Big Oil Bosses at the Congress Hearing

A week after the Hurricane Katrina hit the Gulf Coast, gasoline prices reached an all-time-high average of $3.06 a gallon in September 2005.

A few weeks later, America's five biggest petroleum corporations reported a collective $32.8 billion in profits for the third quarter of 2005.

This sequence raised a simple question in the minds of people: why record gasoline prices and record profits happened at the same time?

In order to find the answer the executives of big oil were called to testify on November 9, 2005 before a joint hearing (on Energy pricing and Profits) of the US Senate Committees on Commerce, Science and Transportation, and on Energy and Natural resources).

The invited big bosses were: Lee Raymond, chairman of ExxonMobil Corp.; David O'Reilly, chairman of Chevron Corp.; James Mulva, chairman of ConocoPhillips; John Hofmeister, chairman of Shell Oil Co.; and Ross Pillari, chairman of BP America Inc.

A second panel was hearing testimony from the Chairman of the Federal Trade Commission and a number of state attorneys general.

Transcript of the hearing is given in Washington Post website. Their written statements can be found on senate energy and natural resources committee web site.

Setting the Scene

Senate wanted to know what they were doing with their profits and what they were doing to lower gas prices. In fact the main question was whether oil majors’ huge profits were due to profiteering.

Senator Ted Stevens (R-AK), (Chairman of Commerce, Science and Transportation Committee) told at the hearing that “Americans are now concerned whether they should be paying so much more for energy when our energy companies are recording record profits.”

HELLOOO!

We are living in a capitalist world. What is a private company’s profit to do with individual’s paying? United States of America is not Iran, Saudi Arabia or Kuwait where the oil companies belong to government, and domestic oil prices are subsidized as a gesture to redistribute to the so called oil wealth.

Actually Senator Pete V. Domenici (R-NM), chairman of Committee on Energy and Natural Resources, corrected it with his saying “Most Americans in most of the polls show that our people have a growing suspicion that the oil companies are taking unfair advantage of the current market conditions to line their coffers with excess profits.”

And Senator Daniel K. Inouye (D-HI) made it sound dramatic: “in the midst of suffering, in the midst of sacrifice, record-breaking profits.”

That had set the scene and then senators began shooting. BUT mostly to a target that does was absent…

What they do with their profits? … they invest

Oreilly (Chevron): “Since 2002, our company has invested $32 billion in our business (he meant worldwide). During the same time period, our earnings were $32 billion. In other words, we invested what we earned.”

Hofmeister (Shell): “where do these profits go? They go back into the business.”

Mulva (ConocoPhillips) in his written testimony “over a three-year timeframe, using 2003-2004 Conocophillips earnings are about $26 billion but investments are just over $26 billion”

Pillari (BP): “In the last five years, the BP Group has averaged $13 to $15 billion each year (excluding acquisitions) in new capital investment. The largest single placement of that investment, approximately $31 billion or roughly half of our global total investment, has been here in the United States. “

Raymond (ExxonMobil): “over the last 10 years, ExxonMobil’s cumulative capital and exploration expenditures have exceeded our annual earnings.”

Why gasoline is expensive? … market forces and costs…

Raymond (ExxonMobil): “The prices that we charge reflect those markets.“

Mulva (ConocoPhillips): “Fifty-four cents per gallon went for higher crude oil and feedstock costs that we must pay to run through our refineries. The oil that we purchased usually represents 85 percent to 90 percent of the total costs of running our refineries. Operating and marketing costs remain flat on a per-gallon basis, while taxes increased 3 cents per gallon due to the higher earnings. In addition, 6 cents per gallon represents retail industry taxes and margins that our company is not exposed to because our U.S. marketing operations are predominantly wholesale activities. That leaves us with 4 cents per gallon additional profit, which is 6 percent of the total increase in gasoline prices from one year to the next.”

