Oil Industry's Record Profits Questioned Lawmakers in Washington address the oil industry's record profits in a hearing. Some in Congress have suggested the industry should donate a substantial share of its profits to help low-income households with heating costs this winter.
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Oil Industry's Record Profits Questioned

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Oil Industry's Record Profits Questioned

Oil Industry's Record Profits Questioned

Oil Industry's Record Profits Questioned

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  • <iframe src="https://www.npr.org/player/embed/5006267/5006268" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Lawmakers in Washington address the oil industry's record profits in a hearing. Some in Congress have suggested the industry should donate a substantial share of its profits to help low-income households with heating costs this winter.

MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

MICHELE NORRIS, host:

And I'm Michele Norris.

Executives from five major oil companies came under tough questioning on Capitol Hill today. Lawmakers wanted to know whether the companies had taken advantage of short supplies in the days after Hurricane Katrina to boost prices and bring in record profits. The executives defended their actions and did their best to shoot down proposals for a windfall profits tax. NPR's Jack Speer has that story.

JACK SPEER reporting:

Senators packed the joint hearing room to debate accusations of price gouging on the part of the oil industry in the wake of Hurricanes Katrina and Rita. The hurricanes knocked out about 30 percent of US refining capacity at a time the industry was already struggling to keep up with demand. Gasoline prices jumped overnight and hit $3 a gallon within a few days of the disruption. Republican Pete Domenici, chairman of the Senate Energy and Natural Resources Committee, expressed the frustration of many at today's hearing.

(Soundbite of congressional hearing)

Senator PETE DOMENICI (Republican, New Mexico): Our people have a growing suspicion that the oil companies are taking unfair advantage of the current market conditions to line their coffers with excess profits.

SPEER: But the executives at today's hearing rejected accusations they had done anything wrong. They acknowledge the industry is enjoying record profits right now, but they said profits go up and down and viewed over time aren't any higher than other industries. Exxon CEO Lee Raymond also said taxing oil company earnings won't bring down the cost of gasoline.

(Soundbite of congressional hearing)

Mr. LEE RAYMOND (ExxonMobil CEO): History teaches us that punitive measures hastily crafted in reaction to short-term market fluctuations will likely have unintended negative consequences.

SPEER: Raymond was referring to a windfall profits tax put in place during the final days of the Carter administration. Most economists believe the tax had unintended consequences and contributed to a growing US dependence on foreign oil. Republican John Sununu of New Hampshire cautioned against taxing oil industry profits.

(Soundbite of congressional hearing)

Senator JOHN SUNUNU (Republican, New Hampshire): Taxes that discriminate against specific industries are a bad idea.

SPEER: But while there doesn't appear to be much support for a special tax on the oil industry's windfall, there are lots of other ideas floating around to tap some of that wealth. Iowa Senator Charles Grassley has encouraged oil industry executives to donate 10 percent of their profits to help low-income people pay their heating bills. ConocoPhillips CEO James Mulva wasn't too enthusiastic about that idea, either.

(Soundbite of congressional hearing)

Mr. JAMES MULVA (ConocoPhillips CEO): We all feel very much for those who are less fortunate, but as an industry we feel that it's not a very good precedent to be looking at one industry to help fund necessarily those--a government program as such.

SPEER: Over in the House of Representatives, Speaker Dennis Hastert is less concerned about the level of profits. He wants to know why the oil industry isn't investing more to expand refining capacity. ExxonMobil Chief Lee Raymond was scheduled to meet with Hastert after today's hearing. Jack Speer, NPR News, Washington.

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