good morning ladies and gentlemen we're ready to begin we welcome you all here again many of you have almost become professional witnesses you've been here so many times  and we've held this is the second hearing that the added trust task force as hell but i'm putting in the record all the hearings that have been held on the hill with the senate and the house with their various committees it comes to a very large number the reason these hearings are called gentleman is that every one of my colleagues on this committee joining with me and wanting to figure ways to bring the price of gas down at the pump we all want to the question is how do we do it and it's not that you are the ultimate resolvers of this issue but certainly you are among the major players and it's in that sense that we began these hearings in may seventh when we had arkansas first hearing on the subject  national average price of gas was three sixty six today it's three eighty one and washington d c it's four dollars in other places it's just as much so we come here to explore this we thank you so much for your cooperation and i wanted to just recognize  my colleagues for a couple minutes too for them to bring their welcome and identify the key point that is on their for his comments and then i'll go to  thank you must thank you mr chairman as chairman fuel prices at the pump have caused a significant strain on individuals and businesses finances across the nation this week the average price per gallon of gas hit three eighty four a new high unfortunately some people are playing playing the blame game when it comes to prices at the pump often pointing fingers at dig oil the corner the federal trade commission no there is no collusion to fix prices and the retail sale of gasoline so what can congress do to reduce fuel prices congress should be working to expand the domestic supply of energy house democratic leaders have rejected opportunities to increase that supply which would result in a drop in prices at the pump for example last august ninety five percent of house democrats voted against a proposal that would have opened up the outer continental shelf and the arctic national wildlife refuge to drilling for oil and natural gas only one tenth of one percent of an r would be impacted the area is frozen tundra not exactly where the caribou roam there may be as many as eighty six billion barrels of oil in the outer continental shelf an arctic national wildlife refuge enough oil to keep america going for five years with no foreign imports at all drilling in anwar alone would increase u s crude oil production by twenty percent over today's levels which would mean lower gas prices in the future w no one contends that opening up the o c s and anwar to drilling will make the united states energy independent overnight it's a step in the right direction many believe that alternative fuels are the solution to gas prices and while alternative sources of energy are important including solar and wind that count for only six percent of u s energy consumption even if we doubled our reliance on these types of energy increasing one hundred percent it would hardly be noticed at the gas pump fossil fuels constituting so much of our energy consumption both now and in the future expanding our access to oil and natural gas must be a part of the solution in reducing gasoline prices and excess profits tax on the oil companies has been proposed while it is true that these companies have strong profits profits are necessary for companies to expand produce and create more jobs to put these profits in perspective last here or when gas companies had a profit margin of eight point three percent lower than the eight point nine percent profit margin enjoyed by all manner factoring sectors and significantly lower than the thirteen percent profit enjoyed by computer companies and the eighteen percent profit in pharmaceuticals do we really want to start punishing any business that makes more than an eight percent profit regarding energy companies an excess profits tax would only serve to discourage them from investing more in their exploration production and refining capabilities this is not the way to reduce the price of gas not only would an excess profits tax not produce an extra drop of oil it would drive down the value of oil company stocks which are owned by millions of americans and their pension funds retirement funds and mutual funds in fact all federal employees who participate in the thrift savings plan have a stake in the energy companies there's an old cartoon which the character pogo says we have met the enemy and he is us it is congress who needs to be held accountable for not supporting policies that would increase the supply of oil and reduce the price of gas there are no short term fixes to this problem but over the long term congress can help reduce the cost of gas at the pump mr chairman one final request and you got a consent request to have an editorial that was in investor's business daily today let me first of all express my appreciation to you in this committee for the insight of convening such a very important hearing in a previous hearing that we've had i think it is well known that houston claims  and still remains the energy capital of the world many of these companies are my constituents and i probably represent their employees and i know that they are hardworking and patriotic americans but as we proceed in this hearing i hope that the approach will be a collective and collaborative effort of solutions we already know the core principles and proposals of the industry which is that this congress has not worked effectively when i say that this bipartisan congress over the long term and that the answers to our problems are out the well i would turn the cards back toward the industry and hope in this process this hearing that you will offer creative solutions frankly i believe that the issue of speculators which many americans are unaware of and to the price i think the structure of opec which many of you believe cannot be touched add to the price i do think that we have to be broad based and now thoughts about how we secure more resources i am a champion of drilling offshore of texas and louisiana why because there is a consensus you've done it well you've done it in an environmentally safe manner i think the other interest and i have and i do want to make mention of your colleague mr hofmeister who did avocation on the road and i'm going to extend an invitation for a roundtable discussion in our city by all of you at my invitation on the question of solutions but this is an antitrust committee and so we will be asking the hard questions what is impacting these prices are there collusions and by six in the ultimate results of the truck drivers who we heard from who are losing their business to the moms and pops who are trying to go on a limited kasian over the summer or carpool all of this has a major impact on the mindset and the attitude that americans have about how their country is treating them i think all of us regardless of whether you're in the private sector you are in fact public servants you have a utility a need that we cannot survive without yes we can look alternatively and we have done a good job this committee the energy and commerce the leadership of this congress the democratic leadership in looking at r n d and looking at alternatives but mr chairman i do believe that we have to have a balance in g policy that includes a variety of resources of which these gentlemen represent let us find a way that the callers that spoke to me this morning asked and that is to relieve the pain there may not be a short term if we think narrowly but there may be a short term if we think broadly and i do think we i'd like to thank you for holding this hearing with our nation facing record high gas prices and energy prices and as we were preparing this speech this was the part of the speech where we had a number and over the past week the ten days since we knew we were going to have this here we had to keep revising this figure and even scratch it out and put it in and now this morning my staff gave me this morning cincinnati enquirer article saying that gas is it's past four dollars mark so it's now four dollars or higher than four dollars in cincinnati ohio and there's not an issue that we hear more about from our can stitch once then when is congress going to do something about the high gas prices and how they are affecting their lives the public is demanding answers to questions such as how are we going to make energy more affordable in the short term how we're going to make our nation more energy independent in the long term what will be our primary source of energy in the future and how we're going to get there in response this congress gives them a legislation that purports to fix our energy problems simply by raising taxes by billions of dollars on domestic energy companies and hoping for the best that's not energy policy that's what amounts to a tax increase on every american family and let's face it for the most part the oil companies are going to pass that cost on to the consumers at the gas pump so they're basically just taxing the public we should be debating legislation to streamline the federal permitting process but his stifled construction of new refineries we haven't built one in about thirty two years the last one back in seventy six we had three hundred twenty four or refineries back then we've got fewer than one hundred fifty now thirty years later we should be talking about benefiting consumers by simplifying our nation's fragmented gas lean supply the number of regional boutique fuels restricts the movement of our fuel supply and raises costs on americans at the pump and islam are smith indicated before we should be opening up alaska's arctic national wildlife refuge anwar and the outer continental shelf for energy exploration and all indications are the combined there's approximately sixteen billion barrels in anwar and eighty six billion barrels in the outer continental shelf so the two together about one hundred billion barrels of oil and also millions of cubic sees me trillions of cubic feet of natural gas previous congresses made the decision to keep these vast reserves off limits i know i personally voted eleven