Oil Executives Defend Gas Prices Under Criticism From Lawmakers

WASHINGTON — Oil industry executives tried to explain to Congress Wednesday that a recent sharp increase in gasoline prices results from market conditions beyond their control.

They vehemently denied they were price gouging to get rich off of international upheavals aggravated by Russia’s invasion of Ukraine and the COVID-19 pandemic.

The six biggest U.S. oil companies reported record profits of at least $75 billion last year.

Congressional reports lawmakers cited during the House Energy and Commerce subcommittee hearing indicate the oil industry could earn as much as $126 billion in profits this year.

Gasoline prices hit an average $4.35 a gallon on March 11, the highest price on record. By comparison, U.S. regular retail gasoline prices averaged $2.17 per gallon in 2020.

On Wednesday, prices averaged $4.16 a gallon.

“We do not control the market price of oil or natural gas,” said Mike Wirth, chief executive officer of California-based Chevron Corp.

Pricing is determined by whether the production and supply of oil and gas is adequate to meet consumer demand, he told a House Energy and Commerce subcommittee. 

Chevron reported $15.6 billion in profits last year.

“We have no tolerance of price gouging,” Wirth said.

The invasion of Ukraine and the U.S. sanctions that banned Russian imports reduced the U.S. oil supply, he said.

Other factors include Biden administration policies to encourage a switch away from petroleum fuels, he and other oil executives said. In addition, the pandemic compelled the companies to reduce oil production.

“We’re living in a critical and unprecedented moment in history,” Wirth said.

All six of the chief executives who testified to the subcommittee on oversight and investigations said they were increasing oil production to bring down prices at the pump. They also said they were trying to be good corporate citizens by investing heavily in clean energy sources that emit fewer greenhouse gasses.

“The price of oil, gasoline and other refined products are driven by international markets,” said David Lawler, chief executive officer of BP America, the world’s seventh biggest oil company.

He said his company was investing $2.2 billion this year in the technology for low carbon emission energy sources.

The oil executives’ assurances of good stewardship were met with skepticism from Democrats. They said their record profits could not be explained as anything other than price gouging.

“We’re here to get answers from the big oil companies about why they’re ripping off the American people,” said Rep. Frank Pallone, D-N.J.

The companies’ top priority was funneling profits back to their shareholders when they should have been increasing oil production and reducing wholesale gasoline prices, he said.

“Don’t tell us you can’t do anything about it,” Pallone told the corporate executives. “You can do something about it.”

Rep. Diana DeGette, D-Colo., the subcommittee chairwoman, showed a graph demonstrating oil companies kept their prices high despite the fact their expenses have been falling.

“While the price of oil has dropped significantly from the peak, the price that Ameircans are paying at the pump has not,” DeGette said.

Among the proposals lawmakers are considering is a windfall profits tax on oil companies to return part of their profits to consumers.

Republicans called the Democrats’ allegations misguided. They blamed Biden administration policies for causing higher gasoline prices.

“This is not a Putin price hike,” said Rep. Cathy McMorris Rodgers, R-Wash., referring to the Russian invasion of Ukraine and its effect on gas prices. “This is a Biden price hike.”

Republicans mentioned as examples Biden administration decisions to halt oil and gas extraction leases on federal land and pressuring banks to cease loans for oil development projects.

The Republicans also criticized President Biden’s Jan. 20, 2021, order to revoke the permit for the Keystone XL Pipeline. It would have pumped oil from Alberta, Canada, to refineries in Illinois and Texas.

It ran afoul of intense protests from environmentalists.

“The Biden administration has declared war on American oil,” Rodgers said.

Tom can be reached at tom@thewellnews.com