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Oil giants defend obscenely high profits: “no ethical compass about the price of gasoline”

Financial Times

US companies defend high profits

By James Politi in Washington

Published: May 22 2008 03:00 | Last updated: May 22 2008 03:00

Top oil executives defended their record profits and called for the US to open up more land for exploration at a heated congressional hearing yesterday that reflected increasing political pressure on lawmakers to tackle the rising cost of petrol.

As the price of crude oil broke through $132 per barrel, Stephen Simon, senior vice-president of Exxon-Mobil, the biggest US oil company, told the Senate judiciary committee: “Our profitability in absolute terms is large but must be viewed in the context of the massive scale of our industry and our dependence on high earnings in the current up cycle to sustain the huge investments required over the long term.”

Mr Simon, along with executives from BP, Shell, Chevron and ConocoPhillips, were grilled by lawmakers including Dianne Feinstein, a California Democrat, who said: “You rack up record profits and apparently have no ethical compass about the price of gasoline.”

Herb Kohl, a Wisconsin Democrat who is pushing for the removal of an exemption to antitrust laws granted to members of Opec, the cartel of oil producing nations, said: “Consumers are angry and they have every right to be. The oil industry seems to get richer and richer.”

Even as the rising cost of energy has risen up the political agenda, US politicians have struggled to find common ground on energy policy, except for a recent bipartisan effort to force the Bush administration to stop filling America’s strategic petroleum reserve.

While Democrats have called for increased taxation of energy companies, many Republicans are asking for restrictions to be lifted on exploration, particularly in Alaska and off the Pacific and Atlantic coasts.

The Republican proposals were strongly backed by executives who testified at the hearing. “Congress has recently made some hard policy choices on renewables and energy efficiency,” said Peter Robertson, Chevron vice-chairman. “We hope you can also make the equally hard choices to open up more federal lands and allow us to responsibly produce more American oil and natural gas, which can supply us for decades to come.”

Jeff Bingaman, a New Mexico Democrat and chairman of the Senate energy committee, is asking the Bush administration to analyse how increased demand for ethanol and biodiesel in the US is affecting domestic food prices.

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