times since i've been here to open up anwar we had the votes to pass it in the house but unfortunately would go over in the senate and be killed over there of course the price of a barrel of oil was much less than two it's now about one hundred here we go again hundred thirty barrel a hundred thirty five a barrel that's since yesterday and reports indicate that it may reach one hundred fifty dollars a barrel at some point this summer is god only knows where it's going to be this summer at this point it's time we were his visit this very important issue what about encouraging the construction of nuclear power plants we began that process in two thousand and five with the pass the energy policy act but as we sit here today we haven't built a new plant in decades european and asian nations are building them by the dozens india has nine new plants under construction japan has built five more and china is they plan to build dozens of new reactors let's talk about how we intend to compete with china canvassing the globe in its quest to ensure a reliable supply of all reports indicate the chinese are forming energy partnerships with rogue nations like iran and cuba and cuba is planning to work with china to drill off the florida keys so we're not going to go after that oil but cuba and china are it's an absolute outrage should we be talking about boosting domestic production simply so we wouldn't have to rely on the mood of third world dictators like hugo chavez would be nice if prices didn't spike our neighborhood gas stations when unrest in nations such as nigeria occur and they impact us here directly now some may argue and they might well be right that oil isn't the long term answer it's a finite resource that may be exhausted there are very scarce some years down the road and china and india continue to develop into and to soak up more the  available out there so maybe oil isn't the energy of the future but shouldn't we consider boosting our own oil and natural gas supplies increasing our energy independence that might just bias the time serry to develop the next fuel source perhaps hydrogen fuel cell technology will take us into the next century or maybe it's other renewable source resources it could be a combination of both or maybe something that we haven't even discovered yet we don't know but we do know that america has substantial reserves of oil and natural gas that we've locked up that this congress has locked up we've placed it off limits these resources could be the bridge that allows america to cross over the choppy waters of opec and third world dictators to the secure footing of affordable and secure energy sources of them are just as no nation has ever tax itself into prosperity it's simply not plausible to believe that we can tax and regulate our way to energy independence yet that has been the majority's prescription and it's clearly failing as we all know and we remember this we've heard it before that speaker pelosi said eighteen months ago that she had a plan that they were going to the prices at the pump were outrageous they were two dollars and thirty cents a gallon two dollars and thirty cents that was eighteen months ago now in my district they're four dollars a gallon getting close to double what they were eighteen months ago that was one heck of a plan you know back about my time thank you steve cohen memphis tennessee thank you mr chairman and thank the panel here for coming before us nine years ago i think it was said in jefferson's time that  they connelly basically was grounded in land and farming and that agriculture was important that the land was the foundation of society and the date it was and  that the land really belonged to everybody because society was based upon it today oral is really what the economy is based don and accordingly everybody has an interest in o because society itself is so wedded to it us that leaders of the companies that produce and sell the oil in my opinion and i hope you agree and in your remarks will comment on this have a duty to all of society to do the utmost to make this society a part of the riches that you have to see that the price doesn't go up and people are not being economically stretched as they are and to find alternatives to fossil fuels so that we don't in danger greater than we already have the planet in which we live and the very existence of man and all other species in the floor on the font of that we presently have but some of which are threatened because of global warming you have an extra responsibility a great responsibility almost like a government unto yourself to see that society is furthered and is perpetuated in a way that does not jeopardize the planet or does not jeopardize everybody's opportunity to have a share of the price of gas is a regressive economic factor and poor people suffer more than a wealthy person does i can afford four dollar gas but most people in my district cannot i heard something on n p r today that airlines can't continue with this one hundred twenty five dollar a barrel and that's why they're charging people to put luggage on the airplane a lot of society and a lot of things we're used to are changing and i would just submit to you while you have a duty to your stockholders and i'm one of them that you have a greater duty to the planet and of the people merican people people on this earth because society has such an investment in what you have as your business interests and i would urge you to think about some social policies and to try to understand the responsibility you have  to everybody to be cautious in the way that you operate your companies what happened in alaska with the valdez is unforgivable and environmental disasters can't really be compensated their damage is never on done but the damage you're doing to the economy can be corrected and i would just ask you to look within your own mortal souls and try to do something to help everybody out there and to help us get all of our reliance on oil and find alternative energy sources which i know you can and i hope that we hear from some responses in this here testimony thank you mr chairman thanks to the cohen from florida rick killer thank you mr chairman i'm going to make my remarks a very brief i've got a ton of questions oil company executives and i want to get to them a soon as possible by way waiting to let them testify so let me just briefly say that in terms of solutions which is where we're all going right now i firmly believe that we do need more exploration in anwar more exploration of our deepwater oil reserves more refineries more alternative energy solutions like nuclear energy on the conservation side and i thing we do need better conservation efforts like higher fuel efficiency standards and tax incentives for hybrids i believe the old company executives from their testimony yesterday have done a good and credible job explaining that crude o increases are the main reason driving the higher gas prices i have i think they've done a good incredible job of explaining that crude oil prices are governed by the law of supply and demand and the one law we can't change here in congress is the law supply and demand i believe however on the flip side that the achilles heel of what i've heard from their testimony is the somewhat exorbitant pay that some of these executives have received in retirement packages and otherwise as well as the failure of these companies to build any new refineries in the united states over the past thirty two years and i want to give them the opportunity fairly to address both of those questions because those are some of the perceptions that are on people's minds that need to address even though they may not directly impact in impact the price of crude oil that we're going to pay so i give them the chance to address those perceptions when i get to my questions but as woody allen said  eighty percent of life is showing up and i thank you for showing up and you'll back the balance of my time thanks betty certain ohio thank you mr chairman for holding this important hearing today we began the discussions of what can we can do in this committee to address outrageous gas prices two weeks ago and i know the american people have several questions they would like to ask our nation's oil executives so i think our witnesses for appearing here today when we met two weeks ago and this is been alluded to by my colleague from ohio gas prices at a record national average of three sixty one a gallon today the national average is three eighty one per gallon rising a penny a day for the last month surpassing as he indicated four dollars in many parts of our country there's no issue that i am hearing more about from my constituents than gas prices they are outraged by what they are paying and frankly so m throughout the president's term of office he has consistently claimed that all is well with the economy my constituents know this is not the case people are losing their jobs and those who manage to hold on while the manufacturing base has collapsed around them have seen the value of their wages diminished greatly now people are spending up to seventy dollars my colleague from florida just told me she spent sixty eight dollars to fill up pertaining to drive to work to take their children to school and to go out about their daily lives the trucking industry is suffering a single philip cost truckers over a thousand dollars that's outs that's astonishing we heard in our last hearing about the trickle down effect the diesel prices have on american consumers leading to in crisis increases and food prices and other necessities that truck drivers and retailers live on the president says the cost benefit analysis of taking immediate action to assist american consumers does not persuade him luckily for the american people a veto proof majority of congress has disagreed last week congress passed legislation which the president has now signed into law that requires the president to suspend purchases of oil for the strategic petroleum reserve through the end of two thousand and eight so long as prices remain above seventy five dollars a barrel i'd also like to think chairman conyers for introducing the no pac act which passed the house earlier this week and will eliminate protection for opec controlled entities to allow the