Oil execs asked to justify huge profits at Congressional hearing
The executives of the five biggest oil companies—Exxon Mobil, Royal Dutch Shell, BP, ConocoPhilips and Chevron—were called to testify at a congressional hearing on Tuesday.
Lawmakers took them to task for making enormous profits but investing next to nothing in renewable sources of energy. They were also called to justify why they got $18 billion in tax breaks last year when their profits had hit $123 billion and oil prices had reached runaway highs.
We speak with Steve Kretzmann, Executive Director of Oil Change International.
AMY GOODMAN: While independent truckers around the nation were striking to highlight the disastrous impact of soaring fuel prices on their survival, the chief executives of the five biggest oil companies justified their record profits at a congressional hearing on Tuesday. US lawmakers took the executives of Exxon Mobil, Royal Dutch Shell, BP, ConocoPhillips and Chevron to task for making enormous profits but investing next to nothing in renewable sources of energy. Congress called on them to justify why they got $18 billion in tax breaks last year, when their profits had hit $123 billion and oil prices had reached runaway highs. The oil company representatives were testifying before the Select Committee on Oil Prices and Energy Independence.
This is Congressmember Emanuel Cleaver, a Missouri Democrat, grilling Exxon Mobil Senior Vice President Stephen Simon about the $400 million severance package to former Exxon Mobil CEO Lee Raymond.
- REP. EMANUEL CLEAVER: My father worked all of his life. He never earned more than $25,000 a year. And there were years that he worked—actually worked three jobs, most of the time just two, sent four children to college. He’s eighty-six years old. There will be people like my father all over the country, and I’ll have some of them at a meeting next Saturday when I do my monthly coffee with the congressman.
Mr. Simon, what can I say to them to help them understand how Lee Raymond received a $400 million severance package from Exxon Mobil, which translates into $141,000 a day? What do I say next Saturday to the people who come to my meeting who are struggling to get to work now because they can’t afford to put gasoline in their car? Can you help me get them to understand how it’s OK for Mr. Raymond to get a $400 million package, and they struggle, and the oil company profits at an all-time high?
STEPHEN SIMON: I would hope that would be behind us by now, Congressman, but I would just—
REP. EMANUEL CLEAVER: Why?
STEPHEN SIMON: —[inaudible] as we’ve said before—
REP. EMANUEL CLEAVER: Why?
STEPHEN SIMON: Because that is in the past. It hasn’t been adhered recently, but what I —
REP. EMANUEL CLEAVER: Well, the gas—we can only talk about gas prices from yesterday. I mean, everything we talk about here is in the past.
STEPHEN SIMON: Well, I agree, but yesterday is a lot different than, let’s say, when that occurred. But I believe, as we testified before, when you break down that, I think there’s a misconception of how much of that was due to past, how much of it was to do with the future, and how much it was due to current earnings there. And I think was blown out of proportion.
REP. EMANUEL CLEAVER: So you think I should tell people in my district and probably all over the country that $400 million package was blown out of proportion?
STEPHEN SIMON: I think when you look at it, Congressman, and you break it down, and you look at that pay package relative to others that were doing the same kind of jobs, you would consider it competitive. And it was done by outside directors. It was not management involved in that at all, and they look at others to make sure we’re competitive.
REP. EMANUEL CLEAVER: This is a rhetorical question: what ever happened to shame?
AMY GOODMAN: That was Missouri Democrat, Congressman Emanuel Cleaver, questioning Senior Vice President of Exxon Mobil, Stephen Simon. I want to play another excerpt from Tuesday’s hearing. This is Massachusetts Democrat Ed Markey, the chair the committee, also questioning Simon about Exxon Mobil’s commitment to investing in renewable sources of energy.
- REP. ED MARKEY: You can’t on the one hand be nickel-and-diming renewables at Exxon Mobil and at the same time be recording $40 billion worth of profits and simultaneously fighting our efforts to move over the billions of dollars into the research in renewables, which this country needs to break its dependence on imported oil. You cannot do that, Mr. Simon. Exxon should make the commitment that they are going to put ten percent of their profits into renewables, so that America has a comprehensive strategy to fight that dependence upon imported oil. Are you willing to make that kind of a commitment?
STEPHEN SIMON: Mr. Chairman, we continue to look at that area. If we identify an area where we think it can have the impact that you’re alluding to, we will do that. But we’ve studied all forms, even anticipating some improvements, and the current technologies just do not have an impact of any kind of appreciable impact on this challenge that we’re trying to meet.
REP. ED MARKEY: Mr. Simon, that is just going to be a continuation of a policy of tax breaks for the oil companies and tough breaks for our consumers at the pump.
AMY GOODMAN: Democratic Congressmember Jay Inslee of Washington State also questioned the Senior Vice President of Exxon Mobil, Stephen Simon, about the kind of change that could be expected from Exxon Mobil when they’re investing less than one percent of their profits in renewable energy.
