Nick Snow
Washington Correspondent
WASHINGTON, DC, Mar. 14 -- Congress would repeat past mistakes if it tried to punish the oil and gas industry for consolidations resulting from economic pressures and regulatory requirements, the American Petroleum Institute said Mar. 14.
Mergers of the 1990s let companies benefit from economies of scale and pass the savings on to consumers, it said in a statement submitted to the Senate Judiciary Committee. API released the statement as the committee began a hearing on oil industry consolidation and its possible relationship to prices.
US oil and gas companies must compete with producing nations' national oil companies, the trade association said. Adding taxes would be counterproductive at a time when domestic energy production needs to increase.
API urged lawmakers to keep industry earnings in perspective. While the oil and gas industry made 8.2¢/dollar of revenue during the third quarter, compared with an average of 6.8¢ for all US industries, its earnings over the last 5 years have averaged 5.8¢/dollar, compared with 5.5¢/dollar of revenue for other industries.
"In attempting to meet the challenges we face, it is also important to do no harm. The worst thing Congress could do now would be to repeat the mistakes of the past by overriding the structures of the free marketplace," API maintained.
Five executives from integrated oil companies and the chief executive of the country's largest independent refiner-marketer were scheduled to appear before the Senate Judiciary Committee. The panel also was scheduled to hear from officials in two state attorney general offices, two private attorneys, and an economics professor.
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