department of justice to bring lawsuits in u s courts against cartel members we've heard a little bit about one measure supported by some of my colleagues across the aisle and our witnesses today to drill for oil and  department of energy has concluded that opening up the arctic for drilling would reduce the price of gasoline by approximately one penny per gallon twenty years from now the debate over drilling in anwar has spanned decades always resulting in the same answer drilling in anwar is simply not the answer to either what we hope is a short term crisis or to our nation's long term energy needs i often say that my top priorities as a member of congress are jobs jobs  jobs this morning i heard one of my colleagues on this committee say that our energy future needs to be green green and green and i could not agree more this congress is enacted landmark legislation to take necessary steps toward a greener and cleaner future america's energy policy first by passing the energy independence and security act that was signed into law in december and to set new fuel standards for cars and trucks yesterday we passed the energy and tactics diners act which will retain and create hundreds of thousands of green energy jobs and provide tax credits for the production of renewable energy sources like solar wind energy and incentives for the production of renewable fuel and energy efficient products in two thousand and seven the oil industry recorded record profits of one hundred fifty five billion dollars seventy five percent which was earned by the companies we have represented before us today exxon mobil alone made forty billion dollars last year it is the prerogative of the american people to know how these companies are possibly in need of the subsidies that the administration has lavished upon them while they themselves are suffering to make ends meet at our last hearing i expressed concern about the administration's energy policy written in secret in my view by vice president cheney i look forward to hearing from you the details on the nature and extent of the involvement of the companies you represent about your participation in those meetings which led to this administration's energy policy i thank the chairman and yell back the balance of my time thank you very much  couldn't disagree more about the reasons for the outrage i'm not sure that this is a complicated subject i'm not sure the america and american citizens understand it but they're learning and they're figuring it out and what i hope they understand very quickly is that the price of oil is going to be a function and i hope we hear from our witnesses today about this the oil is going to be the cost of gas is going to be derived by the availability of oil and the cost of making that oil available and the democrats have in fact interfered continuously with our ability to make resource resources available so the price will come down they voted continuously as a body against drilling in anwar continuously as a body against drilling on the outer continental shelf  we had a regulatory proliferation under their period of control that has led to a diminishing of our ability to drill in the inner mountain west that has expanded i think somewhat significantly under the current president but not nearly enough to keep up with the demands and the growing demand on the other hand if we're going to get out of the problem of the cost for a dollar a gallon cost of gasoline today we have to have another resource you have to have something new we have a great deal and i think we'll hear some some information about some of the unconventional sources but there is a vast source of oil that's available to americans and most people just don't understand the technology has caught up to the point where we can produce oil out of shale in the inner mountain west colorado has the largest amount you well the next in wyoming the third largest amount and these amounts are in the neighborhood of twenty times as much as all the other conventional resources combined and in fact the amazing thing is that the conventional resources are very expensive to get technologies brought down and i think several of the companies that are represented today will testify about their earliest i'll ask him some questions about their technology for getting oil out of shale it's a matter of cost it's a matter of availability how do we reduce the cost well you reduce the signed that is gone in addition we have to have the money available to b l m to promote the development of oil shale and to do and to deal with the issues in the problems and the democrats in their appropriations bills last year included a rider that prohibited spending any money by b l m on development of shale oil or developing the opportunity to do shale oil one of the employees and one of the witnesses came in my office the other days a guy who worked in utah i know him well and he's now running one of these programs and he handed me a list of two two sheets of paper that had forty six forty to forty six agencies listed on it many with multiple permits for agency and he said you know chris we've got an eight year lease on shale oil the permitting is going to take a seven years how do i tell my board of directors they should invest in the seven year process when the lease is eight years if we want to reduce the cost well as a federal government we have to get out of the way of industry which now has by the way the capital available to i think pursue these to most of the people here that are going to in no and i want the world to know that we have the first commercial test in about thirty years going on to develop produce oil out of jail today in utah is not done on federal land because we can't do it on federal lands it's being done on a school trust lands and i believe that by about mid september going to see that they're able to get oil out of shale that based on their test there they believe that that could be done for about thirty dollars a barrel thirty dollars a barrel in a world where we're paying four dollars we're paying for oil we're paying a one hundred thirty eight yesterday it's obscene that we have an environment where we're grilling these gentlemen because their companies competing with each other are trying to get the better share the market in a world where they're constrained by resource and america has vast resources on its public lands which it is locked up and kept from getting the gas pump kept from getting to poor people you know that mr chairman you and i worked on many issues together where the commonality has been the regressive cost of the internet or taxes on telephones and other things like that we have a great deal of commonality here it is a crime it is immoral to have the kind of policies that rob food from people in the third world rob food from the poor people in america because we're doing ethanol and on the other hand locking up our resources and not letting people develop those resources so that we can bring down that cost from four dollars a gallon to wear out ought to be a dollar a gallon or frankly lest we have to get rid of federal taxes to bring it down i think below that level so this jim this is an issue that i'm excited about i'm concerned about we need to change we can do this as democrats and republicans and make the world a better place we have to change policies and that's within our power to do and i think the chairman and you'll back well i'm glad th americans don't understand how oil impacts the price of gas i mean it's that kind of patronizing attitude that has shaken the confidence of the american people and their government and i mean with all due respect the whole point of this hearing is so that we can identify ways that we can dramatically reduce the cost of gas or even maybe reduce the cost of it a little bit because i am a mom with three young kids who just filled up my minivan the other day for sixty eight dollars that is real money i mean it might not be real money to do six people and five people right in front of us because sixty eight dollars is like a nickel to be based on the income that that you all are and but we cannot continue to expect to drill our way out of the cost of gas problem and i am a floridian and i oppose drilling off the coast of the of the outer continental shelf but we need to understand several things since two thousand the amount of drilling that we've done is actually increased dramatically exploded over the last four years has the price of gas gone down because of that no in fact as drilling has increased the prices just kept going up the federal government's given oil companies more drilling permits than they know what to do with since two thousand and three the federal government has consistently issued far more promise than the oil companies have acted on are we tying their hands from continuing to drill no we're certainly not of the forty two million acres of federal land that is currently being leased by or oil and gas companies only about twelve million acres are actually being produced oil companies don't need new areas to drill they need to use the ones we've already given them and for all the talk  republicans about how the democratic congress has stopped drilling and that we've said no throughout the process there hasn't been one acre closed to more and more drilling for oil or gas so if you can drill it under the republican congress you can still drill it under the democratic congress and you know at the end of the day what i would love to hear during the course of this hearing is a solution that does not involve more drilling i also find it baffling that we continue to give you subsidies and forgive royalty payments for an industry that makes record profits is the most profitable industry in america and on top of that i have to tell you it's very difficult to stand in front of our constituents where you are an industry that is reaping record profits while charging record prices and they're not and it becomes difficult to answer the question that that event in evolution comes up that you are not manipulating the prices which there is a strong suspicion that you are so those are the kinds of things that i'd like to hear from you today less reputable when it comes to keeping their promises some of which have nationalized resources