- REP. JAY INSLEE: Mr. Simon, listening to your testimony makes me even more convinced that we need to act to create an incentive for decision makers in industry to really make real investments in the clean energy revolution rather than relatively small ones. And the reason I say that is that, listening to you, as far as I can tell, you’re spending less than half a percent of your gross revenues on clean energy research. Is that right?
STEPHEN SIMON: It would be a very modest amount. I would acknowledge that. But I would not acknowledge that we’re not doing a lot to address greenhouse gas emission.
REP. JAY INSLEE: Well, considering that we have to cut our greenhouse gas emissions 80 percent in this country below our levels by 2050, would you agree that if your company continues on its present course, it will fall several hundred orders of magnitude short of what we have to do to prevent cataclysmic global climate change?
STEPHEN SIMON: Well, the assumption there that that’s required in order to do that, I would—
REP. JAY INSLEE: Well, how else is it going to happen? I mean, oil isn’t going to all of a sudden become clean. We need to do the research to figure out these technologies.
STEPHEN SIMON: No, but the fact is that we are going to have oil and gas and coal, and it’s going to constitute about 80 percent of the energy equation. With that as a given, how do we then address and do what we can to mitigate greenhouse gas emissions with that being the case?
AMY GOODMAN: Democratic Washington Congressmember Jay Inslee questioning Stephen Simon, the Senior Vice President of Exxon Mobil. When we come back from break, we’ll be joined by Steve Kretzmann of Oil Change International. This is Democracy Now!, democracynow.org, the War and Peace Report. Back in a minute.
AMY GOODMAN: We turn to Oil Change International, a group that’s been tracking the promises and realities of big oil companies and the obstacles in moving toward clean energy. Steve Kretzmann is its executive director. He joins us now from Washington, D.C. How important are these hearings, Steve?
STEVE KRETZMANN: These hearings are important because it gives people a chance to really see what the oil companies are saying and see the kind of duplicity that they’re engaged in on a daily basis. I mean, you hear these self-serving predictions that, oh, well, oil is going to continue to be 80 percent of our energy mix for the next thirty years, so get used to it, and we better just deal with that. And this is just, you know—it’s just bunk, and I think Congressman Inslee was beginning to get to that in his comments.
And people really—people, I think, listening to that hearing yesterday could really see how out of touch the oil industry is with where the American people are and where the world is in concern about climate change. We really need to let people know how out of touch the industry is and urge to Congress to get much stronger on them in the near future.
AMY GOODMAN: Do you think that the questioning was strong enough? And what would you have asked?
STEVE KRETZMANN: It wasn’t strong enough in a lot of different ways. Part of that is because, you know, it was a mash-up of different issues around energy independence and prices and global warming. And, you know, it would have been really good to have Congress drill down on the question of climate change and how we’re actually going to effect the drastic emissions reductions that are very much needed and how the industry is going to use more of its tremendous capital to invest in the alternative energy sources that are required.
I mean, no company that was represented in that room yesterday spends more than 1.2 percent of its total profits on alternative energy. At the same time, they’re spending sometimes in excess of 60 percent of their profits just buying back their stock and making more profits. So their priorities are clearly not about the energy transition that is increasingly what we all know needs to happen in this country. Their priorities seem to be making more money for themselves, for executives like Mr. Raymond, etc., etc. And so, that’s a real problem.
AMY GOODMAN: Why are oil prices so high?
STEVE KRETZMANN: Well, that’s a complex question, and the short answer is that there’s a huge global supply crunch going on, and it’s not likely to get better anytime soon, if ever. There is just more and more demand, not only coming from places like China and India, which is what you hear a lot of in the press, but also even the United States, our demand keeps going up and up and up. And there simply isn’t enough supply in the system to take up that slack. And there’s really no way to deal with this and simultaneously deal with the problem of climate change.
I mean, the oil industry’s answer to this problem is, “Gosh, we’re addicted to oil. We have a real problem. What are we going to do? Well, we’re going to find more oil.” And that’s what the oil industry always says, and it’s just the wrong way to go about it.
What we need is a very clear, strong signal from Congress that it’s time to effect an energy transition, and phasing out these subsidies, getting really tough on the industry, beginning to send a very clear signal to investors, to the industry, etc., that the age of a fossil fuels is coming to an end and that we really need to get serious about clean energy is what we need to do. And I would have liked to have seen more of that kind of discussion yesterday in the hearing.
AMY GOODMAN: Speaking of investors, how much money has the oil industry given to candidates, both at the congressional and the presidential level? How significant is that in determining policy?
