Senators grill oil chiefs about their huge profits

WASHINGTON - On a day oil prices leaped to unheard-of highs, senators lined up Big Oil's biggest executives - again - and pummeled them with complaints that they're pretending to be "hapless victims" while raking in record profits.

"Where is the corporate conscience?" Sen. Dick Durbin (D., Ill.) asked the top executives of the five largest U.S. oil companies.

It's all about economics, came the reply. Supply and demand. The company leaders tried to shift attention from motorists' anger over $4-a-gallon gasoline to a debate over new areas for drilling.

But senators at the Judiciary Committee hearing wanted to press the executives about public anguish over paying $60 or more to fill up a gas tank.

"People we represent are hurting; the companies you represent are profiting," Sen. Patrick Leahy (D., Vt.) told the executives. He said there was a "disconnect" between legitimate supply issues and the oil and gasoline prices motorists are seeing.

The executives tried to blunt the emotion with economic analysis.

Profits have been huge "in absolute terms," conceded J. Stephen Simon, executive vice president of Exxon Mobil Corp., but they "must be viewed in the context of the massive scale of our industry."

And high earnings "in the current up cycle" are needed for investments in the long term, including when profits will be down, he said.

" 'Current up cycle,' that's a nice term when people can't afford to go to work" because gasoline is costing so much, replied Leahy with sarcasm.

"The fundamental laws of supply and demand are at work," said John Hofmeister, chairman of Shell Oil Co.

He and Simon were joined by executives of Chevron Corp., BP America and ConocoPhillips. Together the five companies earned $36 billion during the first three months of this year.

Sen. Arlen Specter (R., Pa.), noting that Exxon's profit had nearly quadrupled from $11.5 billion in 2002 to $40.6 billion last year, said he had heard nothing from the oilmen that would explain "why profits have gone up so high when the consumer is suffering so much."

The executives cited tight global supplies with scant spare-production capacity and the fact that large areas of land and offshore waters remain off-limits to drilling. And they said they were worried Congress was talking of requiring the five companies to pay more taxes.

You have "just a litany of complaints that you're all just hapless victims of a system," Sen. Dianne Feinstein (D., Calif.) told the executives. "Yet you rack up record profits . . . quarter after quarter after quarter."