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THE NEW YORK TIMES: Senate Panel to Scrutinize Big Oil Mergers, Profits

By REUTERS
WASHINGTON (Reuters) – Oil companies and their record profits come under more congressional scrutiny on Tuesday, when a Senate committee holds a hearing on the effect industry mergers have had on gasoline and other energy prices.
Executives from six major oil companies will make what is expected to be a standing-room-only appearance at the Senate Judiciary Committee hearing, where lawmakers will push for an explanation of the companies' huge profits and what they plan to do to ease consumers' soaring energy costs.
“I expect every senator to be critical of the companies on their record profits and seriously high prices at the pump,'' said an aide to Sen. Arlen Specter, the Republican chairman of the judiciary panel.
“This is not a partisan issue and everybody complains to their members of Congress when they're paying $2.50 a gallon'' for gasoline, the aide said.
Executives from oil giants Exxon Mobil Corp., Chevron Corp.,, ConocoPhillips, the U.S. units of BP Plc and Royal Dutch Shell Plc and major oil refiner Valero Energy Corp. will testify.
New Exxon Chairman Rex Tillerson plans to use the hearing as “another opportunity'' to explain to policymakers and the American public how the complex energy business works, the industry's massive projects and the time frames companies operate under, said company spokesman Mark Boudreaux.
High gasoline and oil prices helped Exxon earn more than $36 billion last year, the most ever for a U.S. company.
“We are sensitive to the prices that the general public consumers have to pay at the pump. What we're doing is focusing on what we can do to try and get more supply on the market,'' Boudreaux said.
Tillerson and the other oil company officials will testify after a panel of state attorneys general and legal experts on the industry's mergers and proposed legislation to protect consumers.
Specter will focus on his legislation that would give the government more power to stop oil and natural gas company mergers if such deals reduced available energy supplies and raised prices, and to go after companies that purposely withhold supplies from the market to make a higher profit.
The legislation would also permit the government to take legal action against the Organization of Petroleum Export Countries, or OPEC, for restricting oil supplies and fixing prices.
Jamal Qureshi, an analyst with PFC Energy in Washington, said the OPEC language is “just a populist measure — there is really no way of doing this.''
Still, he said the cartel's ministers pay close attention to such anti-OPEC actions. “They are always nervous about that — they make policy with that in mind,'' he said.
Patrick Leahy, the top Democrat on the judiciary panel, is co-sponsoring the bill.
Leahy and the committee's other Democrats will press the executives on why their companies won't use some of their profits to build refineries for making more gasoline and petroleum products, and why the companies don't have enough fuel reserves in place to deal with a supply disruption like the one that occurred with Hurricane Katrina last year that sent the average gasoline price to a record $3.07 a gallon.
Also likely to come up at the hearing is whether to impose a windfall profit tax on the oil companies that could be used for mass transit, fund alternative energy research or provide tax credits to consumers that buy more fuel efficient vehicles. Consumer groups like that idea.
“Those are not investments that Exxon Mobil and the other oil companies are ever going to make,'' said Tyson Slocum, director of energy programs at Public Citizen.
“(Oil companies) are just pursuing what is in the best interests of their shareholders, and what government needs to do is pursue the best strategy for consumers,'' he said.

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