Transcripts

The Energy Crisis Fuels A Grilling On Capitol Hill

SUSIE GHARIB: The high price of energy fueled debate in Washington today. The House of Representatives passed a $54 billion tax package that includes incentives for renewable energy. Meanwhile, lawmakers in the Senate also talked energy, taking on the major oil companies in the wake of record gas prices. Darren Gersh reports.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Two world views collided at the Senate Judiciary Committee today. Oil executives described a fierce global race to secure new crude supply to meet new demand in China and India. It's a race the executives complained, that is pushing into oil fields that are harder and more expensive to reach, even as the United States sharply restricts obvious areas of exploration at home. On top of that, ConocoPhillips Executive Vice President John Lowe said it made no sense for Congress to consider raising taxes to punish the very companies it's counting on to spend billions drilling new oil wells.

JOHN LOWE, EXECUTIVE VICE PRESIDENT, CONOCOPHILLIPS: U.S. oil companies should be viewed as the key to the energy solution, not as scapegoats, but as assets in this global energy race. We must be allowed to compete on level ground for the benefit of our country.

GERSH: Senators channeled the world view of constituents. Americans paying more at the pump, with families hard-pressed and small business owners worried about meeting payroll, senators like Diane Feinstein were not buying big oil's reasoning.

SEN. DIANNE FEINSTEIN (D) CALIFORNIA: As I listened to your opening comments, to me, it was just a litany of complaints that you are all just hapless victims of a system. You blame one thing or another. And yet, you rack up record profits -- record profits for any corporation in the United States of America -- quarter after quarter after quarter.

GERSH: But the industry says the marketplace, not the companies, set prices. A sagging dollar doesn't help, since oil is priced in dollars. Neither do speculators, which the executives blamed for helping driving up prices. At the refinery level, ExxonMobil's Stephen Simon said the rising costs are putting profits are under pressure.

J. STEPHEN SIMON, SR. V.P EXXON MOBIL: Our profitability last year was $0.10 a gallon. That's now down around $0.04 a gallon. We are seeing the impact, because 90 percent of the raw materials that we use to make our products we buy on the open market. It's not our own production. We buy it on the open market and we're not able to pass that through.

GERSH: Having invested billions in new capacity, the oil executives are no longer telling Congress they need new refineries to produce enough gasoline. The industry's problem now is the new oil fields they have been able to find cost $70 or more per barrel to produce. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.