House Republicans say they intend to press oil companies about huge profits at a time when American consumers are paying record prices for petroleum products, even as one major company announced it had boosted its bottom line by more than one-third.
"Big Oil needs to do its part. Increasing capacity and improving refineries will do much to boost supplies so that consumers do not feel such a big pinch," House Speaker Dennis Hastert said in prepared remarks, according to the Washington Times.
Meanwhile, BP PLC, one of the world's biggest oil firms, announced its third-quarter profits had risen 34 percent, reflecting the reality that hurricane-related damage to rigs in the Gulf of Mexico was far overshadowed by record oil prices.
The company – the first in a line of big oil firms expected this week to announce earnings figures from the July-September period – said its profits rose to $6.53 billion on revenues of $97.73 billion. That's up from $4.87 billion in profits on $66.73 billion of revenue during the same period a year ago, Reuters reported.
"The recent hurricanes in the U.S. have impacted our results. However, underlying performance is strong, amplified by high but volatile prices of oil, gas and products," said Lord Browne, BP's chief executive officer, adding oil prices "are expected to be well supported into the winter" – meaning, they are likely to remain high.
"Oil product stocks and anticipated recoveries in refining capacity generally are adequate to meet current demand but the situation remains finely balanced and vulnerable to further disruptions or a colder than normal winter," Browne said.
Royal Dutch Shell PLC and Exxon Mobil Corp. are expected to release their earnings as well, but it's not clear if their operations were as profitable during the third quarter.
In Washington, Hastert and other members of the GOP will hold a press conference today in which they intend to press oil companies on why profits are so high and what they plan to do to bring prices back under control, the Times said.
Hastert said oil companies share a responsibility to the public to do what they can to help keep energy prices affordable and the nation's economy stable and growing.
"These are extraordinary times that call for extraordinary measures," he said. "We expect oil companies to do their part to help ease the pain American families are feeling from high energy prices."
His spokesman, Ron Bonjean, said Republicans also were considering congressional hearings to get answers from oil companies, the Times reported.
One analyst, Michael McKenna, a Republican strategist who lobbies on energy issues, says oil companies should be a little nervous about GOP efforts to get to the bottom of higher energy prices. That could even include legislation, he said.
"The next stop on this train is legislation," he told the Times. "We could go back and forth over whether that legislation is going to be successful, whether it can pass or not, whether it's constitutional. But if you're an oil company, do you want to spend the next six months talking about a windfall profits tax?
"This would be a good moment and a nice opportunity for the oil companies to step forward and do something proactive," he added.
Democrats have already made the leap. Sen. Byron Dorgan of North Dakota has drafted a bill which would impose a 50-percent tax on every barrel of oil sold for more than $40. But for the moment, the GOP says it's opposed to that idea, the Times reported.
As of Tuesday, the price of a barrel of oil was near $60, following a 31-cent loss yesterday.
Though a number of analysts have tried to downplay it, U.S. consumers are definitely driving less to ease the pain of higher gasoline. In a survey at the end of September, the New York-based NPD Group found fuel price increases and the threat of higher costs have led 69 percent of the 41,400 consumers polled to drive less frequently. Another 42 percent said they were planning to cut down on their driving.
Higher prices are not coming on reduced supplies, as was the case in the 1970s, however. A Reuters analysis shows U.S. gasoline stocks up by about 2.3 million barrels this week, due to heavy importing – the third successive weekly increase. That is in spite of 68 percent of oil production and 55 percent of gasoline production still shuttered following Hurricane Katrina last month.
U.S. distillate stocks – heating oil and diesel fuel – are expected to have fallen by about 900,000 barrels from this time last year, Reuters said.
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