ConocoPhillips CEO Defends Oil Company Profits

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• JIM LEHRER:

  And now a conversation with the chairman and chief executive officer of ConocoPhillips, James Mulva.

  ConocoPhillips is the nation's third-largest oil company behind Exxon-Mobil and Chevron. Mr. Mulva has been CEO of the company since 2002 when Phillips Petroleum merged with Conoco. He's been in the industry for more than 30 years. I spoke with him earlier this evening.

  Mr. Mulva, welcome.

  JAMES MULVA, CEO of ConocoPhillips: Thank you. Happy to be with you.

• JIM LEHRER:

  Are the oil companies responsible for this rise in gasoline prices we're seeing?

• JAMES MULVA:

  Well, the rise in gasoline prices really comes from, really, three reasons. The first, over the last number of years, there's been quite an increase in demand. It comes not only from North America and the United States, but we've seen a lot of increase in demand from Asia, particularly countries like China.

  Second, we see — and the price of oil has gone up pretty dramatically. And there's a political risk aspect to oil prices. There's concern, perception, what have you, with respect to interruption of supply. And that could come from countries such as Iran, Iraq, Nigeria, Venezuela. And so some believe that part of the oil price, anywhere from $10 to $20 a barrel, is a political risk associated with some interruption of oil production.

  And the third part is, we find that actually that we have a plentiful supply of oil, but we are finding that, in the United States and around the world, we fully are utilizing our refining capacity. And a result of that is we need more refining capacity, so as to take the oil, manufacture the gasoline and diesel that the consumers want.

  Those really are the three reasons for the higher oil prices.