some of which like like russia fail to reinvest in their natural resources so that although today they have record profits there's no likelihood of record profits of the future i'm not ashamed to be a republican i'm proud to be a republican i'm proud to be for all energy solutions and for all reasonable energy savings and i'm happy that we're having this discussion today because in fact whether or not there has been any manipulation in prices i think those of us that the day is have to be part of the solution to make sure that there are a surplus of opportunities and options to compete with real energy alternatives you in front of us represent one energy source or one group of energy sources the truth is that this congress has in fact taken many areas of potential new development off limits when we had nine dollars ten dollars or twenty dollar a barrel oil perhaps some of those didn't make sense i for one have watched t boone pickens reinvent himself and become the smartest guy going because he went to canada where it takes thirty or forty dollars a barrel to lift or to extract if you will from the sands and he now of course is making a killing he's making a killing because prices have gone well above where they were in the past and where they would be today if in fact we had a glut rather than a shortage around the world so i for one want to hear what we can do to enable you to have better access here which i believe unlike the gentle lady from florida a state like mine that has simply said we don't want it in our backyard more available i also would like to and my questions will ask about each of your companies worldwide efforts to find and extract oil from around the world i don't expect you to give us all the answers on wind energy although many of your companies have invested that i do expect you to have a plan to reinvest the profits that you're earning today into future energy i'm confident you will in fact have a plan to do that that unlike the gentle lady in the gentleman in some cases on this day s that you will show us where these funds are not simply being sent out to to stockholders although well deserved because many of them waited for a long time for these windfall profits but in fact reinvested in future energy for that i hope the chairman will be as receptive as as i will be with me and i would yield to the gentleman from ohio i think she'll me i'll be very quick the gentleman made the comment about america being a nimby nation and nimby of course is not in my backyard i would just note when it comes to anwar which is in alaska the overwhelming number of alaskans are in favor of drilling in anwar back thank you in reclaiming my time it is very clear that some people in america are not in anyone's backyard that's not true of who go chavez who will drill where he needs to drill it's certainly not true of the chinese who are today in preparation for drilling off of cuba's coastline far closer to the gentle lady from  florida's district than in fact any of you are allowed to drill so mr chairman i do look forward to it i do believe that we have to be vigilant against price manipulation i also think we have to recognize that an absence of sufficient supply in too much demand is in what we also have an obligation from this day as to deal with and with that i would happily yield back thanks there tom feeney florida well thank you mr chairman and you know congress has had some forty five hearing so recently on gas prices and energy applications i would say that the essence of these hearings have proved two of my favorite maxims number one no situation is so bad that congress can't make it worse  two that congress is constantly trying to repeal the laws of supply and demand and economics as though we could reverse gravity by passing a law and i would predict that the more hearings we have and the more policies based on the attitude the liberal leadership the higher prices of gas will go i think it ought to be liberal leaders in congress that are answering questions about how our policies have led to one hundred thirty eight dollars a barrel o any of you that have had a third grade economics class or the first week of that and omics in high school or college can talk about the fundamental laws of supply and demand we can't really impact or stop india or china or much of the developed and developing world that forty years ago was walking around they were rich if they had a bicycle the demand for energy is increasing worldwide and there's simply nothing that the american congress can do about that what we can have an impact on is supply and what we've done for thirty five years energy includes a basket of a viable ways to produce energy that we need in our personal lives for families for businesses and for prosperity and yet for thirty five years we have said that not one nuclear power plant can be built to provide energy to americans all of our nuclear experts went to france i hate to point out that france france has a better commonsense policy towards energy than the united states but all of our technology experts went to france they now get eighty percent of their energy needs from clean renewable and affordable nuclear power we've got twenty six percent of the world's coal supply right here in the united states and yet we have largely said we're not going to build any new coal plant even though liquefied or gasified coal is cleaner than ever we have done this to ourselves we have stopped any new drilling in the gulf for oil in shale as a congressman can and can point out in anwar we have deliberately done everything we can to reduce the supply of domestic energy and yes it's great to talk about long term needs that i support wind and solar and biofuels are all great potential one day opportunities but in the short run we have done this to ourselves with policies and finally i'd like to say a word about the speculators that supposedly are driving up the cost of gas at the pump speculators are nothing but sophisticated betters and they are betting on what's going to happen in the future to supply and demand they are watching the united states congress crush ourselves in every way that we produce a new policy of taxes or regulation or killing supply and they are betting that this congress will take four dollars a gallon gas to eight or ten or twelve dollars a gallon gas and i would say if we don't change directions to magically the speculators are right they're not responsible they're betting on the mis performance and the negligence of the united states congress without a little back that melts my time thank you very much we welcome john peterson of pennsylvania is sitting with us you know you are given us an idea is started out this morning we finished now we've got three quick votes will stand in recess and we'll resume thank you for your patience president shell oil company who we know as been active with the national urban league who is stepping down soon and who we wish you well in his future chairman conyers congressman shabbat and members of the task force i appreciate the opportunity to testify today in addition to my formal written statement i welcome the chance to share some additional thoughts this is an era of remarkable capital expenditures for major new projects and infrastructure strong investments in technology and the aggressive pursuit of energy alternatives we're setting records and one of the most expansionary periods the industry has known yet in the face of the sustained record spending the relentless increase in the price of  barrel continues as repetitive in an interesting as it may sound the fundamental laws of supply and demand i believe are at work oil exporting nations are managing their natural resource development production to supply their local and global markets in their own self interest while oil oil importing nations by oil and global prices some notably india and china subsidize the cost of oil products to their nations consumers feeding the demand for more oil despite record prices they do this to speed economic growth and to ensure a competitive advantage relative to other nations meanwhile in the united states access to our own oil and gas resources has been limited for the past thirty years prohibiting companies such as shell from exploring and developing resources for the benefit of the american people according to the department of the interior sixty two percent of all on shore federal lands are off limits to all and gas developments with restrictions applying to ninety two percent of all federal lands in addition the outer continental shelf moratorium on the atlantic ocean the outer continental shelf moratorium on the pacific ocean the outer continental shelf moratorium on the eastern gulf of mexico congressional bans on on shore oil and gas activities in specific areas of the rockies and alaska and even a congressional ban on doing an analysis of the resource potential for oil and gas in the atlantic pacific and eastern gulf of mexico prevent us from bringing new supplies to the american people at a time the desperately need new supplies the argonne national laboratory in addition produced a report in two thousand and four that identified forty specific federal policy areas that halt limit delay or restrict natural gas projects i urge you to review it it is a very long list if i may i offer it today if you would like to include in the record by doing so ordered when many of these policies were implemented oil was selling in the single digits not the triple digits we now see the cumulative effect of these policies has been to discourage us investment and send us companies abroad to produce new supplies as a result u s production has declined so much that nearly sixty percent of daily consumption now comes from foreign sources alternative and renewable energy sources play a role and will grow substantially and shell is playing a key part in the expansion of such technologies but nonetheless leading experts forecast that by two thousand and thirty we are still expected to import more than half of our oil the problem of access can be solved in this country by the same government that has prohibited it congress could if it chose lift some or all of the current restrictions on exploration and production of oil and gas if the nation set a goal mr chairman