Oil company executives deny price-gouging

WASHINGTON -- Oil company executives, under fire for enjoying record profits while consumers complain about high prices at the gas pump, were grilled yesterday by senators who questioned whether the companies were engaged in price-gouging or manipulation of the energy market.

The executives denied that they were taking advantage of consumers, and instead called on the government to ease regulations for an industry they said is facing a complicated and competitive world market.

Oil profits were indeed high in the aftermath of Hurricane Katrina, said Lee Raymond, chairman and chief executive officer of ExxonMobil Corp., which clocked a record $9.9 billion in profits last quarter. But he said oil profit margins were not excessive compared with those of other US industries.

''Our numbers are huge because the scale of our industry is huge," he said.

If the federal government really wants to lower energy costs, Raymond and the other executives said, Congress needs to ease environmental regulations, make it easier to site liquefied natural gas terminals despite local opposition, and open up more areas like the Alaska National Wildlife Refuge for oil and gas exploration.

But last night, House leaders jettisoned an attempt to push through a controversial plan to open the wildlife refuge for drilling, fearing it would jeopardize approval of a sweeping budget bill today.

About 25 Republicans, led by Representative Charles Bass of New Hampshire, signed a letter asking GOP leaders to strike the Alaskan drilling provision from the broader $54 billion budget-cut bill. The leaders also dropped from the budget document plans to allow states to authorize oil and gas drilling off the Atlantic and Pacific coasts.

The Republicans had told the House leadership they would not vote for the budget bill unless the drilling provision was removed and they were assured that it will not return after House and Senate negotiators agree on a final measure.

The actions were a stunning setback for those who have tried for years to open a coastal strip of the Alaska refuge to oil development, and a victory for environmentalists. President Bush has made drilling in the Alaska refuge one of his top energy priorities.

The move came as lawmakers in both parties said they are under heavy pressure from constituents, who are angry about gas prices that now average $2.31 a gallon in the Northeast and are worried about the cost of heating their homes this winter. Even Senator Larry Craig, a conservative Republican from Idaho and backer of two energy bills that gave tens of billions of dollars in tax breaks and subsidies to oil and gas interests, indicated he was running out of patience.

''It's not terribly fun defending you, but I do," Craig told the oil company executives, complaining that gasoline in Idaho was more expensive than it is in Washington, D.C.

Senate majority leader Bill Frist, a Tennessee Republican who prodded colleagues to hold the joint oversight hearing yesterday of the Senate Commerce Committee and the Energy and Natural Resources Committee, said he was not satisfied with the oil executives' response.

Frist said the executives did not ''adequately answer the question of whether the sky-high gas prices we saw earlier this fall were entirely justified, and whether their companies' profit margins are appropriate given the hardships energy consumers are facing and will continue to face this winter."

Frist said that the Senate would continue to investigate whether price-gouging occurred, and that ''we will act swiftly to respond" if it did.

House Speaker J. Dennis Hastert, Republican of Illinois, urged Raymond in a private meeting yesterday to invest profits in production. While supply and demand affect the cost of gas, ''we should not tolerate price-gouging," Hastert said after the meeting.

Hastert had previously warned the industry that it might be hit with a windfall profits tax if energy companies do not invest more in production.

The oil executives testified that they are already investing their profits in production, and denied they were engaged in price-fixing or overcharging.

''ConocoPhillips is, and has always been, against any form of price-gouging," said James Mulva, the firm's chairman and chief executive officer. He said the company spends about the same each month in capital investments as it makes in profit.

''We do not see this as a windfall," he said of the industry's recent profits.

Despite sharp questioning by Democrats and a few Republicans on the committees, the businessmen were given some protection by GOP leaders.

The five executives were allowed to enter quietly into a cleared hearing room, and they were not forced to take an oath as Democrats had urged, depriving photographers of a group picture that might make the panel look on the defensive.

And when Senator Barbara Boxer, Democrat of California, began reading a list of the executives' individual compensation packages, she was stopped by the Commerce Committee chairman, Senator Ted Stevens, Republican of Alaska.

Boxer asked the witnesses whether they would voluntarily contribute some of their salaries to a heating oil fund for low-income people, and sought to include in the public record a chart of the salaries and bonuses. But Stevens refused.

''This chart is about publicity," he said.

Information from Globe wire services was included in this report.