Oil Executives Testify Before
Senate Panel
WASHINGTON
(Wednesday, May 21, 2008) – Senate Judiciary Committee Chairman
Patrick Leahy (D-Vt.) convened a hearing this morning to examine
the explosive rise in oil prices in recent months. The hearing
featured testimony from executives of five major oil companies –
ExxonMobil, ConocoPhillips, Chevron, BP America and Shell.
In his opening
remarks, Leahy highlighted the story of a Vermont business
owner, Warren Hill, whose family settled in Vermont more than
200 years ago. Mr. Warren’s logging and trucking company has
been hit especially hard by rising gas prices. This morning in
Vermont, the price of a gallon of gas hit a record high of
$3.77. The national average price of a gallon of gas is $3.79.
The average price of a gallon of gas has more than doubled since
President Bush took office in 2001.
Leahy’s
opening remarks follow.
Statement Of Patrick Leahy (D-Vt.),
Chairman, Senate Judiciary
Committee,
Hearing On “Exploring
The Skyrocketing Price Of Oil”
May 21, 2008
The price of a gallon of gas at
the pump today in Vermont reached a record $3.77. Nationwide,
the average price has more than doubled since President Bush
took office.
The President once boasted that
with his pals in the oil industry, he would be able to keep
prices low and consumers would benefit. Instead, it is his pals
in the oil industry who have benefited. American consumers, and
the American economy, have suffered immensely.
Today’s witnesses represent the
major, vertically integrated oil companies that, collectively,
made more than $36 billion in profits in just the first quarter
of this year-- $36 billion in the first three months of the
year.
I want these witnesses to hear
about Warren Hill, whose family settled in Greensboro, Vermont,
more than 200 years ago. Warren runs a logging and trucking
company that he dreams of passing on to his son. But the
increase in fuel prices has led him to question whether his
business, which has been successful for over 30 years, can
survive.
I say to our panel today: Mr.
Hill wants to know how you can justify exorbitant profits on the
backs of middle class, hard-working families. He deserves
answers. Every member of this Committee, and of this Congress,
has constituents with similar stories and similar questions.
We hear from the oil industry that
the price of gas at the pump is directly related to the price of
crude oil. One of our witnesses today has said that normal
supply and demand indicates that the price should be somewhere
around $50-$55 a barrel. As he said: “There is a disconnect.”
I would like to know, and I am sure American families and small
businesses would like to know why prices are so disconnected
from what normal supply and demand would indicate. Why has the
price of oil increased 400 percent since President Bush took
office? Why has it nearly doubled in the last year? Prices
should not skyrocket like this in a properly functioning,
competitive market.
Certainly the cost of oil to these
companies has not doubled or quadrupled. Certainly our
witnesses today would not contend that it is service station
operators who are gouging consumers for windfall profits.
I expect that none of our
witnesses would dispute that a protracted war in Iraq has caused
the price of oil to rise. I expect that none of our witnesses
would dispute that Bush administration economic policies, which
have crippled the value of the dollar, have contributed to the
rising price of oil.
I want to hear directly from these
oil companies about causes of the rising price of oil on which
Congress can act. This Committee unanimously approved Senator
Kohl’s NOPEC legislation, which would put an end to artificial
limits on supply by ensuring that the U.S. Government has the
authority to prosecute OPEC members for collusive behavior.
Seventy members of the Senate have voted for this legislation,
as have 345 Members of the House. Yet this President threatened
to veto it.
I would like to know what these
oil executives think about applying principles of competition
from our antitrust laws to the commercial activity of the oil
producing states.
The members of OPEC meet regularly
to agree on limits on the amount of oil they will produce. That
is wrong, and it hurts Americans. If such a meeting took place
in almost any other context, the participants would likely be
arrested for an illegal conspiracy in restraint of trade.
Do they agree that we need to
crack down on speculation and manipulation in the oil
commodities market? Numerous experts have testified before this
Committee and others that oil prices are moving higher as a
result of speculators. Investors are betting up the price of
oil, and consumers are paying the bill. Increasingly, this
speculation takes place in over-the-counter trading, which
avoids the oversight of the Commodity Futures Trading
Commission, thanks to the Enron loophole.
That is an unjustified loophole,
which Senator Feinstein and I, among others, have been actively
trying to close. Keeping the CFTC blind to speculation and
manipulation in the oil futures market is inexcusable. Last
week, Congress passed the Farm Bill that would close this
loophole. The President threatened to veto the legislation. I
would like to know what these oil executives think about that.
Finally, last week we were able to
pass legislation calling for the Government to stop artificially
inflating demand by diverting fuel to the strategic petroleum
reserve. The President opposed it. Filing the SPR may have made
sense when oil was $25 a barrel. At $125 a barrel, it is simply
hurting consumers.
This Committee and the Congress
need answers so that we can act in a way the administration will
not – for the benefit of consumers, for American families and
small businesses. We need to get prices under control and back
to competitive levels, and we need to do it now. Warren Hill
and his family in Vermont, and all Americans, deserve a
government that will stand up for them. Small businesses should
not be forced to close their doors because oil prices are
skyrocketing out of control.
I thank the witnesses for being
here today and look forward to hearing from them.
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