of increasing domestic production by two to three million barrels a day by opening up new sources for exploration and production in addition to recent laws you have passed to increase the production of renewable fuels and to increase m vehicles that we drive we could demonstrate to the world that we are in control of our own destiny if we did this it would be unnecessary for our national leaders to ask the rulers of other sovereign nations to produce more oil for the and for us consumers and risk the discomfort of an unresponsive reply instead of continuing the thirty year pattern of living in access let's implement a national policy that expands access where appropriate and shell is prepared to participate in such a plan in addition to more access we do need more with the more refining capacity as you know from my written testimony shell is a fifty percent participant in the seven billion dollar expansion of the motif a refinery in port arthur texas this project will expand production of finished products by more than three hundred thousand barrels per day and when completed will be one of the largest refineries in the united states and in the world refining capacity is particularly critical when it comes to the demand for diesel aviation fuel and heating oil all products that we in the industry refer to as the middle of the barrel at home and around the world demand for these middle distil it's is growing faster than the demand for gasoline due to the sustained demand for diesel mobility in air travel prices for these products are also rising faster than other products there's simply no way for us to keep up with demand or get ahead of it without producing more oil and more refining capacity higher taxes would only serve to diminish the expansion capacity of this critical capital investment and i to resist such punitive policies we are making significant capital investment to produce more energy and more kinds of energy to meet global demand an enormous amounts of capital are required and will continue to be required to fund our huge scale projects and cutting edge research this year shell will spend more than twenty eight billion dollars the largest expended capital expenditure in our history and perhaps in the oil and gas industry and this investment includes significant investments in wind solar hydrogen and biofuels in conclusion mr chairman the united states has the natural resources it has the technology the financial capital the human capital and the desire to be energy to be more energy self sufficient it can secure its future through new alternatives and more traditional hydrocarbons it can also address the c o two reductions that we need for the future it can continue to assure a high quality of life for its citizens it can deliver more affordable energy an affordable ways to u s consumers by addressing our challenges by considering them a short term medium term and long term opportunities the u s can move beyond its current dilemma and build anew a new era of sustainable affordable energy security i look forward to your questions thank you so very much we have all of your resumes accomplishments and present activities that will be in the record mr robertson welcome good morning mr chairman ranking member shabbat and members of the committee my name is peter roberts and i'm biased chairman of chevron corporation and i'm here today proudly representing our fifty nine thousand employees i appreciate the up to discuss the energy issues facing consumers we know americans are frustrated and concerned about prices at the gas pump they are looking for answers and rightly so they deserve answers from us and answers from congress last week the average price of gasoline was three dollars and seventy two cents a gallon up sixty two cents from a year ago increased fuel costs made up all of the increase and now account for seventy one percent of the price or two dollars and sixty five cents a gallon global issues affecting the supply and demand of crude all are driving prices up to new records the world is consuming or oil and ever increasing rate and it is projected to continue there dramatically reduced spare supply and no room for error any disruption a perceived threat of disruption sands oil prices up oil prices have doubled over the year due to this highly volatile environment so what are we doing about rising oil prices we are reinvesting our record income at record rates and future energy supplies including renewables and we market energy efficiency services this year we're spending seven point one billion dollars to develop u s energy projects triple what we spent in two thousand and four in the previous five years we spent nearly twenty billion dollars in the u s when it comes to refining and gasoline marketing we're spending two point three billion dollars this year on our american facilities recent upgrades to our u s system of added one million gallons per day and we're working to add more we now produce more than six billion gallons of gasoline each year a large number but that's less than six percent of us refining capacity and in fact we own just five of the hundred fifty u s refineries and when it comes to selling gasoline on the street corner where the fourth largest us really retailer but our market share is less than seven percent there are one hundred sixty eight thousand retail sites across the country we have fewer than ten thousand sites most of which are owned and operated by independent business men and women given the number of players involved that can be no doubt competition for sales as f consumer demand has fallen in the first two months of this year u s gasoline production has been at record levels for over the first four months gasoline inventories are recent been pushed to their highest levels in a decade the market is well supplied that's why the current high price situation is so confusing americans are right to ask with ample supplies of gasoline and weak demand at home why are prices at the pump continuing to climb the tension is with crude oil supplies america is the world's largest consumer we import ten million barrels a day which is double our domestic production we are in competition for these imports with developing economies around the world many of which subsidize their domestic fuel prices this puts more pressure on limited spare capacity to ease this tension massive investment is needed around the world this is where companies such as chevron play a critical role american energy companies are large compared to most u s businesses but relatively small compared with national o companies competing with us for supplies these companies have control over most of the world's known reserves and many enjoy the unqualified support of their national governments punitive measures such as windfall profits taxes will hamper o ability to invest in badly needed applies they will weaken our competitive competitiveness in this volatile atmosphere and increase our dependence on foreign supplies our solutions need to focus on the basics of cruel supply and demand when it comes to demand we need less we need to value energy as a precious resource and use our ingenuity in advanced technology to use energy more wisely across the economy when it comes to supply we need more of all farms oil natural gas biofuels and other renewables last year the national petroleum council study reinforced this need to deal with supply and demand it emphasized strategies for achieving american energy security through smart policies and investments we strongly urge you to implement its recommendations we know that high prices are forcing consumers to make hard choices on how they use energy we are making hard choices to mobilize more people and more money to increasingly remote locations in the world for more supplies chevron ploys understand the enormous responsibility they have to deliver energy reliably i can personally attest to their strong commitment congress has recently made some hard policy choices on  energy efficiency that will make a difference but we can't expect other countries to expand their resource development to meet our increasing needs as we limit our development without good reason we welcome the opportunity to work with you to ensure the responsible development of this country substantial untapped potential resources in a way that respects the environment and delivers badly needed energy supplies to americans thank you thank you so much john low good morning chairman conyers on the committee we share the public's concern about rising energy prices and appreciate the opportunity to present our views on what is driving the increase what our company is doing to respond and what we believe congress can do that's over seventy percent of the current cost of gasoline so higher crude prices are driving higher gasoline prices so why have crude oil prices increased so dramatically there are numerous factors the biggest contributor being a long period of strong global economic growth particularly in developing asia limited access to resources both here and abroad also constrains the growth in supply in addition higher taxes service cost inflation little excess production capacity and high geopolitical risk also contribute adding to this are the investor funds flowing into oil futures as a hedge against credit risk inflation and dollar  devaluation i cannot overemphasize the access issue access to resources is severely restricted in the united states and abroad and the american oil industry must compete with national companies who are often much larger and have the support of their governments we can only compete directly for seven percent of the world's available reserves while about seventy five percent is completely controlled by national companies and are not accessible conoco phillips is working to bring more energy to the market over the past six years we've reinvested on average one hundred six percent of our income in two thousand and seven we are in twelve billion dollars but we're invested thirteen billion dollars and we have over fifteen dollars in investments planned this year this investment includes finding added supplies of oil and gas expanding refining capacity and continuing to research and bring renewable and alternative fuels to the market here in north america