Prices at the pump have soared in recent months, and House Democrats pointed the finger at Big Oil on Wednesday during an adversarial congressional hearing.
Lawmakers pressed the leaders of ExxonMobil, Shell, Chevron, bp America, Pioneer, and Devon Energy about why gasoline prices remain at their highest levels since 2008, despite crude oil prices leveling off from their March highs.
"If it's an issue of supply and demand, wouldn't that be reflected in the global price of oil as well?" asked Rep. Diana DeGette (D-Colo. 1st District) chair of the House Committee on Energy and Commerce. "Something just doesn't add up."
The executives denied any responsibility for the disparity and stressed how crude oil prices are determined on a global market, which has been severely disrupted since the start of the pandemic.
“We do not control the market price of crude oil or natural gas nor of refined products like gasoline and diesel fuel, and we have no tolerance for price gouging,” said Chevron CEO Mike Wirth.
They also suggested that there could be a lag between prices at the pump and the price of crude oil, which accounts for 61 percent of the price of gasoline, according to the U.S. Energy Information Administration. The rest of the price comes from refining, distribution and marketing, and taxes.
"It is a very complex set of factors that impact the price of gasoline," said David Lawler, chairman and president at bp America. "For example, the price of oil that's entering a refinery could have been purchased at a higher price, and therefore that price then flows through all the way to the station. It's not necessarily an instantaneous market."
Democrats pushed back against this narrative, pointing out that the companies raked in record profits in 2021, and delivered billions of dollars in stock buybacks and dividents to shareholders.
"Don't tell us you can't do anything about it," said Rep. Frank Pallone, Jr. (D-N.J. 6th District). "You can do something about it, and we expect you to do that. Maybe it's a matter of patriotism. I don't know what to call it, but something must be done on your part."
Pallone asked the CEOs directly if they would reduce stock buybacks in response to higher gas prices, and each said they would not. He also asked the executives to share their 2021 profits, which totaled $70 billion between the six companies.
The executives noted that those gains came after a dismal 2020, where many oil companies ended the year in the red, and that stock buybacks and dividends would not come at the expense of investments in production.
At the same time, they noted that oil companies are facing pressure from investors to invest sustainably to avoid oversupplying the market, as it did in 2014-2015.
"It became abundantly clear that for the industry to survive, the model of production growth at any cost needed to change," said Scott D. Sheffield, CEO at Pioneer Natural Resources Company, which operates primarily in Texas' Permian Basin. "The investment community of mutual, index, and pension funds, which represent the retirement funds of millions of Americans, demanded change."
Republicans, meanwhile, argued that the main reason for price increases is the Biden administration's effort to steer the country away from fossil fuels.
"Today is purely political," said Rep. Cathy McMorris Rodgers, (R-Wash. 5th District). "President Biden needs cover for his war on American energy that has caused gas prices to skyrocket."
"Oil and gas are going to be needed for decades to come. Instead of accepting this reality, they continue to shut down American energy," she added.
The GOP pointed to Biden's moratorium on issuing new oil and gas leases on federal land, and his successful effort to stop the construction of the Keystone XL pipeline, as some of the actions that have helped drive up prices.
One Republican even blamed these policies for encouraging Russian President Vladimir Putin to invade Ukraine.
"The majority is laying the blame for the problem at the wrong feet," said Rep. Morgan Griffith (R-Va. 9th District).
"It has become painfully clear that President Biden's anti-American energy policies emboldened Putin, and in my opinion helped to invite the attack on Ukraine," he added.
