House Democrats slammed oil and gas industry executives during a hearing on Wednesday, accusing them of profiteering amid Russia’s invasion of Ukraine and its impact on the global energy market.
The consensus among committee Democrats and Republicans, as well as the executives who testified, is that the U.S. needs to boost domestic production in the short term in order to provide Americans relief at the pump. Where they fiercely disagree is on the barriers keeping that from happening.
Rep. Diana DeGette (D-Colo.), chair of the House Energy and Commerce Oversight and Investigations subcommittee, displayed a chart showing that while the price of crude oil has dropped in recent weeks, gasoline prices in the U.S. remain near historic highs.
“Why?” she asked. “If the price of gas is driven by the global market, why is the price of oil coming down but the price at the pump is still at record highs?”
“Something just doesn’t add up,” she added.
Industry executives from Exxon Mobil, BP, Chevron, Shell USA, Devon Energy Corp and Pioneer Resources said the global market controls prices, not individual companies, but struggled to explain the widening gap.
“Changes in the price of crude oil do not always result in immediate changes at the pump,” said Mike Wirth, CEO of Chevron. He added that “it frequently takes more time for competition among retail stations to bring prices back down.”
“It is a very complex set of factors that impact the price of gasoline,” including supply risk across all fossil fuel products, said David Lawler, president of BP America.
Republicans on the committee ran to the industry’s defense. Reps. Morgan Griffith (Va.) and Cathy McMorris Rodgers (Wash.) argued that the Biden administration’s “anti-American energy agenda” and “war” on fossil fuels are to blame for inflated prices.
“It is impossible to generate confidence or invest in production today when future production is clearly being blocked by this administration,” Griffith said.
Griffith asked each of the executives if their company was “taking advantage of the crisis in Ukraine to keep prices artificially high in order to increase your own profits?” All of them said they were not.
“We have no tolerance for price-gouging,” Wirth, of Chevron, said in his opening remarks.
But as DeGette and other Democrats on the panel pointed out, and as the executives acknowledged, the industry is raking in record profits. The six companies present Wednesday brought in a combined $75 billion in profits last year. And when the Federal Reserve Bank of Dallas surveyed 139 industry executives last month, the majority — 59% — cited investor pressure as the main reason producers have not ramped up production.
Rep. Frank Pallone (D-N.J.), chairman of the House Energy and Commerce Committee, said the industry is “ripping off the American people.”
“At a time of record profits, big oil is refusing to increase production to provide the American people some much-needed relief at the gas pump. Instead, they are buying back their stock at an estimated $40 billion this year. Big oil is lining their pockets with one hand and taking millions in taxpayer subsidies with the other.”
Stock buybacks are when a company uses its profits to buy up its own stock, often leading to a surge in the stock price. Pallone asked each of the executives if they would commit to reducing stock buybacks and dividends for shareholders, which would enable them to increase production instead amid ongoing turmoil in the energy market. None of them said they would.
“I can’t commit to a reduction in buybacks,” Lawler said.
Monday’s hearing and U.S. lawmakers’ push for more fossil fuel development come against the backdrop of a new United Nations report that warns global carbon emissions need to peak by 2025, then go down 43% by 2030, in order to prevent catastrophic planetary warming.
Last week, Biden ordered the largest-ever release of oil from the nation’s strategic reserves — an average of 1 million barrels per day for six months — to combat high prices and act as a “wartime bridge” until domestic production can ramp up later this year. He also called on Congress to pass “use it or lose it” legislation requiring oil and gas companies to pay fees on idle wells and unused federal leases.
Highlighting the tightrope that Democrats are walking on energy ahead of the midterms later this year, when gas prices are likely to be high on voters’ minds, Pallone called on industry executives to “take some action to reduce the pain at the gas pump.”
“Produce more oil,” he said on Wednesday. “Produce more with the wells you have.”