House Democrats slammed oil and gas industry executives at a hearing on Wednesday, accusing them of profiting from Russia’s invasion of Ukraine and its impact on the global energy market.
The consensus among Democrats and Republicans on the committee, as well as the leaders who testified, is that the United States needs to boost domestic production in the short term in order to relieve Americans at the pumps. Where they fiercely disagree is on the barriers that prevent this from happening.
Rep. Diana DeGette (D-Colo.), chair of the House Energy and Commerce Oversight and Investigations subcommittee, posted a chart showing that while the price of crude oil has fallen in recent weeks, gasoline prices in the states States remain close to historic highs.
“Why?” she asked. “If the price of gas is determined by the world market, why is the price of oil falling when the price at the pump is still at record highs?”
“Something is wrong,” she added.
Industry executives from Exxon Mobil, BP, Chevron, Shell USA, Devon Energy Corp and Pioneer Resources said the global market controlled prices, not individual companies, but struggled to explain the widening gap .
“Changes in the price of crude oil don’t always result in immediate changes at the pump,” said Mike Wirth, CEO of Chevron. He added that “it often takes longer for competition between outlets to bring prices down.”
“It’s a very complex set of factors that impact the price of gasoline,” including supply risk for all fossil fuel-based products, said David Lawler, president of BP America.
Republicans on the committee ran in defense of the industry. Representatives Morgan Griffith (Va.) and Cathy McMorris Rodgers (Wash.) have argued that the Biden administration’s ‘un-American energy agenda’ and ‘war’ on fossil fuels are to blame for the inflated prices .
“It is impossible to generate confidence or invest in production today when future production is clearly blocked by this administration,” Griffith said.
Griffith asked each of the executives if their company was “taking advantage of the crisis in Ukraine to keep prices artificially high in order to increase your own profits? All said they weren’t.
“We have zero tolerance for price gouging,” Chevron’s Wirth said in his opening remarks.
But as DeGette and other Democrats on the panel pointed out, and as executives acknowledged, the industry is reaping record profits. The six companies on Wednesday made a combined profit of $75 billion last year. And when the Federal Reserve Bank of Dallas polled 139 industry executives last month, the majority — 59% — cited investor pressure as the main reason producers haven’t increased production.
Rep. Frank Pallone (DN.J.), chairman of the House Energy and Commerce Committee, said the industry is “scamming the American people.”
“In an era of record profits, big oil companies are refusing to increase production to provide the American people with much-needed relief at the gas pump. Instead, they are buying back their shares at about $40 billion this year. The big oil companies line their pockets with one hand and take millions in taxpayer subsidies with the other.
Stock buybacks are when a company uses its profits to buy back its own shares, often resulting in a spike in the stock price. Pallone asked each of the executives if they would commit to reducing share buybacks and shareholder dividends, which would allow them to increase production instead amid turmoil in the oil market. energy. None of them said they would.
“I can’t commit to reducing buybacks,” Lawler said.
Monday’s hearing and push from U.S. lawmakers for more fossil fuel development comes against the backdrop of a new United Nations report that warns that global carbon emissions must peak by 2025, then drop by 43% by 2030, in order to avoid catastrophic global warming.
Last week, Biden order the largest-ever release of oil from the country’s strategic reserves – an average of 1 million barrels a day for six months – to combat high prices and act as a “wartime bridge” until domestic production may increase later this year. He also called on Congress to pass “use it or lose it” legislation requiring oil and gas companies to pay royalties on unused wells and unused federal leases.
Highlighting the tightrope Democrats are walking on energy ahead of the midterm elections later this year, when gasoline prices are likely to be high on voters’ minds, Pallone called on the industry leaders to “take action to reduce pain at the gas pump”.
“Produce more oil,” he said Wednesday. “Produce more with the wells you have.”