Hofmeister (Shell): “First, they are determined largely by the price of crude, and the price of crude is set on world markets. We do not set or control the price of crude. Second, as profits rise, so do our tax payments….In the aftermath, Shell imported gasoline and other fuels – purchased at prices that were set in the global marketplace – to compensate for lost production from our damaged Gulf Coast refineries.”

However, Arizona Attorney General Terry Goddard’s testimony concurs that “…market forces are not working. The industry’s lack of reinvestment in refining capacity, product storage, and delivery infrastructure serves only the industry’s financial interests, while exposing consumers, especially in states like Arizona without anti-price gouging laws, to huge price spikes when the market experiences a supply disruption. It is up to you, our nation’s lawmakers, to stop this noncompetitive, exploitative and economically disruptive situation. I urge you to adopt an anti-price gouging law that will allow the Federal Trade Commission to protect consumers on a national level and state Attorneys General to protect consumers in the state courts.”

Pillari (BP) in his testimony: “In the face of these unusual external conditions, the market response was what you would expect in a global commodity market. Available product supplies were bid up as demand exceeded supply. Geographic areas not affected by the hurricanes experienced increased demand from buyers looking to move supply to the affected areas causing upward price movement in both the storm damaged and the unaffected areas. The rest of the world was also impacted. Product prices in Europe increased as domestic marketers began importing product to meet demand in the United States. Consequently, while consumers experienced difficult and rapid increases in prices throughout the country, these same increases resulted in a market that was able to attract supply and minimize large scale supply disruption.”

Why crude prices go up? … it’s the market, Dude…

O”reilly (Chevron): “For too long, Americans have been led to believe they can enjoy low oil and gasoline prices with less exploration and refining. The hurricanes have shown that this equation is not sustainable.”

Hofmeister (Shell): “The surge in demand has had a dramatic impact on the costs of doing business. The cost of an onshore rig in this country this year has more than doubled. The cost of a deepwater rig is now up to or over $300,000 or more per day. The cost to develop a deepwater field reaching $2 billion. The cost to build or expand a refinery -- for example, a 200,000 to 300,000-barrel-per-day refinery costs in the range of $3 billion to $3.5 billion. The cost to build a major green field LNG facility can be in the range of $5 billion to $6 billion.”
Compare this with what he said in his written testimony. Not radically different.. Just the numbers are rounded up…

“An onshore rig that cost $9,000 per day one year ago costs $15,000 per day today. In the deepwater, the cost of floating rigs has doubled to $300,000 per day. The cost to develop a major deepwater field is between $1.5 and $2 billion. The American Petroleum Institute (API) has estimated that a 200,000 to 300,000 barrel-per-day greenfield refinery could cost up to $3 billion to build in the U.S. “

In his written testimony he said that “The prices of oil and natural gas – which are set on the world market – fluctuate substantially and dramatically. …In conclusion, the world faces fundamental and pressing energy challenges. Demand is likely to be robust despite high prices. The investment necessary to meet this demand will be significant. Prices are high, but input costs are rising everywhere, driven by tight capacity along the supply chain.“

Raymond in his testimony said that “failing to meet demand abroad means higher prices for Americans at home.”

O’Reilly (ChevronTexaco) in his written testimony: “Fundamentally, today’s energy prices are a reflection of the current interplay between supply and demand, as well as complex regulatory and geopolitical forces. The hurricanes magnified this underlying trend and showed how vulnerable supplies are to disruptions. “

How the price of oil is set? … because…market…speculators…Saudis…Well…

All big bosses agreed that the price of crude is set on the market. But it was indeed Lee Raymond who made the issue a bit messy.

Raymond (ExxonMobil) said clearly that “The price is set on the world market by willing buyers and sellers, as to what willing sellers are willing to sell it for and willing buyers are willing to pay for it.”

But when pushed hard he blamed on first Saudis, then speculators and later on he contradicted himself, at least I understood so.

