(Reuters) - Oil executives defended themselves in the U.S. Congress from charges by lawmakers that they are gouging Americans with high fuel prices, saying that they are boosting energy output and no one company sets the price of gasoline.
US CONGRESS
Lawmakers in the U.S. House of Representatives Energy and Commerce Subcommittee on Oversight and Investigations are holding the hearing to grill companies on why gasoline prices remain elevated even though prices for crude oil, the feedstock for fuels, have dropped.
U.S. gasoline prices surged after Russia invaded Ukraine and Western countries slapped sanctions on Moscow's energy exports. Pump prices hit a record before inflation adjustments of $4.33 a gallon on March 11, and since then have slipped about 4% to $4.17 a gallon on Wednesday, according to the AAA motorist group.
International crude prices have dropped far more steeply, from a peak of more than $139 per barrel in early March to about $107 on Tuesday, a fall of 23%, and unfinished gasoline futures are down about 15%.
"These prices are constraining our constituents' budgets and patience," U.S. Representative Diana DeGette, a Democrat and chair of the subcommittee, said at the start of the hearing.
Executives from ExxonMobil, Chevron, BP America, Shell USA , Devon Energy Corp and Pioneer Natural Resources Co testified.
DeGette questioned the billions of dollars in profits earned by companies present at the hearing, and cited $30 billion in taxpayer subsidies they receive as a reason they should help lower gasoline prices.
Republican representatives at the hearing, including U.S. Representative Morgan Griffith of Virginia and U.S. Representative Cathy McMorris Rodgers of Washington, blamed President Joe Biden's policies for high pump prices, including a decision to revoke a key permit for the Keystone XL pipeline.
"It is impossible to generate confidence or invest in production today when future production is clearly being blocked by this administration," Griffith said.
Chevron's chief executive, Mike Wirth, said fuel prices are set by market dynamics that companies have little control over.
"Changes in the price of crude oil do not always result in immediate changes at the pump," Wirth said, adding that "it frequently takes more time for competition among retail stations to bring prices back down at the pump."
Biden, a Democrat, last week urged oil companies to boost output and service American families instead of investors, as he announced a record release of oil from strategic reserves.
Wirth restated Chevron's plans to boost capital expenditure this year by 50%, with about half going to increasing oil and gas output and half to renewable fuels and lower-carbon energy.
Exxon, the top U.S. oil company, on Monday said first-quarter results could top a seven-year quarterly record. Other oil company earnings could also surge after Russia's invasion pushed up energy prices.
"No single company sets the price of oil or gasoline," Darren Woods, chairman and chief executive of Exxon, said. "The market establishes the price based on available supply, and the demand for that supply."
Gretchen Watkins, president of Shell USA, said her company neither controls or owns the 13,000 gas stations that carry its brand. "Each of these independent businesses is responsible for setting the local retail price of gasoline."
Scott Sheffield, the chief executive of Pioneer, said it would take time to rev up the company's production in the Permian Basin, citing worker and supply chain shortages and the decommissioning of many rigs and hydraulic fracturing fleets when prices were low in 2020.
Retail gasoline prices exceed wholesale costs due to refining, transport, marketing and taxes, and the gap between the two tends to fluctuate - with retail prices often falling more slowly.
