Senators Set to Grill Gas Execs about Gigantic Profits

Most Americans have been sweating all summer trying to figure out how to dig deeper into their pockets just to fill their gas tanks, and worrying about how they were going to be able to pay their heating bills this winter. Most Americans, that is, except the big oil companies. Last week ExxonMobil, the world's largest publicly traded oil company, announced $9.9 billion in profits for the third quarter of 2005, on revenue of $100 million. Royal Dutch Shell reported profits of $9 billion, and ConocoPhillips earned $3.8 billion, nearly double the profits it reported a year ago.

Next week top executives of the three monolithic oil companies will face a Senate panel to explain why some of the record profits reported by the oil industry this year—an estimated $96 billion—can’t be used to help people who are having trouble paying their energy bills. Lee Raymond, chairman of Exxon, Jim Mulva, CEO of ConocoPhillips, and John Hofmeister, president of the U.S. unit of Royal Dutch Shell PLC will be some of the executives to be questioned at the hearing. The three companies together earned more than $22 billion during the July-September quarter of this year when crude oil prices skyrocketed to $70 a barrel. After the Gulf Coast was hit with the double barrels of Hurricanes Katrina and Rita, angry motorists were paying way over $3 a gallon at the pump, and yet the oil companies last week blithely reported that they had made off like bandits.

Both Republicans and Democrats in Congress are sounding off about the huge profits. Sen. Charles Grassley, R-Iowa, said oil companies should "do their part" by donating some of their monstrous profits to low-income families, and to senior citizens who are having trouble paying exorbitant energy bills. Grassley wrote a letter to the chair of the American Petroleum Institute wherein he said, "You have a responsibility to help less fortunate Americans cope with the high cost of heating fuels." He also said that oil companies should reinvest more of their profits, to increase exploration and boost production and refining capacity, to increase national supplies.

Sens. Byron Dorgan, D-ND, and Chris Dodd, D-CN, are hoping to put a windfall profits tax into a tax bill later this month, with the revenue from the tax being given to consumers in the form of an income tax rebate. As Dorgan argues, these huge profits the oil companies have reported "come as a windfall, falling into the laps of the big oil companies with little or no additional effort or expense." The windfall tax would put a 50% tax on the sale of oil over $40 a barrel. But Energy Secretary Samuel Bodman said he remains opposed to a windfall profits tax because it was a failure when it was attempted in the 1980s. House Majority Leader Dennis Hastert, R-IL, agreed that oil companies must invest more earnings in new refineries, but he did not rule out a windfall tax.

Senate Majority Leader Bill Frist, R-TN, announced the joint hearing by the Energy and Natural Resources Committee and the Commerce Committee last week. Some state attorneys general who have pursued price gouging complaints are also expected to testify at the hearing, which is scheduled for November 9. Advocates for low-income energy assistance have said that because of soaring fuel costs, poorer families may need as much as $5.2 billion in assistance if they want to be able to pay their winter heating bills. Congress provided about $2 billion last year. "Consumers are increasingly feeling that they are being taken for a ride," Sen. Larry Craig, R-Idaho, said at a hearing last week. Yes they are being taken for a ride, and they’re the ones paying for the gas.