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The Same Old Song on High Gas Prices

The Same Old Song on High Gas Prices

Doug Mills/The New York Times

From left, John Hofmeister, president, Shell Oil Co.; Peter Robertson, vice chairman, Board of Directors, Chevron Corp.; John Lowe, executive vice president, Exploration and Production, Conoco Phillips; Robert Malone, chairman and president, BP America, and Steve Simon, senior vice president, Exxon Mobil Corp. during a hearing on Capitol Hill on Thursday.

Published: May 23, 2008

WASHINGTON — Representative Debbie Wasserman Schultz peered down at the executives from the nation’s biggest oil companies, arrayed before the House Judiciary Committee like five targets in a carnival dunk tank, wearing dark suits and ties instead of swim trunks.

It was the Thursday before the Memorial Day weekend — the ideal time for Congress to show its solidarity with angry American motorists. Ms. Wasserman Schultz, Democrat of Florida, channeled the rage of every parent in America who has pulled into a gas station recently on the way to ballet lessons or soccer practice, letting loose on the men from Exxon Mobil, Shell, ChevronConocoPhillips andBP America.

“I’m a mom of three young children who filled up her minivan the other day for $68,” she said, seething. “Sixty-eight dollars — that’s real money. Maybe that’s not real money to the five people sitting here because $68 is like a nickel to you, based on the income you all earn.”

Ah, the sweet, indelible signs of summer. Baseball. Backyard barbecues. And dramatic Congressional hearings over the rising price of gasoline.

In what has become a regular show in the hearing rooms on Capitol Hill, the oil company executives took a second day of lashings on Thursday. On Wednesday, they went through a similar exercise with the Senate Judiciary Committee.

To be sure, oil prices have never been higher. Though they eased on Thursday to $130.81 a barrel, down $2.36 on the day, they are up 30 percent in the last two months. And just as sure, Democrats in Congress are itching to take action — perhaps by taxing so-called windfall profits of oil companies, perhaps by allowing the Organization of the Petroleum Exporting Countries to be sued in American courts under antitrust laws.

But neither those initiatives nor a portfolio of others currently under consideration are likely to reduce prices at the pump. And so the lawmakers and the oil titans, well aware of this reality but also mindful of the roles they are expected to play, ran through a familiar script.

The executives firmly insisted that global market forces beyond their control were to blame for high prices. “As repetitive and uninteresting as it may sound, the fundamental laws of supply and demand are at work,” said John Hofmeister, the president of Shell OilCompany.

(Of course, it was repetitive and uninteresting: Mr. Hofmeister read the same line in his testimony the day before.)

The executives politely but just as firmly insisted that Congress should focus its efforts on allowing more drilling and exploration for domestic oil — in the Arctic National Wildlife Refuge, offshore in the Atlantic and Pacific, and in the eastern Gulf of Mexico. They insisted that they were investing heavily in search of new oil supplies.

And they strongly warned against other measures: any new tax on profits would put American companies at a disadvantage and only further decrease oil supply; a temporary suspension of the federal gas tax would increase demand and only raise prices more; lawsuits against foreign nations would do nothing to lower prices.

The lawmakers played their parts, too — showing mostly outrage and fury. “You all are gouging the American public and it needs to stop,” declared Representative Steve Cohen, Democrat of Tennessee. Other Democratic lawmakers openly questioned whether the companies were illegally fixing prices to hoard profits and voiced suspicions that they were in cahoots with Vice President Dick Cheney to enrich the energy industry.

The Republicans, on the whole, were more understanding of the needs of America’s corporate citizens but still sought to sympathize with their constituents.

Representative Chris Cannon, Republican of Utah, gave an impassioned speech on the need to develop more petroleum from oil shale, which can be found in abundance in the rugged terrain of the Rocky Mountain West.

And Representative Ric Keller, Republican of Florida, said: “In terms of solution, which is where we all going right now, I firmly believe that we need to have more exploration.” He added: “One law we can’t change here in Congress is the law of supply and demand.”

Later in the hearing, though, Mr. Keller expressed little sympathy when the executives said that they sold gasoline in the United States on slim margins. “You are saying, ‘I need a hug here, because margins are tight?’ ” he asked incredulously.

As in the Senate hearing, lawmakers focused on the record profits that oil companies have enjoyed in recent years, and the large compensation packages of their executives, even though none of those testifying was actually the highest-paid employee in their firms.

It was also clear that Senator Patrick J. Leahy had made an impression on Wednesday when he ridiculed some of the executives for claiming they did not know how much they were actually paid.

When a lawmaker demanded that John E. Lowe, the executive vice president of ConocoPhillips, tell her the pay of the company’s chief executive, Mr. Lowe said he did not know it but told her where to look. “I know it’s on page 36 of the proxy,” he said. “Because I looked at my compensation on page 36 of the proxy last night.”

The House Judiciary Committee hearing stretched on for most of the day, interrupted briefly at points as lawmakers rushed over to the Capitol to cast votes. Throughout the day, Representative John Conyers Jr., Democrat of Michigan, presided with a regal air, a demeanor accentuated by his maroon velvet sport coat.

In one of the more pointed exchanges, Representative Maxine Waters, Democrat of California, seized on the record $40.6 billion profit of Exxon Mobil in 2007. She pounded on the company’s senior vice president, J. Stephen Simon, demanding to know if gas prices would be lower if the company earned a few billion dollars less.

At another point, Ms. Waters brazenly suggested that perhaps the American oil industry should be nationalized, acknowledging that it was an “extreme step” but one that might be necessary if outsize profits and exorbitant gasoline prices continued.

“Thank you for being here today,” Ms. Waters told the executives. “If you feel a little bit beaten up on, we all feel beaten up on, so just share the pain. We get our behinds kicked every day in our districts about what is going on.”

Doug Mills/The New York Times

Mr. Hofmeister with reporters during a break in a House hearing on Thursday.

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