a barrel and motorists were paying well over $3 gallon at the pump after Hurricanes Katrina and Rita struck the Gulf Coast.

Spokesmen for Exxon Mobil and Royal Dutch Shell would not confirm Tuesday that their executives had been called to testify. ConocoPhillips did not immediately return a call seeking comment.

There is growing distress among both Republicans and Democrats in Congress about the huge profits reported by oil companies last week.

On Tuesday, Sen. Charles Grassley, R-Iowa, chairman of the Finance Committee, said oil companies ''should do their part'' and donate some of their third-quarter earnings to low-income families and senior citizens having trouble paying energy bills, including high heating bills this winter. Grassley cited industry analysts as estimating that the 29 major oil and gas companies are expected to earn $96 billion this year.

''You have a responsibility to help less fortunate Americans cope with the high cost of heating fuels,'' Grassley, whose committee deals with tax legislation, wrote in a letter to the chief of the American Petroleum Institute, the industry's lobbying arm. He also said companies should invest more of their profits in exploration and production and refining capacity to increase supplies.

Earlier in the day, Sens. Byron Dorgan, D-N.D., and Chris Dodd, D-Conn., renewed their call for passage of a windfall profits tax on oil companies. They hoped to put such a proposal -- a 50 percent tax on the sale of oil over $40 a barrel -- into a tax bill later this month, they said. The revenue would be given to consumers in form of an income tax rebate.

These huge profits ''come as a windfall, falling into the laps of the big oil companies with little or no additional effort or expense,'' argued Dorgan.

The Bush administration also has discussed internally a possible proposal to link funding of the federal low-income energy assistance program to oil industry profits. But Energy Secretary Samuel Bodman said he remains opposed to a windfall profits tax, arguing it was a failure in the 1980s and would be counterproductive.

Advocates for low-income energy assistance said that because of soaring fuel costs, as much as $5.2 billion may be needed to help poorer families pay winter heating bills. Congress provided about $2 billion for the program last fiscal year.

In an interview last week, John Felmy, chief economist at the American Petroleum Institute, which represents the major oil companies, said the industry in the coming years plans to invest $86 billion in marketing, refinery expansions, oil exploration and production. ''We are an industry already doing a lot. ... We're already investing vast amounts,'' Felmy said.

Senate officials said other industry executives and some state attorneys general who have pursued price gouging complaints also were expected to testify at the Nov. 9 hearing. The joint hearing by the Energy and Natural Resources Committee and the Commerce Committee was announced last week by Senate Majority Leader Bill Frist, R-Tenn., as oil companies announced record profits.

Exxon Mobil, the world's largest publicly traded oil company, announced earnings for the third quarter of $9.9 billion, on revenue of $100 billion. Royal Dutch Shell said it had profits of $9 billion, while ConocoPhillips earned $3.8 billion, nearly double profits a year earlier.

House Majority Leader Dennis Hastert, R-Ill., urged oil companies to invest more earnings in new refineries and -- in answer to a question at a news conference -- did not rule out taxing oil company windfall profits. Frist said Congress should consider a federal energy price-gouging law.

''Consumers are increasingly feeling that they are being taken for a ride,'' Sen. Larry Craig, R-Idaho, said at a hearing last week.

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