Oil executives talk about rising gas prices at hearing

Officials of six large oil and gas companies, who appeared at a House of Representatives hearing on Wednesday, defended themselves against criticism that they are seeking to boost corporate profits by refusing to produce more oil and gas amid the Russian invasion of Ukraine.

In statements prepared for the hearing, the executives said they were not involved in price gouging and were responding only to global commodity prices that were beyond their control. They also said they are working on the transition to cleaner energy.

The hearing took place as lawmakers in Washington wrangling over who is responsible for soaring gasoline prices, and how to balance efforts to curb climate change with the need for more US production of oil and natural gas. US and European sanctions over the Russian invasion of Ukraine have limited global supplies.

Gasoline is averaging about $1.30 a gallon more than it was a year ago, rising along with oil prices, which are now just over $100 a barrel. This increase has become a major challenge for President Biden and the Democrats, who control both the House and Senate. Some Democrats have called on oil executives to suspend dividend increases, share buybacks, invest more in alternative energy development and lower gasoline prices.

Last week, Mr. Biden said some oil companies had increased production, but added that “many companies are not doing their part and are choosing to make extraordinary profits and without making additional investment to help supply.”

Anger over oil company profits is not unusual. Politicians often criticize the energy industry for exploiting it when gas prices are high, and then quietly drop their complaints when prices fall. Over the past 15 years, oil and gas prices have moved up and down in three big cycles, the most recent of which began with the coronavirus pandemic.

With vaccines widely available and the early destruction of the pandemic waning, energy demand has recovered rapidly. But global oil production has not fully returned to pre-pandemic levels. US production is about 12 million barrels per day, about a million barrels below the record set just before the pandemic. As oil companies add drilling rigs, the Department of Energy expects US production to exceed 13 million barrels next year.

Biden administration officials have urged oil companies to expand production faster, but Wall Street investors are telling them to be extra careful because they don’t want companies to ride out a storm when prices rise, only to incur losses when prices drop again. This is what happened between 2011 and 2015, leading to dozens of bankruptcies.

At the moment, oil companies are making record profits. ExxonMobil said this week that its profit in the first three months of the year could reach $11 billion, the most the company has made in a quarter since 2008, when the price of a barrel of oil topped $140.

Exxon has reduced spending and its workforce in recent years, even while boosting production in the Permian Basin between Texas and New Mexico and off the coast of Guyana. Darren Woods, the company’s CEO and one of the witnesses at Wednesday’s hearing of the House Energy and Commerce Committee, insisted that Exxon was working to reduce greenhouse gas emissions while meeting the country’s energy needs but was not responsible for the rise. the prices.

Mr. Woods will be joined at the hearing by the chief executives of BP America, Chevron, Devon Energy, Pioneer Natural Resources and Shell USA. The panel will also hear from HR McMaster, who was a national security advisor to President Donald J. Trump and is now a senior fellow at Stanford University’s Hoover Institution.

“Because oil is a global commodity, Shell does not set or control the price of crude oil,” Gretchen H. Watkins, president of Shell USA, is scheduled to tell the committee, according to prepared remarks released Tuesday night. “Today’s crisis and pressure on hydrocarbon supplies and prices reveal the urgent need to accelerate the energy transition.”

Controversy rages over who is responsible for the fuel price hike outside Capitol Hill. The Conservation Voters Association is displaying an art installation depicting a wall of oil barrels on the National Mall in Washington this week to highlight what it calls “the oil industry’s price gouging.”

Conservatives responded that oil prices move in cycles and that after making record profits in one year, companies often lose money in other years.

said Myron Ebel, director of the Center for Energy and Environment at the Competitiveness Institute in Washington.

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