STEVE KRETZMANN: We think it’s pretty significant. If you look—if you go to our website, priceofoil.org, you can look up the full amounts that the presidential candidates and representatives have taken to date in this cycle and back to 2000. And in analyzing those numbers and looking at key votes on clean energy, we find that people who vote against clean energy tend to take about four-and-a-half times more money from the industry overall as those who vote for it. So if you’re looking to try to get your representatives to vote for clean energy, to vote against the war in Iraq, one of the best ways to do it is to urge them to stop taking money from the oil industry.
AMY GOODMAN: Steve Kretzmann of Oil Change International, one of the issues that the Congress members took on with these oil executives yesterday was the issue of tar sands. Explain what they are?
STEVE KRETZMANN: Tar sands are about the dirtiest form of oil you could imagine, the dirtiest form of energy you could imagine. They’ve recently been tagged with the label in Canada of the most destructive project on earth. They are a major potential new source of oil in Canada, but it is so much more energy-intensive and so much more destructive to the local environment that it is a very, very poor option for increasing supply in the United States. But there’s a lot of money to be made. And so, the industry is investing very heavily in this very dirty technology right now. And we’re trying to do everything we can to slow that down.
Congress actually did a wonderful thing back in December, where they passed the energy bill in December 2007. It had a section in it that required the US government to only buy fuel that didn’t have a higher lifecycle greenhouse gas emission content than conventional petroleum. That counts out tar sands. That counts out coal-to-liquids fuel. And so, that’s a very strong provision. Unfortunately, there was just a bill introduced a couple days ago to repeal that provision by two Texas Republicans. So we’re going to have to fight to keep that in there, and we’re going to have to do more to say that the answer to ending our oil addiction is not finding more and dirtier oil in Canada.
AMY GOODMAN: I was just reading a piece by Naomi Klein called “Baghdad Burns, Calgary Booms” on how the techniques to get Alberta’s—turning Alberta’s crud into crude were so expensive it wasn’t considered before, but after the invasion of Iraq, when the price of oil reached from $35 a barrel to now over $100 a barrel, it becomes a real issue. She said, “That year, the United States Energy Information Administration ‘discovered’ oil in the tar sands. It announced that Alberta—previously thought to have only 5 billion barrels of oil—was actually sitting on at least 174 billion ‘economically recoverable’ barrels. The next year, Canada overtook Saudi Arabia as the leading provider of foreign oil to the United States.”
STEVE KRETZMANN: Yeah, that’s right. And it’s—you know, if you look at the overall reserves base, Canada is potentially the largest source of oil on the planet. No one’s got a real clear idea, but people know there are an awful lot of tar sands up there. You know, we’re at a very important fork in the road on energy policy here. We can choose to encourage further destruction of Canada and further exploitation of the tar sands, and that pretty much dooms us to serious climate change and a warming world and all the various different horrible impacts that come with that, or Congress can send a clearer signal that it’s time to move towards clean energy and away from those kind of dirty projects. You know, this is—the next several years are very important for making this choice, because we’re seeing more and more and more investment move towards Canada in the absence of clear signals otherwise from Congress.
AMY GOODMAN: Steve Kretzmann, I want to thank you for being with us, executive director of Oil Change International.
The original content of this program is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. Please attribute legal copies of this work to democracynow.org.
In the course of the hearing, only one Congressional representative actually uttered the words "peak oil." Jerry McNerney (the Democratic wind energy consultant who defeated arch anti-green California Congressman Richard Pombo in 2006)Despite coming from a liberal-left background, I must admit to a secret sympathy for the oil executives as they undergo their ritual grilling by Congress. While it is good fun and scores political points, this spectacle does little to solve the problem. The Representatives took the oilmen to task for earning a gazillion in profits while investing a trifle in renewables. But, gentlemen, this is capitalism, under which the overriding aim of corporations is to make profits. If executives fail in this, they are severely punished. To expect corporations to pursue an energy policy in the national interest is foolish; they have other priorities. Since capitalists will act like capitalists, the responsibility for establishing a framework for sound policy lies with the government. An erratic government policy is a nightmare for industries who must make huge long-term investments. Thus we hear quiet voices from industry suggesting a national energy policy. "Give us consistency!" they cry. But to make sound policy requires requires an understanding of energy. Sadly, the Congressmen seem to have unrealistic expectations about renewable energy. Nary a word about conservation and efficiency ... not to mention "peak oil." And perhaps we voters should take some responsibility too: turn off our TVs and bone up on the oil-fueled civilization we inhabit. If we are "mad as hell" about gas prices and "we're not going to take it anymore," let us do something productive. Learn about the issues, vote, write irate letters to the editor, make an appointment with our Representatives, raise the issue in the community and professional groups to which we belong. We might even consider driving less.
We have met the enemy and he is us. - Pogo-BA
What do you think? Leave a comment below.
Sign up for regular Resilience bulletins direct to your email.
This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.