we're drilling exploratory wells developing the canadian oil sands and building infrastructure but we want to do more such as explore the vast areas of the u s that are off limits due to  more than double the nation's oil and gas ass reserves downstream we're increasing our refining capacity and ability to process lower quality crudes unfortunately our efforts here in the us have been met with continuing opposition at our wood river illinois refinery the tenth largest in the united states we are experiencing long permitting delays via the appeals process that are blocking our expansion plans in california a project to make alter low sulfur diesel fuel has been threatened by permit challenge for four years we are working hard to bring renewable fuels into the market by looking at ways to process them at traditional refineries and researching new technologies fifty five percent of our u s gasoline volumes contain ethanol eighty five and biodiesel are being marketed at our branded facilities we're producing renewable diesel fuel and researching next generation biofuels like and we are developing better materials for the lithium ion batteries and electric vehicles so what can congress do to help address energy concerns congress can act a balanced national energy policy that encourages development of the conventional fuels of power our economy clears the permitting log jam encourages alternative sources including all forms of biofuels and removes the current tariff on imported ethanol encourages higher energy efficiency and accelerates technological innovation meanwhile we are do not to pass measures that have public appeal but would be counterproductive such as tax increases that diminish our investment reduce the attractiveness of high cost of mesic production or disadvantage us oil and gas companies this has been tried before with extremely negative results reducing supplies eliminating jobs and resulting in higher prices the nation cannot afford to make that stake again the u s is in a global race for energy we're competing against national oil companies that are far larger and that enjoyed preferred access and governmental cooperation we must move beyond today's adversarial relationship and start working together to find real solutions us all companies should be viewed as the key to the energy solution not a scapegoats but as assets in this global energy race we must be allowed to compete on level ground for the benefit of our country mr chairman i conclude thank you very much we're pleased to recognize  malone chairman and president of b p america thank you must thank you mr chairman ranking member shabbat members of the committee good afternoon we know that high energy prices are having an adverse effect on our economy and on our workers and families across this nation not a week goes by that i don't receive letters from consumers about the impact that they're feeling from high energy prices unfortunately i cannot and we cannot change the world market which this nation now realize for sixty percent of the oil it consumes every day but what we can do is to work together with this congress with the administration and with governments and consumers to move towards greater energy security and a lower carbon energy future today's high prices are linked to the failure both here and abroad to increase the supply of oil and gas in renewables and to reduce demand through conservation and energy efficiency the oil market is tight geopolitical risk and concerned about future supply have had a big impact on price we're working hard to expand and diversify u s energy supply where the nation's largest producer of domestic oil and gas and one of the let nation's largest energy investors over the last five years we've invested thirty one point five billion dollars in development of u s energy supply almost dollar for dollar of our net income we expect to spend thirty billion over the next five years to maintain production of natural gas from the rocky mountain area to renew critical infrastructure in alaska to continue development of the deep water gulf of mexico and to increase gasoline production at two of our midwest refineries were nearly doubling the capacity of our frederick maryland solar plant and by the end of this year we expect to have a thousand megawatts of u s wind power capacity online increasing to two thousand four hundred megawatts by the end of two thousand and ten we're already one of the largest blenders of ethanol in the nation however over the next decade we'll invest more than five hundred million dollars in the search for a new generation biofuels that contains more energy has less impact on the environment in which is not made from a food crop together with my colleague here from conoco phillips we recently announced the largest private sector investment ever in the united states the dunalley alaska gasline project our investments across the entire energy spectrum are huge but the hard truth is that even with major improvements in energy efficiency and the rapid growth of solar wind and biofuels the united states is going to need more oil more natural gas more coal and more nuclear power in twenty thirty than it does today the united states with five percent of the world's population is consuming twenty five percent of daily world oil production the us has had to produce more the energy has to produce more of the energy it consumes and it has a responsibility to use the energy wisely on the supply side we support incentives for alternative energy but taxing one form of energy to and courage production of another will reduce our ability to keep up with the growing s energy demand the results will be less investment less production tighter energy markets and potentially even higher prices at the pump this nation should be encouraging production of all forms of energy especially oil and gas but adopting measures that limit access to u s resources that dampen investment in infrastructure discourage trade with our canadian neighbors is going to make it increasingly difficult and make our economy more vulnerable to market influences my company is serious about bringing new sources of oil and gas to the u s market we're also serious about building a sustainable profitable alternative energy business that's capable of delivering the clean and affordable power that consumers want my company is ready to work with you and others to address the energy and environmental needs of this nation through a bipartisan and comprehensive energy energy is essential to the u s economy and as a topic on many americans minds they are raising important questions about how our industry is helping meet their vital energy needs i welcome the opportunity to respond to these questions and to clear up some misconceptions regarding our industry and to this in i would like to make two points during my allotted time similar to those i made before the senate judiciary committee yesterday first the prices americans pay at the p reflect the dynamics of an enormous international market for energy which means that in order for american energy companies like exxon mobil to successfully compete it is vital that we have sufficient financial strength and  he crude oil used to manufacture the fuel americans consume may have been produced in the united states or in any one of more than thirty five countries within this vast global marketplace competition  exxon mobil is the largest u s oil and gas company but we account for only two percent of global energy production only three percent of global oil production only six percent of global refining capacity and only one percent of global petroleum reserves with respect to petroleum reserves we rank fourteen government owned national oil companies dominate the top spots for an american company to succeed in this competitive landscape and the go ahead to head with huge government backed national oil companies it needs financial strength and scale to execute massive complex energy projects requiring enormous long term investments to simply maintain our current operations and make needed capital investments exxon mobil spends nearly one billion dollars a day over the past twenty five years we have invested three hundred fifty five billion dollars in new energy projects which is more than we earned during this same period over the next five years we plan to invest at least one hundred twenty five billion more  profitability in absolute terms is large but it must be viewed in the context of the massive scale of our industry and our dependence on high earnings in the current up cycle to sustain the huge investments required over the longer term the second point i would like to make address is the concerns your constituents and our customers have about where their gas dollars are going last year the average price in the united states of a gallon of regular unleaded gasoline was around two dollars and eighty cents on average in two thousand and seven approximately fifty eight percent of the price reflected the amount paid for crude oil consumers pay for that crude oil and so do we of the two million barrels per day exxon mobil refined in two thousand and seven here in the united states ninety percent were purchased from others last year we spent over forty billion dollars ourselves buy in crude oil and feedstock on the open market to fill our u s refineries fifteen percent of the average price americans paid at the pump last year reflected the amount collected in federal state and local taxes the remaining twenty seven percent reflected refining marketing and transportation for our refining and marketing business that twenty seven percent would be more than twenty three percent costs and less than four percent earnings which translates to earnings of only about ten cents per gallon of product so that is about one quarter of the him out claimed by taxes now since last year the increase in gasoline price and a more can be attributed to the rise in the cost of crude oil product prices have not risen as much as crude oil so industry margins have been reduced in fact our u refining and marketing earnings have actually been cut by more than half compared to last year proximately four cents a gallon so our margins are tight because our industry is very competitive the federal trade commission and