Big Oil Defends Profits
Senators Blast Oil Execs For High 3rd Quarter Profits
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Play CBS Video Video Oil Executives Under Fire As consumers prepare to spend more on heating their homes this winter, five major oil companies are being grilled on Capitol Hill for reaping huge profits while prices soar. Aleen Sirgany reports.
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Video Big Oil Cashes In While drivers were suffering from astronomical gas prices this summer, oil companies were raking in record profits. Bob Orr reports on the oil industry's day on Capitol Hill.
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Oil company executives, from left, David O'Reilly of Chevron Corporation; James Mulva of Conoco Phillips; Ross Pillari of BP America Inc. and John Hofmeister of Shell Company testifying, Nov. 9, 2005 (AP)
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Senate Commerce Committee member, Sen. Barbara Boxer, D-Calif., uses charts to demonstrate the difference between oil executive bonuses and the average U.S. salary as she questions oil executives on Capitol Hill, Wednesday, Nov. 9, 2005. (AP)
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High prices at a Pasadena, Calif., gas station Aug. 11, 2005 (AP)
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Lee Raymond, chairman of ExxonMobil Corp., the world's largest publicly traded oil company, acknowledged the high gasoline and home heating prices "have put a strain on Americans' household budgets," but he defended his company's profits. Petroleum earnings "go up and down" from year to year and are in line with other industries when compared with the industry's enormous revenues.
It would be a mistake, said Raymond, for the government to impose "punitive measures hastily crafted in response to short-term market fluctuations." They would probably result in less investment by the industry in refineries and other oil projects, he said.
Oil company heads also warned a tax on their windfall profits could hurt the oil supply, and rejected an idea of voluntarily giving money to help poor people heat their homes this winter, reports CBS News correspondent Bob Fuss (audio).
ExxonMobil earned nearly $10 billion in the third quarter. Raymond was joined at the witness table by the chief executives of Chevron Corp., ConocoPhillips Co., BP America Inc. and Shell Oil Co.
But senators pressed the executives to explain why gasoline prices jumped so sharply in the aftermath of Hurricane Katrina, when prices at the pump in some areas soared by $1 a gallon or more overnight.
Sen. Bill Nelson, D-Fla., asked why the industry didn't freeze prices, as it did after the Sept. 11, 2001, terrorist attacks.
"We had to respond to the market," replied Chevron chairman David O'Reilly.
©MMV CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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