Raymond (ExxonMobil): “A month before the month in which we're going to lift the crude the Saudis tell us what the crude price will be for that month…they basically say, "Here's the price." And the alternative we have is to buy it or not buy it. Now, how they determine what the price is that they're going to set, that would only be speculation on my part, but I would have to say, when you look at that data, that the prices they set for the forthcoming month generally are very reflective of world market conditions, apparently as they see it. Well, they look around the world and see what people are willing to pay for a barrel of crude oil.“

“To be specific about the Saudis, the Saudis will only sell to end users. That is to say, the Saudis will only sell to refiners. The Saudis have never had any interest in being involved in I'll call it the speculative market.”

“The Saudis set the price. At that point, that establishes the price over the Saudi government. In the case, say, we bought the cargo of crude oil, we'll take it to a refinery. We run it through the refinery, and the product markets then determine what the margin was in the refinery.”

“But we bought the crude oil at world market price. “

But he also said that the recent price hikes are not supported by market fundamentals
“Senator, the facts are – and I’ve said this publicly for a long time – the oil prices have been moving steadily up for the last two years. And I think I have been very clear in saying that I don’t think that the fundamentals of supply-demand, at least as we have traditionally looked at it, has supported the price structure that’s there…the hurricanes aggravated whatever problem was there to begin with. That means we’re going to have to pay the world market price for these products, no matter where they come from.”

In fact, he even kind of blamed on speculators "speculators can purchase oil 24 hours a day all around the world. They bid up the price afterwards.” But he omitted what he said months before “When oil's at $60 a barrel, at least $20 of that is speculative and not supported by the fundamentals.”

Apparently Senator Roy Wyden (D-OR) remembered Raymond’s statement that fired the gun “You've been quoted as saying that speculation accounts for about $20 of the current per barrel price of oil. Yet you have given us now several times multiple, kind of, discussions about how the markets are working. Shouldn't we rein in those speculators who, by your own admission, are accounting for $20 of the current per-barrel price of oil in order to make markets work?“

Raymond (ExxonMobil) replied “I think you will find that, many times, speculation is a requirement for an orderly market. It is an extraordinarily complex interaction to try and deal with that. And the facts are that in the petroleum markets, in the scene that has been set for the petroleum markets, the uncertainty -- political, all around the world -- leads to speculation. And that speculation does impact on the price of petroleum.”

I did not understand what he really means, meant to say or try to say or think.

The question is then who are those speculators? I mentioned some of them in an earlier post, but Mulva (Conocophillips) shed some light his testimony “Approximately 83% of Conocophillips’ stock is owned by more than 2000 different mutual funds, representing investments by a wide array of individuals and businesses, as well as numerous private and public pension plans.”

Knowing that mutual funds, hedge funds and pension funds represent a very big chunk of speculators, I think the answer is clear!

Would big bosses donate money from their earning? …Nada…

Senator Barbara Boxer (D-CA) asked the big bosses to donate money because they earn a lot.

This was the nonsense part…

“In 2004, Mr. Raymond, your bonus was over $3.6 million. This was on top of your salary of $3.2 million, and stock gains and other compensation of $19 million. Mr. O'Reilly, your bonus was almost $4 million in addition to a salary of $1.5 million and tock gains and other compensation of $11.2 million. Mr. Mulva, your bonus was a little over $4 million on top of your $1.5 million salary, and $2.7 million stock gains and other compensation.”

“Gentlemen, this compares to an average American who makes $23,276 per year. Each of your bonuses was more than 155 times greater than the typical American's yearly salary. And compare your bonuses to a worker on minimum wage, which Congress hasn't raised in nine long years, that minimum wage workers makes $10,713 per year. Each of your bonuses -- forget the rest of it -- each of your bonuses was more than 300 times greater than a minimum wage worker's annual pay.”

“Will you consider making a major personal contribution and major corporate contributions from record profits to a charitable fund set up, hopefully with your efforts and community effort, to help America's working families get relief from higher home heating oil prices or higher gas prices?”

