During a House hearing on Wednesday, executives of six major oil and gas companies defended their actions in refusing to produce more oil and gas amid Russia’s invasion of Ukraine.
The executives said they were simply responding to global commodity prices that were out of their control in prepared remarks for the hearing. They also stated they were working on cleaner energy.
The hearing came as lawmakers in Washington fought over who was to blame for rising gas prices and how to balance climate change efforts with increased US oil and gas production. US and EU sanctions over the Ukraine invasion have limited global supplies.
It is now roughly $1.30 more expensive than a year ago, with oil prices now just above $100 a barrel. As Democrats control both houses of Congress, President Joe Biden and Democrats face a major challenge. Democrats have urged oil executives to halt dividend increases and stock buybacks and invest in renewable energy and lowering gasoline prices.
He added that “too many companies aren’t doing their part and choosing to make extraordinary profits without making additional investments to help with supply.”
It’s not unusual to decry oil company profits. As soon as gas prices drop, politicians quietly drop their complaints about the energy industry’s profiteering. The last 15 years have seen three major cycles in oil and gas prices, the most recent triggered by the coronavirus pandemic.
The availability of vaccines and the pandemic’s initial shock reduced energy demand quickly. But global oil output hasn’t fully recovered. US output is just shy of 12 million barrels per day, roughly 1 million short of the pre-pandemic record. With more rigs, the Energy Department expects US production to hit 13 million barrels next year.
Officials from the Biden administration have urged oil companies to increase output faster, but Wall Street investors are warning them to be cautious lest they lose money drilling when prices are high. Between 2011 and 2015, thousands of people filed for bankruptcy.
Companies like ExxonMobil are raking in Exxon Mobil said this week that profits in the first three months of the year could top $11 billion, the highest quarterly profit since 2008 when oil topped $140 per barrel.
Exxon has cut spending and reduced its workforce in recent years while increasing production in the Permian basin off the coast of Guyana. Exxon CEO Darren Woods told the House Energy and Commerce Committee on Wednesday that the company is working to reduce greenhouse gas emissions while meeting the country’s energy needs, but that it is not to blame for rising prices.
The CEOs of BP America, Chevron, Devon Energy, Pioneer Natural Resources, and Shell USA were to appear with Woods. H.R. McMaster, former national security adviser to President Donald Trump, will also testify before the committee.
As a global commodity, Shell does not set or control crude oil prices, according to prepared remarks released Tuesday night. We need to speed up energy transition because of today’s crisis.
The blame game for rising gas prices extends beyond Capitol Hill. To highlight what it calls “the oil industry’s price gouging,” the League of Conservation Voters has set up an art installation on the National Mall in Washington this week.
Conservatives counter that the oil price cycle and that company often lose money after making record profits one year. Oil Executives Defend Themselves at a Hearing!
“It’s a mystery why oil companies couldn’t do it when gas was $2.20 a gallon and they were losing money,” said Myron Ebell, director of the Competitive Enterprise Institute’s Center for Energy and Environment in Washington.