other government agencies have repeatedly confirmed this fact when energy prices are high the urge to point fingers at all companies is strong but understanding and undercutting the ability of american companies like exxon mobil to compete in a huge global marketplace only makes it harder for americans to secure the energy they need at competitive prices we should instead work together to strengthen u s competitiveness and meet the needs of the american people we all sir thank you thanks so much mr simon shiva jackson  i believe this process is constructive and i hope as we proceed without question that each of you will find our inquiry going down a pathway that would lead us to solutions my first question is very simple i indicated my interest in this when we first started and i had my opening remarks and i will just simply ask each of the gentleman  here to say yes or no and that is the invitation for around table discussion that is outside the realm of these very important congressional hearings in houston on  the question of solutions which i believe is key to really explaining to the american people how we can work together to stop meister congresswoman provided we could do it in the next thirty five days otherwise i can't say my i'm sure my successor would be interested as well mr robinson would be pleased to participate and if i can do it i'd like to be there much i'm going to start with you because there is a question of buying product on the market the international market and i don't take to calling names to allow international partners but exxon had a very strong presence in venezuela a market that is much closer than the north and south america what happened with that and what's the status of the product coming from venezuela was i think you know congresswoman  our assets in venezuela where expropriated were currently in arbitration regarding the value of those assets were hoping for a name a couple solution to that and constructive discussion and we'll see how that plays facilities today and there was no way putting aside the arbitration no way that you thought you could effectively negotiate a compromise in the new attitude of the new government or the existing government we worked very hard to do so but thus far have been unsuccessful but as i've said we're still hoping for an amicable solution and how many barrels are you getting out of that production area we were bringing in into the and how you overcame the regulatory maze that i hear members of the panel speaking to congresswoman there's a long history of relationships between saudi aramco and at that time texaco and towards the i would say about the one nine hundred ninety six ninety seven timeframe shell oil company entertained discussions with both texaco and saudi aramco to form a series of joint venture companies in order to reduce costs and in order to bring frankly more product to america the relationship between saudi aramco and shell has continued in the aftermath of the  be precise it's a fifty fifty joint venture between saudi aramco and shell oil the focus of my question is how you managed to do get through the regulatory construct quickly or not quickly would you be prepared to do another refinery since that is one of the issues that we're discussing if you're referring to the refinery expansion of the o t the refinery in port arthur the state of texas was very helpful and very useful in helping to speed up the process and  the federal regulations also that we had to deal with so it can be done and be done and it was done and we don't have all permits and we're beginning to strip you had to estimate how many more refineries do you think if we looked at a balance energy policy that didn't rule out fossil feel what would be an optimum in terms of moving the technology forward in creating increased proficiency in our refineries how many more we need well i can really only speak for shell in that regard and i think with the seven billion dollars three and a half billion shell  share that will take care of our expected demand for some time to come so you wouldn't bill another one at this point not at this point but we never really we never stopped looking at options and depending upon our market share and which we would decide to you know instead of buying on a third mark third party market finished products we always keep options open for further expansions chairman and don't know if we i had a question for mr malone know where we were recognizing the need for heavy crude if the energy industry would embrace its name which is energy which is diverse and doesn't have a definition to it and begin to promote these alternative fuels and i must say that i know some of the testimony did not reflect but we've passed legislation in this congress two hundred tenth congress that is focused on r and d that is trying to turn money back into research and development to improve the status of our energy policy if you will what has by b p done currently to promote not only conservation but this alternative  and how much more can we expect from the energy industry quoting b p on giving us the roadmap to alternative fuel i'm not going to try to speak for the entire industry but i think you've heard that all of us have some degree of work that we're doing in alternatives as i said in my statement the incentives that were included in the energy bill have allowed us to actually bring on additional wind generation capacity it would not be economical if it had not been for those encourage missed because we're building a market and we're going to have to get a lot of wind generation to make that profitable and competitive but an example is texas went one step further and also put in encouragement and by requiring renewable energy into their system and right now is now the largest wind producer in the united states so it's usually a combination of congress and the states so in wind energy we're seeing it working solar is a lot more difficult we've been in the business a long time actually our biggest solar market out of our maryland plant is california where again a combination of federal and state  has allowed that market to grow in the biofuel side again we're a big blender but what we've got to look for and what we're spending money on is research into the next generation of that biofuel and as i stated that doesn't compete so we're my own company and one other thing i'd mention is we're working in california at the capability to generate hydrogen from the from the bottom of the barrel and it would be clean hydrogen where we could sequester the c o two in existing oil fields increase the production from the field sequester the greenhouse gases and produce clean energy from hydrogen i thank the chairman and i thank you for allowing the these questions an a recession and if so how deep it is is the energy crisis that we have in this country right now and they say you will reap what you sow and it's my belief that what congress has sown is the inability of the necessary acts preparation and drilling in areas like anwar in the outer continental shelf that's been mentioned by myself and others previously and that was terrible policy in not allowing this country to go into those areas and one of the key problems that we face right now and i would invite any of the members of the panel to address that first thing that has been understood as a for thirty years we have been building business plans that has not included major potential resource development projects in the atlantic pacific eastern gulf of mexico as well as you  and so we've had thirty years of training to look elsewhere and so we don't have a good handle on what is possible in the outer continental shelf which is why i think it's long past time to at least map and understand what are the resources that are there so the nation could then make very informed decisions i think that the drilling that we are currently doing on existing leases is many of which are marginal leases is not yielding sufficient new energy new oil into the economy to make up for persistent decline in existing fields that then drives us to very expensive projects in the deep water or ultra deepwater gulf of mexico where we are allowed which costs us an awful lot more money which then of course gets built into the whole cost equation which goes to american consumers so my point of view is this persistent denial of access is costing american consumers right out of their pocketbook ok congressman can i add to that i think there are estimates and the estimates i've seen is about thirty billion barrels of oil and about one hundred twenty five trillion cubic feet of gas that are declared off limits when you look at that and put it into perspective that's enough oil to back out our current level of imports for more than eight years and enough natural gas to heat fifteen million u s homes for a period of over one hundred years this is the only government in the world who did energy companies in the world in this country and you know our production used to be nine million barrels a day five million barrels a day the oil in the united states where now import ten million barrels a day whereas as already been said exploring the most difficult places in the world we've heard from some of the senators this morning some of the forms of energy that exist in the united states but to be coal whether it be oil whether it be gas whether it be all forms of energy and with the renewal and with the determination you know led by you know frankly some of these permitting and some of these access issues that that production decline could be turned around significantly it takes a lot of you know long periods of time but they're very important and we have the capability to do it we've got we've got helpful in this effort is to raise taxes what effect does that have on exploration for additional al and how much of the tax increases were they  ultimately just get passed along to the consumer but as i said in my oral statement congressman i think the important thing right now is my company is investing every dollar it makes back into energy development in states and the simple result of that is b if you take a dollar away from me here i'm not going to have it to reinvest in energy here in the united states ok mr low you have just echo those same