And nothing happened. I don’t understand what she expected though.

Why don’t they invest more in the US? … Because of obstacles

Big bosses joined Raymond’s (ExxonMobil) view that they would “like to invest even more in this country, especially in exploring for and producing new supplies of oil and natural gas, if there were attractive economic opportunities to do so. And limited opportunities for new investments that have been made available to us.”

O’Reilly (Chevron): in his testimony “While U.S. spending is significant, nearly 65 percent of our capital and exploratory expenditures have been directed towards investment opportunities outside the United States. As with any well-run company in any industry, our investments have gone to areas where there is opportunity to invest and earn reasonable, long-term returns for the risks taken.”

In the hearings he said that “conflicting government policies and restricted access to opportunities make it difficult to invest here in the United States....Our investments flowed to the areas of greatest opportunity and long-term return.”

O’reilly (Chevron): “the industry cannot pursue its potential in the U.S. without the right government policies in place…there is a critical need to rationalize regulations that create barriers to the efficient development and operation of energy infrastructure; And there's also a need to reduce the number of boutique fuels…. I believe that if the U.S. government can work with our industry as partners to eliminate barriers to investment, investment will follow.”

What are the obstacles to investment in upstream in the US? …lack of access..

Mulva (ConocoPhillips): “We also encourage you to give more serious consideration to the issue of resources access. With the entire East and West Coast and eastern Gulf of Mexico and key areas in Alaska all closed to entry, it's understandable why the supply-demand balance is tight.”

In his written testimony he adds “The industry’s only access to new offshore development remains the central and western Gulf of Mexico….We are concentrated there because that is where the available resources are and that is where policies from congress have kept us.”

“It takes an ever increasing amount of capital to keep production in the mature oil and gas fields in the US and the North Sea from declining. We will eventually lose this battle.”

“Costs also are rising because international oil companies don’t have access to low-cost reserves, primarily because host governments, including the United States, don’t allow access to reserves or make the terms too unattractive. The opportunities available to us and to me more remote, complex, or involve lower quality crude oil that requires higher prices to be economically produced. “

Hofmeister (Shell): “Congress might consider policies that will, in the first instance, allow responsible access to more domestic resources,”

O’Reilly (Chevron): “the U.S. government should open areas currently off-limits for the environmentally responsible exploration and development of oil and gas.”

“In our search for natural gas in the U.S., we have found many promising areas off-limits to development. For example, in the late 1980s, we made a significant discovery of natural gas in an area of the eastern Gulf of Mexico called Destin Dome, approximately 25 miles off the coast of Florida. At the time, it was estimated that Destin Dome held enough natural gas to supply 1 million American households for 30 years. Chevron and its partners could not get the permits to develop the field because of opposition at the local level in Florida, as well as a maze of regulatory and administrative barriers at the federal level. We are co-leading a project to produce and liquefy natural gas in Angola, shipping it to an import facility in the U.S. Gulf Coast and then piping it to the market. The customers will be the same customers who could have been supplied by natural gas just miles off the coast of Florida.”

Which is more or less the same in his written testimony: “Although our company is actively exploring for oil and gas in all the areas in North America currently available, we are doing this with one hand tied behind our back, as most of the Outer Continental Shelf (OCS) is off the table for exploration and development. ….The U.S. Government estimates that there are about 300 trillion cubic feet of natural gas and more than 50 billion barrels of oil yet to be discovered on the OCS surrounding the Lower 48. When you then add the Alaska OCS, you contribute the potential for another 122 trillion cubic feet of natural gas and 25 billion barrels of oil. If Congress wants to address high oil prices, they must address domestic supply issues, such as the limited access to oil and gas exploration off our coastlines. “

