WASHINGTON — Amid partisan finger-pointing at who is responsible for rising energy prices, executives of six major oil and gas companies on Wednesday defended themselves against criticism that they want to boost corporate profits by refusing to produce more oil and gas.
In an effort to evade political debate, executives said they were not pushing prices and were only responding to global commodity prices that were out of their control. They also said they were in the process of switching to cleaner energy.
“We’re here to get answers from major oil companies about why they are robbing the American people,” Representative Frank Pallone Jr., a New Jersey Democrat and chairman of the Energy and Commerce Committee, said during the hearing. “At a time of record profits, Big Oil refuses to increase production.”
The oil executives disagreed with the Democrats’ accusations, but remained subdued in their responses.
“Because oil is a global commodity, Shell does not set or control the price of crude oil,” Gretchen H. Watkins, the president of Shell USA, told the committee in its prepared remarks. “The current crisis and pressure on hydrocarbon stocks and prices demonstrate the urgent need to accelerate the energy transition.”
Michael Wirth, the CEO of Chevron, insisted the company had “no tolerance for price pushes”.
Now that his ratings have plunged to new lows as inflation has remained high for months, President Biden has struggled to explain the rise in gas prices to the American people. In an effort to capitalize on widespread support for crippling sanctions against Russia, the government has attempted to characterize the recent rise in gas prices as “Putin’s price hike”.
But Republicans have tried to hang the hike around the president’s neck, noting that the price of gas has been rising for a year, long before Putin’s invasion of Ukraine. They have used the fear of higher gas prices as their main argument to voters about the need for a change in leadership.
Republicans have hammered Mr. Biden for his cancellation of permits for the Keystone XL oil pipeline, as well as pauses for new leases for oil wells on federal land. White House officials have tried to explain that neither policy is responsible for the rise in gas prices.
In reality, the easing of pandemic restrictions has increased the demand for gas when the supply does not rise fast enough. Both supply and demand are driven by factors beyond the control of Mr. Biden and Congress.
Still, the attacks seem to be working. In a recent Quinnipiac University poll, just 24 percent of respondents said they believed the rise in gas prices was a result of the war in Ukraine, which saw more Americans blaming the Biden administration’s policies.
A recent NBC News poll showed that despite widespread support for a ban on Russian oil imports, the majority of Americans were still concerned about gas prices. Polls have shown Mr Biden’s approval ratings to be near the lowest of his presidency, at about 40 percent, suggesting Americans hold him accountable even if they support some of his foreign policy.
Some Democrats heading into competitive races in November have pushed for the federal gas tax to be suspended until the end of the year. But Republicans quickly brushed off the proposal, calling it a desperate attempt to appeal to voters. Progressives have also sought to use the spike in energy and gas prices to boost clean energy investment to reduce reliance on foreign authoritarian leaders and oil companies.
Republicans tried to take advantage of Biden’s weak position during Wednesday’s hearing.
“This is not Putin’s price hike,” said Washington Republican Rep. Cathy McMorris Rodgers. “This is Biden’s price hike. It’s been a steady climb since he took office.” She said Democrats were looking for another scapegoat by blaming the oil industry.
Ms. Rodgers and other Republicans criticized what they called the government’s efforts to ease oil sanctions on Venezuela and Iran to boost global oil supplies, as well as the decision to block the Keystone XL pipeline, which would allow more Canadian production from the oil sands of that country would have imported.
The average price for a gallon of gasoline is about $1.30 higher than a year ago, rising along with the price of oil, which is now just below $100 a barrel.
Democrats have called on oil executives to suspend dividend hikes and share buybacks and invest more in developing alternative energy and lowering gasoline prices. They said their voters were suffering and growing angry at oil companies over higher prices.
Last week, Biden said some oil companies had increased production, but added that “too many companies are not doing their part and choosing to make extraordinary profits without making additional investments to support supply.”
The outcry over oil company profits is not unusual. Politicians often criticize the energy industry for profit when gas prices rise, then quietly drop their complaints when prices fall. Over the past 15 years, oil and gas prices have been up and down in three major cycles.
Most recently, energy demand quickly recovered from the lull of the early pandemic as vaccines became widely available and much of the infections receded. But global oil production has not fully returned to pre-pandemic levels. U.S. production is just under 12 million barrels per day, about a million less than the pre-pandemic record. With oil companies adding rigs, the Department of Energy expects US production to exceed 13 million barrels next year.
While Biden urges oil companies to expand production, Wall Street investors are telling them to be more cautious because they don’t want companies setting up a storm when prices are high and only losing money when prices fall again. . This happened between 2011 and 2015, resulting in numerous bankruptcies.
Oil companies are currently making record profits. Exxon Mobil said this week that profits could total $11 billion for the first three months of the year, the most the company has made in a quarter since 2008, when the price of a barrel of oil hit $140.
Exxon has cut spending and its workforce in recent years while increasing production in the Permian Basin, which spans 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, has insisted that Exxon is working to reduce greenhouse gas emissions while meeting the country’s energy needs, but that it is not responsible. for rising prices.
“The uncertainty of supply in a tight market with growing demand is leading to significant price volatility – and that is what we are seeing today,” Mr Woods told the committee.
Scott D. Sheffield, chief executive of Pioneer Natural Resources, a large Texas producer, said his company and others couldn’t do much to increase production quickly.
“I understand the desire to find a quick solution to the recent spike in gasoline prices,” he said, “but neither Pioneer nor any other US producer can turn up production overnight by turning on a tap. turn.” He noted that shortages of manpower and drilling equipment, and inflationary pressures on oil services, hampered production increases.
