The Marketplace Report: Oil Firms Grilled on Gouging
MADELEINE BRAND, host:
Back now with DAY TO DAY. I'm Madeleine Brand.
In Washington today, CEOs from the country's five largest oil companies appeared before a panel of senators. The senators wanted to know why prices for gasoline and home heating fuel are so high when oil companies are posting record profits. Joining us is John Dimsdale from "Marketplace"'s Washington bureau.
And, John, were there any answers at today's hearing?
JOHN DIMSDALE ("Marketplace"): Well, there was really more heat than light. The senators are obviously feeling pressure from voters who've been hit by these high energy bills and who read that the oil companies are raking in lots of money. So the committee members put on a pretty good show of holding the companies to account. The chairman of the Senate Energy Committee, for example, New Mexico Republican Pete Domenici, told the oil executives what he's heard from constituents.
Senator PETE DOMENICI (Republican, New Mexico): Most Americans and most of the polls show that our people have a growing suspicion that the oil companies are taking unfair advantage of the current market conditions to line their coffers with excess profits.
BRAND: John, is there any sign that this debate will result in any legislation, any change in energy policies?
DIMSDALE: There are several proposals to crack down on price gouging, to limit oil company profiteering with an excess profits tax is another idea. There, they would take the proceeds and give some to low-income families who are struggling to pay their heating bills and possibly give a tax rebate to consumers. But Lee Raymond, the chief executive of ExxonMobil, warned the senators that those things have been tried before with unintended consequences.
Mr. LEE RAYMOND (Chief Executive, ExxonMobil): Think back to the 1970s when we were all in an energy crisis here in this country. First price controls, then punitive taxes were tried to manage the petroleum markets. They contributed to record prices, shortages and gasoline lines.
BRAND: So, John, what do the oil company executives say should be done to make energy prices more affordable?
DIMSDALE: Well, they're saying, `Let the markets react to these shortages. The profits that these companies are making are going to be plowed back into new refineries and drilling rigs and pipelines and eventually make more supplies of energy available which will eventually bring prices down.' You know, they say extracting oil, shipping, refining it, distributing it to consumers, it's complicated, expensive and it takes years to set up, but in the meantime, critics say these corporations are getting lots of tax breaks and other incentives from the government and paying their executives big salaries and spending millions on lobbying and for campaign donations. So that's really spurring Congress to act.
Coming up later today on "Marketplace," a look at what the riots in France reveal about how that country deals with poverty and class.
BRAND: John Dimsdale of public radio's daily business show "Marketplace." And "Marketplace" is produced by American Public Media. Transcript provided by NPR, Copyright NPR.