[url=http://www.msnbc.msn.com/id/24757944/]Oil execs defend huge profits before Senate
‘Laws of supply and demand are at work,’ Shell chairman explains
Top executives of the five largest oil companies tried to shift anger over high prices to a debate over supplies Wednesday, leading a senator to accuse them of acting like “hapless victims” while racking up record profits.
Patrick Leahy, D-Vt., told the executives there’s “a disconnect” between normal supply and demand and the skyrocketing price of oil — surpassing $130 a barrel even as the oil leaders testified — that the industry has yet to explain.
J. Stephen Simon, executive vice president of Exxon Mobil Corp., said profits have been huge “in absolute terms” but must be viewed in the context of the massive scale of the industry.” He also said high earnings are needed “in the current up cycle” to pay for investments in the long term when profits will be down.
“’Current up cycle,’ that’s a nice term,” replied Leahy with sarcasm, “when people can’t afford to go to work” because gasoline is costing close to $4 a gallon.
He asked Simon what his total compensation was at Exxon, a company that made $40 billion last year. Simon replied it was $12.5 million annually.
Two other executives, John Lowe, executive vice president of ConocoPhillips Co., said he didn’t recall his total compensations as did Peter Robertson, vice chairman of Chevron Corp. John Hofmeister, president of Shell Oil Co., said his was “about $2.2 million” but was not among the top five salaries at his company’s international parent. Robert Malone, chairman of BP America Inc., put his compensation at “in excess of $2 million.”
Sen. Arlen Specter, R-Pa., said Exxon’s annual profits increased from $11.5 billion to $40.6 billion in the past five years and there was no explanation for “why profits have gone up so high when the consumer is suffering so much.”
The five companies earned $36 billion in the first quarter of this year.