What government can do? … remove or ease the barriers…

O’Reilly (Chevron) in his testimony: “We believe that there are additional steps that must be taken by Congress and the Administration:…impediments to access for exploration should be removed. This would include ANWR, areas in the Rocky Mountain region, and Continental shelves..…Overlapping authority and conflicting or redundant processes should be eliminated….the government should recognize the growing interdependence of energy markets and work actively with other countries to provide additional secure sources of energy and to ensure a level investment playing field across national boundaries…. we need to rationalize the complex thicket of regulations and permitting requirements that is acting as a bottleneck to the efficient development and operation of energy infrastructure, particularly in the refining sector. “

Raymond (ExxonMobil) in his testimony: “Government can best help by promoting a stable and predictable investment environment, reinforcingmarket principles, promoting global trade, promoting the efficient use of energy, and implementing and enforcing rational regulatory regimes based on sound science and cost/benefit analyses.”

Hofmeister (Shell): “Streamline Government Processes. Governments at all levels – federal, state, local – should take the initiative to remove unnecessary bureaucratic barriers that inhibit investment.“

Mulva (Conocophillips) in his written testimony “Help American companies stay strong competitors in the global energy market…and streamline regulatory processes and remove barriers that discourage energy investment at home.”

In his testimony he also says that “both upstream and downstream, on the refining side and the infrastructure side of the pipeline, we need streamlined permitting and regulation, not at the expense of the environment in any way, but we just need to get the permitting process and regulatory process streamlined.“

Arizona Attorney General Terry Goddard pointed out in his testimony that ”…the lack of transparency in the oil industry, both with respect to upstream pricing and supply, often leads to uncertainty and confusion among consumers and government agencies alike. When we consider the importance of gasoline to our daily life, our economy, and our security, this lack of transparency is alarming. Not only do consumer fears of stations running out of gas lead to panic buying, but many state and local government officials are left guessing about the fuel supply situation when a supply emergency occurs….I concluded that no single federal agency is responsible for ensuring a stable, affordable supply of gasoline for the nations’ consumers and businesses.”

Would they support revenue sharing? ….Oh, yes!

Senator Marry L. Landrieu (D-LA) said that only 2.5 percent of OCS has been explored and there would be additional supplies of oil and gas that could supply the US. She asked the bosses whether they would support any sort of revenue sharing.

And all jumped, of course.

Are you in favor of Efficiency, Conservation and Alternative Fuels? … yes, in principle, but…

Big bosses didn’t seem to be in favor of raising fuel economy standards which was raised by Senator Jim Bingaman (D-NM): “Would you agree with me that it's time that we go ahead and raise fuel economy standards on vehicles in this country?”

Lee Raymond rolled the ball to the corner “I don't want to get into the political aspects of that. But I think the general proposition that we have to find ways to make the transportation system in this country more efficient in the use of energy is one that I would strongly support.“

Senators asked whether oil industry can assist (indeed asking for money for the program) Low-Income Home Energy Assistance Program

Mulva (ConocoPhillips) made it very clear: “But as an industry, we feel that it's not a very good precedent to be looking at one industry to help fund necessarily a government program as such. We think that's more in the realm of the government should be doing that. What we need to be doing as an industry, though, is what we've been talking about, and that is spending all of our money to add capacity and be pushing very, very hard on energy efficiency.”

When talking about alternative fuels big bosses said that they all working towards that as well and they have a lot of investments, but indicated that it is a long term process and takes time even though it has a future. They also mentioned problem with alternatives that they are not economically competitive with traditional oil and gas supplies.

At that stage Senator Daniel K. Inouye (D-HI) raised a very tricky question “I gather that all of you are in favor of alternative sources of fuel such as hydrogen and you would be in favor of improving CAFE standards? “

Private Raymond was in the front again “Again, I don't want to get into the politics; that's in your bailiwick. But I am and I have been supportive for a long time of having the transportation sector become more efficient. Whether that's CAFE standards or some other way to do that, that's a political decision you have to deal with.”

