Posted on 02/01/2006 9:32:23 AM PST by GeneD
WASHINGTON (Reuters) - The chairman of the U.S. Senate Judiciary Committee said on Wednesday that Congress would attempt to address growing concerns about rising fuel prices and soaring oil industry profits. "We intend to do something about" rising prices to consumers, Chairman Arlen Specter said at a hearing into whether oil industry mergers in recent years have made gasoline more expensive at the pump.
Specter, a Pennsylvania Republican, said he was shocked by the size of oil company profits, adding, "It just may be time to legislate in this field."
After the hearing, Specter raised the possibility of modifying federal antitrust laws to impose tougher oversight on mergers in the industry and crack down on any abuse of market power.
Further investigation was needed before reaching any final conclusions, Specter told reporters, but the number of mergers in recent years has been "excessive on its face."
"There are a lot of red flags out there," he said, referring to rising prices and record industry profits.
Exxon Mobil Corp. said Monday it earned $10.7 billion in the fourth quarter of last year and $36.1 billion for all of 2005 -- bigger than the economies of 125 countries.
Some industry critics have called for an excess profits tax.
Sen. Mike DeWine, chairman of the committee's antitrust subcommittee, said the biggest reason for the spike in fuel prices to consumers was rising crude oil prices.
DeWine, a Republican from Ohio, called for conservation measures and use of alternative fuels. "Try as we might, we simply can't drill our way out of this crisis," he told the hearing.
President George W. Bush said the United States was "addicted to oil" in his State of the Union speech on Tuesday, and called for developing alternative energy sources, such as ethanol-blended gasoline and hydrogen fuel cells.
Officials from six major oil companies refused to testify at the hearing. Specter criticized their failure to appear and said he might seek subpoenas to compel their testimony.
The Judiciary Committee had asked representatives from Exxon Mobil, Chevron Corp., ConocoPhillips, Valero Energy Corp. and the U.S. units of BP Plc and Royal Dutch Shell Plc to tell their side of the story.
William Kovacic, a member of the U.S. Federal Trade Commission, told the hearing that most sectors of the petroleum industry remained unconcentrated or moderately concentrated.
The FTC is investigating whether oil companies manipulated gasoline prices and oil refining production levels. The agency plans to finish its probe and send its findings to Congress this May.
There are no red flags here. Other than the Red Flag of Communism that wants to attach private property.
Idiots. I guess they didn't bother to notice that the ROI for the oil companies was right around 8%, which is commensurate with the ROIs of most companies, regardless of industry.
But why ruin good old-fashioned oil company bashing, right?
Fricking government is absolutely clueless on energy. They sit there and rant about the "evil" oil companies but offer "solutions" that will only exacerbate the problem. Their grandstanding only appeals to the sheeple who have no idea how economics work.
Why are the oil companies getting the poopy end of the stick here? Prices are set by the market, demand drives everything. With China and India's demand skyrocketing the price will rise. This is basic High School Economics. Why should Shell, Chevron, ect. buy high and sell low? Why should they take a loss? The solution to this problem is to develop alternatives to oil that are viable.
But Specter, and everyone else in government fails to tell the rest of the story. That as with cigarettes, Government makes more money on oil and gas than do the companies that actually make and sell the products.
There is no such thing as excessive profits.
it is just a "third way" propaganda tool.
“Will you refrain from putting in your oar?”— The Mikado
Did Ex-Spectorate say anything about the Fed AND state governments making more money on a gallon of gas than the oil companies?
A company making a profit??? Well, by golly we'd better put a stop to that! Too much profit and Americans will be living better than Europeans, and we sure can't have that, can we???
Does this mean we can demand a refund when the government programs take in excess tax revenue?
They are barking up the wrong tree. The oil companies profits are due to the unregulated speculators in the stock market which was deregulated in 2000. Supply and demand are no longer what drives the prices. Iranian president farts loudly, oil prices go up 20 cents. Venezuela shakes fist at US ... prices go up. Thats not supply and demand thats extortion by a small group of traders on the American public.
The puzzle to be investigated is that when costs go up profits are expected to go down. But when the cost of a barrel of oil is around a record high and profits are at a record high inquiring minds would like to know the economics here so their firms can do likewise.
Hey Arlen, is part of your consideration the lowering/elimination of Federal gas taxes? Limiting the states tax rates?
Let's see, Exxon makes a 9.7% return and you deem this as excessive. What is the percentage of return for the government?
"Specter, a Pennsylvania Republican, said he was shocked by the size of oil company profits, adding, "It just may be time to legislate in this field."
NO WAY! Just keep your hands off the market, Specter. Let it do its work. Meddling politicians like you only make things worse.
Now its Spector channeling Wellstone.
Great point. Here is Kali-fornia sales tax alone is nearly equal to Exxon's return.
That's because prices are set at replacement cost. If you have tanks full of product that cost you $40.00 to buy and your costs go up to $60.00 a barrell you have to price that $40.00 a barrell product high enough to replace it with $60.00 product. When you do that your profits will be huge, temporarily. Conversly when you have tanks full of $40.00 product and the market goes to $10.00 a barrell you take a bath on that $40.00 product. That happened to "Big Oil" 2 years ago...I didn't see Arlen Spectre looking to help out profit starved Exxon Mobile back then.
Oh, and a P.S. here.
Specter is also the putz who defended Ira Einhorn after he murdered Holly Maddux and stuffed her body into a trunk which he kept in his apartment for over a year. I won't forgive him for that.
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