Oil executives defend profits, high gas costs

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Top oil company executives yesterday told Congress that their companies have little effect on the gas prices that consumers pay and said a new tax on their record-breaking profits would backfire by cutting domestic production.

Under grilling at a joint hearing of the Senate commerce and energy committees, the executives said that crude oil prices are set in a global marketplace over which they don't have control and that the current price spike is part of the natural business cycle.

"People need to realize we are in a commodity business," said Exxon Mobil Chairman Lee Raymond. "There are ups and downs in the commodity business, and our job is to manage through the ups and downs with a view towards the long term, which is what we try and do."

The hearing was supposed to be a chance to get the executives -- the chiefs of Chevron, ConocoPhillips, BP America and Shell Oil, in addition to Mr. Raymond -- to explain why gasoline, natural gas and home heating oil prices are so high and whether the companies are engaged in price gouging.

But Senate Majority Leader Bill Frist, the Tennessee Republican who told the panels to hold the hearing, said the executives didn't justify high prices, nor did they answer "whether their companies' profit margins are appropriate given the hardships energy consumers are facing and will continue to face this winter."

He also said the Senate's investigative subcommittee will continue to look into whether there was price gouging.

Republicans have become worried about the political fallout from high gas prices, which they said is one of the top issues they are asked about when they meet constituents.

Sen. Pete V. Domenici, New Mexico Republican, said that senators just don't have answers to give those constituents and that the oil companies didn't do much to clear things up.

On the other side of the Capitol, House Speaker J. Dennis Hastert of Illinois, the first Republican leader to call on oil companies to reinvest profits, met with Mr. Raymond. Afterward, he told reporters that he challenged the Exxon chief to boost production.

Mr. Hastert said the recent drop in prices suggests that the increases in September were a matter of supply and demand, rather than gouging, but said prices need to come down more.