Hofmeister suggests means for US to control its energy destiny
Congress could take a decisive step to reduce energy prices by lifting some or all of the oil and gas exploration and production restrictions it has imposed, Shell Oil Co. Pres. John D. Hofmeister told a US House committee May 22.
WASHINGTON, DC, May 23 -- Congress could take a decisive step to reduce energy prices by lifting some or all of the oil and gas exploration and production restrictions it has imposed, Shell Oil Co. Pres. John D. Hofmeister told a US House committee May 22.
"If the nation set a goal of increasing domestic production by 2-3 million b/d by opening up new sources for exploration and production, in addition to recent laws you have passed to increase the production of renewable fuels and to increase miles per gallon in the vehicles that we drive, we could demonstrate to the world that we are in control of our own destiny," he said during a hearing of the House Judiciary Committee's competition policy and antitrust law task force.
Exxon Mobil Corp. Senior Vice-Pres. J. Stephen Simon, Chevron Corp. Vice-Chairman Peter J. Robertson, ConocoPhillips Co. Executive Vice-President John E. Lowe, and BP America Chairman and Pres. Robert A. Malone also testified. The five executives appeared before the Senate Judiciary Committee a day earlier (OGJ Online, May 22, 2008).
The other four echoed Hofmeister's call for increased access to domestic oil and gas resources. "This is the only government in the world that denies its citizens access to known domestic oil and gas reserves," Simon said. "There's plenty of evidence that the companies represented here are starved for access to more prospective acreage," Lowe observed.
Republicans on the committee generally agreed. Democrats did not. "I think there's something wrong when your prices, profits, and salaries keep increasing and all you can say is drill, drill, drill. I can't believe [record crude oil and gasoline prices are] all about supply and demand. You're inviting a windfall profits tax and antiprice-gouging legislation," said Rep. Steven Cohen (D-Tenn.).
'Exercise in futility'
Other committee Democrats were openly hostile. "This is an exercise in futility. I don't think we're going to get information out of these presenters," said Maxine Waters (Calif.) after asking several questions. When Simon said that Exxon Mobil's US refining income has fallen, Debbie Wasserman Schultz (Fla.) told him, "You can't refill your minivan for less than $70. That's the number that matters."
One Republican tempered his sympathy. "I believe you have done a good job of explaining how crude oil costs drive gasoline prices and the law of supply and demand. But I also believe that executives' salaries and exorbitant retirement packages are your Achilles heel," said Ric Keller (Fla.).
He and other committee members asked why no new US refinery has been built in 27 years. Simon responded that the domestic petroleum industry has brought into service the equivalent of one new refinery annually for the past 10 years by increasing additional plants' capacities. Committee member Darrell E. Issa (R-Calif.) maintained that decades of government policies have kept any new domestic refineries from being built.
Sheila Jackson Lee (D-Tex.) began on a conciliatory note as she invited the witnesses to participate in a forum addressing a wide range of issues which she plans to hold in Houston. The five executives said that they, or someone else from their companies, would be there. Then she asked them if they would support paying for a suspension of the federal gasoline tax through the summer from their companies' profits. They rejected that proposal on several grounds. "Reducing the price for a short period would increase demand, which is the opposite of what we want to do," said Lowe.
Jackson Lee urged them to try harder to develop solutions with congressional Democrats. "There's been a sense among you that the Republicans have the answers and the Democrats don't. This is a whole new Congress and you're not trying to talk to us," she maintained.
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