Oct. 31, 2005 – With at-the-pump gasoline prices settling back down to pre-Hurricane Katrina levels, the nationâ€™s oil and gas companies last week anticipated record quarterly profits, prompting calls from some for an investigation into possible collusion and price gouging. Members of both chambers of Congress are calling for hearings on the matter.
- High Gas Prices Result of Industry Profits, Watchdogs Say (Aug 22, 2005)
Thursday, Congressman Bernie Sanders (I-Vermont) and Senate leader Bill Frist (R-Tennessee) independently issued statements questioning how oil and gas companies managed to make so much money and asking colleagues to hold hearings into the companiesâ€™ price-setting and other business practices. The nationâ€™s top oil companies reported their 2005 third-quarter earnings last week showing they had all reaped massive windfalls, even compared with the same period in boon-year 2004.
ExxonMobil led the pack, with nearly $10 billion in profits for the third quarter and more than $100 billion in sales, the highest amount ever reported by an oil firm. Other companies had similar takings, with Shell at $9 billion in profits, BP reporting over $6.4 billion in profits, ConocoPhillips $3.8 billion, and the much-smaller Hess $272 million, nearly $100 million more than the same period last year.
In a statement Thursday, Sanders sought to highlight the disparity between the nationâ€™s neediest and the mammoth multi-national oil companies.
"It is absolutely outrageous for oil companies like ExxonMobil to be raking in obscene profits while millions of Americans are struggling to pay skyrocketing gas and home heating oil prices," Sanders said. "Letâ€™s be clear: Senior citizens will go cold this winter, and workers will lose a significant part of their pay checks if we do not stop this price gouging."
The same day, Frist asked the two Senate committees â€“ Energy and Natural Resources as well as Commerce, Science and Transportation â€“ to hold joint hearings, the Los Angeles Times reports. Early last week, House Speaker Dennis Hastert (R-Illinois) said oil companies should use those profits to lower consumer cost and increase fuel supplies.
Consumers may face the highest home-heating costs in history, with average hikes expected to between 30 and 50 percent and many projecting 50 to 90 percent heating cost-jumps across the Midwest. Public interest groups say the juxtaposition is startling and attribute the profit increase of more than 35 percent to a regulatory failing.
According to Consumers Union, the nonprofit consumer advocate that publishes Consumer Reports, energy market deregulation played a key role in permitting the oil giants to reap windfall earnings while jacking consumer prices higher.