Is It Time To Tap U.S. Oil Reserves?

Energy Secretary Tells Congress Dipping Into Strategic Reserve Won't Reduce High Gas Prices

(CBS/AP) 
Meanwhile, the top executives of the country's five largest oil companies made a repeat appearance in Congress.

After being pummeled by senators over high oil and gasoline prices at a Senate hearing on Wednesday, they were summoned before the House Judiciary Committee on Thursday.

The executives reiterated much of what they had told the senators: The primary cause for high oil prices is tight supplies and growing demand, and that their profits - $36 billion during the first three months of the year - are not excessive given the size of their companies and the need for reinvestment to find more oil.

The executives urged more domestic oil and gas production by opening areas now off limits including large areas of federal offshore waters and a wildlife refuge in Alaska, where billions of barrels of oil are located. "This persistent denial of access is costing American consumers right out of their pocket books," said John Hofmeister, president of Shell Oil Co.

The other executives represented Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., and BPAmerica Inc.

Bodman, appearing at a separate hearing down the hall from the oilmen, also viewed the problem as essentially one of production not keeping up with demand.

Asked if he believed there was "rampant" speculation driving up oil prices, Bodman replied: "No. I don't."

The biggest problem, he said, is flat oil production and growing demand. Up to 2004, he said the world's producers pumped about 1 million barrels more oil each year, then production increased and so did demand. Demand continued to grow, but beginning in 2005 "there has been no change in global production" and "demand has outstripped supply."

"We have sopped up all the available spare (oil production) capacity in the system," said Bodman.

The world uses about 87 million barrels of oil a day, about a quarter of it in the United States.

Energy experts have acknowledged that most producers have little ability to pump more oil. The exception is Saudi Arabia, which is producing about 9.4 million barrels a day and has the ability to increase that by about 2 million barrels a day but have declined to do so.

Last week, the Saudis said they were boosting production by 300,000 barrels a day in June, but that was only to make up a decline in production by other OPEC countries.