Whitfield Seeks Answers from Oil Companies on High Gas Prices

Press Release

Whitfield Seeks Answers from Oil Companies on High Gas Prices

U.S. Rep. Ed Whitfield, Chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations, today sent letters to the heads of five major oil companies - ExxonMobil, Chevron, ConocoPhillips, BP, and Royal Dutch/Shell - asking for detailed information about how those
companies are allocating their record profits to improve domestic and international oil refining efforts. The letters are part of an investigation by the Subcommittee examining escalating energy prices across the country.

Oil companies tallied record profits last year, earning nearly $140 billion for all of 2005. Profits have continued to rise in 2006, with the top three oil companies ExxonMobil, Royal Dutch/Shell and BP reporting first-quarter profits of $15.7 billion, 17 percent higher than the previous year. Despite these profits, no new domestic oil refineries have been built in the U.S. for the past 30 years.

High gas prices are a danger to every sector of our economy, said Whitfield. In light of the profits that are being made right now in the oil industry, I am interested in hearing exactly how oil companies invest to increase refining capacity.

Worldwide consumption of oil totals approximately 85 million barrels per day, with U.S. consumers alone using nearly 21 million barrels of oil on a daily basis. However, supply in this country has not kept pace with rising demand. The Department of Energys Energy Information Administration reports that refineries in the United States continues to operate at approximately 86 percent capacity, and gasoline production averages 24 million gallons fewer per day than one year ago. This crunch in gasoline supply has given rise to higher prices, which currently average $2.91 per gallon nationwide - nearly 68 cents higher than a year ago this time.

Several factors have contributed to this constriction in supply, including Hurricanes Katrina and Rita, which knocked many Gulf Coast refineries off-line. In addition, state and federal environmental regulations require refineries to switch over gasoline blends that include clean-fuel additives like ethanol that reduce emissions during the summer driving months, causing seasonal disruptions in gasoline supply. Whitfield wants to know the capacity at which each companys refineries have been operating for the past decade and whether the companies have ever deliberately reduced domestic refining capacity in order to keep prices artificially high.

With world demand for oil topping 85 million barrels per day, higher prices for the transport and delivery of goods will ultimately be passed on to consumers and have the potential to slow down an economy which, by all accounts, is booming. I have a keen interest in hearing the responses from these companies and their efforts to address the recent run-up in oil prices, said Whitfield.

Source