WASHINGTON — Top executives of major U.S. oil companies defended themselves Wednesday from allegations they are exploiting tight international energy markets to rack up blockbuster profits while American consumers suffer at the pump.

Darren Woods, chairman and CEO of Irving-based Exxon Mobil Corp., pointed to how the pandemic crushed oil demand so completely that crude prices briefly dipped into negative territory, a situation that drove many industry operators to go out of business or slash capital spending.

That helped create the current supply-and-demand imbalance that has no quick fix, he said, considering the industry must spend substantially every year just to keep production at the same level.

“That’s why even during the depths of the pandemic, when oil prices collapsed and ExxonMobil lost $22 billion, we continued to invest to increase supply,” Woods said. “That was not without risk and was often criticized.”

Woods testified alongside representatives from five other big oil companies at a House Energy and Commerce Committee oversight subcommittee hearing on “price gouging” intended to put a spotlight on the role of oil companies in sky-high gas prices.

He was joined at the witness table by representatives of BP America, Inc., Chevron Corporation, Devon Energy Corporation, Pioneer Natural Resources Company and Shell USA, Inc.

The hearing comes as Democrats scramble to blunt voter wrath over inflation generally and gas prices in particular. The party faces a potentially rocky midterm election cycle that could wipe out their slim congressional majorities. Republicans have seized the opportunity to hammer Biden administration energy policies, which they have denounced as a barrier to more domestic production.

GOP lawmakers object to Biden’s cancellation of the Keystone XL pipeline, his move to pause oil and gas leasing on federal lands and other proposals to replace the country’s use of fossil fuels with renewable energy sources.

Democrats have countered in part by highlighting the role of the economic rebound and Russia’s invasion of Ukraine in driving up gas prices.

President Joe Biden has sought to bring down prices with releases from the Strategic Petroleum Reserve. Last week, he announced that a whopping million barrels a day would flow from the SPR over the next six months – describing it as a “wartime bridge” until production can ramp up later in the year. He called on oil companies making their biggest profits in years to be patriotic and use that money to increase production.

He also proposed a “use it or lose it” policy under which companies would pay fees on wells on federal leases they refuse to put into production.

Wednesday’s hearing could help lay a foundation for legislation in that vein and other proposals, such as instituting new windfall taxes on the industry and using that money to provide relief to consumers.

Democrats cited a recent survey of 139 oil and gas firms in which 50 percent of all large firms responded that they intend to expand production by no more than 5 percent. A majority have cited pressure from investors as the primary reason limiting production increases.

Rep. Frank Pallone Jr., D-N.J., chairman of the full committee, said the companies represented at the hearing made more than $75 billion in profits last year and are funneling much of that money back to investors.

“We’re here to get answers from the big oil companies about why they’re ripping off the American people,” Pallone said. “At a time of record profits, big oil is refusing to increase production to provide the American people some much needed relief at the gas pump.”

The top Republican on the full committee, Rep. Cathy McMorris Rodgers of Washington, said the hearing represented nothing more than a distraction from Democratic efforts to force a transition to renewable energy that has resulted in more expensive oil.

“President Biden needs cover for his war on American energy that has caused gas prices to skyrocket,” McMorris Rodgers said.

Democrats pressed the executives repeatedly on whether they would shift money from stock buybacks and dividends to give some relief to consumers and the executives repeatedly responded that they intend to continue rewarding shareholders while also increasing production.

Woods said Exxon’s plans for the Permian Basin in Texas and New Mexico include increasing production by 25 percent over 2021, which already was up 25 percent over 2020.

“In fact, we expect our total oil production this year will be the highest in 15 years,” Woods said.

Rep. Lizzie Fletcher, D-Houston, said she was disappointed the hearing featured more political finger-pointing than practical solutions.

Republicans are wrong to blame high gas prices on Biden actions such as cancelling the Keystone XL pipeline permit, she said, noting the oil that would have come through that pipeline is making its way onto the market through other means. But she also defended the importance of the oil industry and chided fellow Democrats for blocking her proposal to buy oil for the SPR early in the pandemic after prices had cratered.

“If we had these reserves today, our country would be in a much better position,” Fletcher said. “As policymakers, we need to take energy policy seriously and stop using it as a political weapon.”

Extracted in full from: Exxon, BP, Chevron and Shell executives grilled at House hearing on gas prices, windfall profits (dallasnews.com)