As far as alternative fuels are concerned they are all for that. But they don't need mandates to how to do that.

What’s wrong with refinery capacities? … blame on the US goverment…

O’Reilly (Chevron) in his testimony: “The refining sector too has undergone many changes as it has responded to a need to become more efficient and to comply with environmental laws. No refineries have been built since 1976 and their number has dwindled substantially, from 325 in 1981 to 148 today. Despite that drop, the overall capacity of the U.S. refining system has been steadily increasing since 1994. Current capacity stands at around 17 million barrels per day, up from 14.5 million in 1994. Refineries today are extremely efficient, operating at almost maximum capacity – nearly 95 percent. But a variety of factors make it challenging to expand current refining infrastructure:

• Historically low economic returns in the refining business.
• Timing and cumulative impact of environmental rules resulting in high costs for building new equipment.
• Delays in obtaining permits and NIMBY challenges.
• Multiple regulatory requirements to make a variety of cleaner burning gasolines, which has resulted in a proliferation of boutique fuels.
• Regulatory uncertainty regarding alternative fuels.”

O’Reilly (Chevron) in his testimony:

“Federal offshore drilling is currently only allowed in Mississippi, Alabama, Louisiana, Texas and parts of Alaska….limited access to domestic supplies and constrained refining capacity in the United States have created a situation in which the United States has become increasingly dependent on imports of all forms of petroleum.”

“Over the past decade, we have made substantial investments in projects to meet fuel specification and environmental objectives. Even then, meeting these requirements has not always been easy or without risk. In some instances, when we have debottlenecked and have added to capacity, we have had to pay severe penalties to do so. “

Raymond (ExxonMobil) in his testimony: “Building a new refinery from scratch takes years. And once a refinery begins operations, it takes years more for that refinery to pay back its investment. For us, a faster, more practical and economical way to add capacity has been to expand our existing refineries. It is much more efficient because the basic infrastructure is already in place. We have invested $3.3 billion over the last five years in our U.S. refining and supply system.”

“And industry-wide, while the number of refineries in the United States has been cut inhalf since 1981, total output from U.S. refineries is up by 27 percent over this sameperiod, a percentage which almost exactly matches the rise in overall product demand.I should add that we would like to invest even more in this country, especially inexploring for and producing new supplies of oil and natural gas – if there were attractive,economic opportunities to do so. But the fact is the United States is a mature oilprovince, domestic production is declining from those areas that are accessible to theindustry, and limited opportunities for new investment have been made available to us.”

But again he contradicts himself:

“It is our responsibility to engage in an open, honest, informed debate about our energy future… grounded in reality… focused on the long-term… and intent on finding viable solutions.”

“In politics, time is measured in 2, 4 or 6 years, based on the election cycle.In the energy industry, time is measured in decades, based on the lifecycles of ourprojects. We must take a longer-term view.”

Senator Barbara Boxer (D-CA) made a very good point and pushed Shell hard:
“ documents showed Bakersfield refinery was making about 55 cents profit per gallon, the biggest marginal profit of any Shell refinery in the country. The truth is it also was the most reliable Shell refinery in the country for 2003. So could you please explain why your company put out that word that there were no buyers -- that wasn't true -- that the refinery wasn't reliable -- that wasn't true -- that the refinery wasn't making money -- that wasn't true? Was it because you wanted to control the supply of gasoline and make gasoline even more expensive to my people in California?”

And Hofmeister (Shell) kicked back

“And the refinery is up and operating and Shell continues to support the new owners of that refinery in its technical requirements and in a smooth handover from one owner to the next. Fundamentally, we'd shopped the refinery around unofficially but did not find buyers. We then decided to close it. The reason for closing it is that this is a refinery that is one of the oldest in the country. It is one of the smallest in the Shell system. And it is on multiple sites. So, in other words, the refinery is not contiguous; it operates in different plots of land in the city of Bakersfield. And so, in terms of future investments, as we look at the need for world-scale, large manufacturing operations, what we really require are world-scale factories. And this was not going to get to world-scale. It was impossible to expand it. It was impossible to link it up in the way in which refineries are to be linked up to meet our investment criteria. So, in the end, it was sold. It's operating. We're delighted that the employees are still employed. “

Mulva (Conocophillips) in his written testimony: “We also cannot ignore the negative impact that federal and state regulatory processes have had on discouraging new grass root refineries. “
Raymond also made a good point: “…at the time that Exxon and Mobil merged, each one of the companies owned the refinery in California. The Federal Trade Commission and the state of California made it very clear that we could only own one refinery, and they weren't interested in our making any additional investments in any refining in California. So given that that was the circumstance a few years ago and we now only own one refinery, we probably aren't the right people to talk to.”

Did they sell oil abroad during the high price period? … don’t know…

Senator Maria Cantwell (D-WA) asked: “Did any of you sell product outside of the United States in the same time period for a smaller profit than you would have made if you would have sold the product in the United States?”

Big bosses anonymously said that they don’t know because it is impossible to answer without checking.

But Cantwell went ahead: “Do you know of any instance in which your companies might have diverted supply, that any instance where you had a ship heading toward the United States destined for U.S. market with supply and the petroleum products en route to the United States were diverted?”

Of course the answer is no, of course. What did she expect anyway?

Do Oil Companies Need Incentives? …. No, leave them alone…

Senator Ron Wyden (D-OR) asked “Now, today the price of oil is above $55 per barrel. Is the president wrong when he says we don't need incentives for oil and gas exploration?“
They were basically in the opinion that they have not asked for any incentives for exploration and $2.6 billion dollars new tax breaks on top of the tax breaks they already get.

Senator Wyden suggested taking that money back and using it to help people who are hurt by hurricanes. Big bosses agreed because the tax break did not make any contribution to their profits and has minimal effect in their revenues.

In fact, Mulva (ConocoPhillips) made it clearer “with respect to oil and gas exploration, production, we do not need incentives, what we need is access so that we can explore.”

However, as O'REILLY correctly specified “they must affect others. Whatever steps are taken by the government, they should be done on a prospective basis so they don't penalize people that have made decisions based on the act that's already been adopted.”

The issue was clarified by Senator Marry L. Landrieu (D-LA) “ 85 percent of the wells in the United States are run not by the big oil companies that are represented here, but by independent producers. Sixty-five percent of the country's natural gas are produced by these independent companies. They need these tax incentives because they're smaller. They don't have the international reach. They aren't able to, basically, hedge against the volatility of the price. And that's why most of these tax cuts or tax credits, tax incentives are in the record. “

Windfall profit tax blackmail….wrong door…

Senators blackmailed the oil bosses with plans for a windfall profit tax and a profiteering ban but the companies warned them against it because a windfall tax could impact investment and push prices higher. Raymond indeed made it very clear “History teaches us that punitive measures, hastily crafted in reaction to short-term market fluctuations, will likely have unintended negative consequences."

The Washington Post writers define the issue very elegantly: “Fortunately, the hearings are more bark than bite. Congress knows it, and the oilmen know it too.”

Non quia difficila sunt non audemus, sed quia non audemus sunt difficila
“we are not acting because things are difficult, but rather, things are difficult because we are not acting”
Roman Philosopher Seneca

If the Senators wanted the real truth, they would have asked different questions, such as

What was your crude and products stocks levels when the Hurricanes hit? Below or above average? Yes or No.

• 
  How much of those stocks you made use of during the crisis period?
• 
  How do you interpret the buying of your own stocks with your profits?
  
  It turns out that bringing the big oil bosses to the Senate had a different purpose: We (the Senators) will ask you why it happened and you will tell us what you want, so that the public understands how we should go on…
  
  Dogs bark but the caravan moves on. - Arab Proverb