comments that it's going to re supply which is going to end up ultimately end and higher prices for the consumers ok mr chairman i think in the interest of time since we have votes on the floor i'm going to yield back because i know the red lights ready to come on here or are you can we finish get there we'll be right back chair recognizes gentleman from ohio mr shabbat thank you mr chairman and i'll try to be relatively brief since i started my questions prior to the votes and we want to apologize to the folks here for having a break obviously this happens during the course when these airings of zero two we have mr low you had mentioned in your testimony that you were attempting to x going back a little bit clearly having sufficient refinery capacity if we have enough crude to be able to refine it into a product that we can actually put into our cars in a timely manner is important and it's my understanding that you are trying a factor still trying to expand the capacity of your refineries and i think you mention in the permitting process you've had lawsuits filed against you and that's been a hold up to being able to expand this refinery to be able to put out more product is that is that correct you did say that yes or actually at at a number of different refineries we've had significant issues with permitting the one that i specifically mention was would river illinois where it's a very important project to expand the capacity produce to produce significantly more clean fuels and it really ties in with the canadian oil sands development so this refinery will be capable of running those heavier canadian oil sands and it's been about two years now we still haven't gotten the permits and who or what organizations are filing such lawsuits to prevent you from expanding to be able to put out more gasoline that we can put in our cars these are primarily environmental groups who i think their primary interest is to block the development of the canadian oil sands now as i was mentioning here when we broke for the for the vote mr cannon for the second time that i've seen him quite animated about the future of shale oil and the potential to be able to to go after that and it sounds very  interesting to me i'm just wondering he also mentioned that one of the problems has been the government in the example he used i believe was that it takes seven years to develop the plant and move ahead and yet they give them an eight year lease so it makes no sense to make that investment if you're going to be shut down potentially after a year how real is that and is that something that we ought to be looking at in the future that we are looking at in the future and anybody that has experience with this mr robertson well shale is a real resource i mean this supposed to be about a trillion barrels or something like that which is bigger than you know all of the middle east and all put together in the  in the ground to produce this material without tearing up the surface that we used to do in mining projects and those kinds of things so this is real it's too big of a resource the united states to ignore it's going to take a determined effort over a period of time but companies are working on that today so we just need to make sure that there are no barriers to us continue to go forward with this project it's a it's a multi year project but we need to start now it's a huge opportunity for the united states and we've talked about a lot about gasoline here today which  is critical because a lot of people being hurt right now at the high prices at the pump but we haven't talked too much about diesel and of obviously trucks or what take our products around the country and as diesels been going up all consumers are going to see this reflected in the price of goods that we purchase whether it's at the grocery store or the furniture store or anywhere else what and diesel is even higher than gasoline at this point are what are the prospects for diesel in the near term and perhaps long term mr hofmeister thank you i think the point that many people do not realize is that if you have a forty two barrel forty two gallon barrel of crude oil you cannot produce forty two gallons of diesel from that in other words the way the cracking process works on the molecules you can get it best with the right kind of crude in the right kind of production process maybe fifty percent can be turned at the most to be turned into diesel or aviation fuel more likely you'll get about a third we like to talk about a barrel and in terms of three third the bottom third a middle third and a top third and what is pushing up the price of diesel today is not just u s demand but global demand where europe for example has a concentrated strategy to convert their fleet of private automobiles not just their trucks to diesel run products asia all the construction all of the major activities that are expanding economies in asia are consuming diesel as well as aviation fuel so there's only two ways to get more diesel into the marketplace first to get more barrels if you don't get more barrels you don't have the opportunity to create that third or whatever it is into days and then you need manufacturing or refineries in order to produce it in the u s we tend to concentrate the design of our refineries around gasoline more than diesel because that's what the market has demanded so for this country we would have to do some considerable retrofitting of refineries in order to produce more diesel in the new expansion i've mentioned in port arthur texas we're actually designing it in such a way that we can reconfigure quickly for thing that people are relying upon and obviously it's been driving up the cost of food stuffs and animal feed and everything else and we're paying for that now other ways but is it a fact that the energy that expended to one of the least efficient forms of ethanol as we do our own research in this area in that the coefficient c of energy and for energy out is fairly close to a one to one relationship let me stop you there if i can so what are you saying in essence is it generally gasoline that you're using or is it another type of fuel if you compare the b two you content of what you get out of a gallon of ethanol for the b two you energy content to make that gallon ethanol is fairly close to a one to one relationship ok so the energy expended to produce the energy that you get out the other side what you're going to put your car is almost the same is that correct that's correct what many people don't recognize the ultimate b t u content of a gallon of ethanol is considerably less than a gallon of gasoline so it's about could be as much as twenty five percent less than a gallon of gasoline and is already being you actually have to use more  get the same energy usage that you would twenty five percent more ethanol to get the same energy usage as you would from the same gallon of gasoline does that make any sense well the reason shell is pursuing all of its research in what we call second generation  ethanol we prefer not to put investment dollars into corn ethanol will let others do that but we believe that there is a much richer energy content to be had from ethanol that might come for example from algae or from wood chips or sawdust or other kinds of grasses that are not in the food chain so we've we have major projects on on going with third parties just to test the liver the validity of that science thank you star you're back to bounce one time chair recognizes the distinguished general a d from california maxine waters thank you very much mr chairman i thank you for using the task force to attempt i have listened to the testimony of our presenters here today and i've been trying to read about what was done over on the senate side and we asked the same question  we ask a lot about profitability and in all of this testimony we see where there are explanations probability and basically what the presenters are all saying refineries trying to expand them to development of new sources of energy so we never really learn anything different when our present is a here let me try and frame some of these questions a little bit differently so noble is represented by whom thank you very much mrs simon ok it shows that forty point six billion what your property in two thousand and seven the largest corporate property in american history now with boy you point six billion dollars in profit are you saying that every time the price of oil per barrel increases that you have to keep increasing the price at the pump in some way well i think  it would be about ten cents per gallon so what did you spend that money on if i could just finish my point here and then i'll come back to when you come back to the united states and then you look at this cents per gallon on the piece of the business where we produce products last year it was four cents per gallon and this year it's one point four cents now in terms of where we are spending that in the united states one thing we're doing is we're expanding our refineries to meet the demands of our customers in your construct the forty point six billion how much did you spend on refinery expansion in the in the last five years we've spent about three and a half billion dollars on refining here in the united states in two thousand and seven your profits were forty point six billion how much did you spend on refinery expansion in two thousand and seven in two thousand and seven was probably about one one and a half billion dollars right now again that's here in the united states and you've got to be sure that you're talking about profitability here in the knighted state i'm talking about forty point six billion where it was earned was that earned internationally are he to about seventy five percent of that profitability was earned outside of the united states so about twenty five percent here in the united states and again then when you look at what amount of that was in the refining  marketing business it was about ten percent last year the boy two point six billion where you spent about one and a half billion on refineries how else did you spend forty point six billion dollars well part of that goes back to the shareholder in terms of the evidence paid pay back the what did you can say in two thousand and seven in dividends and dividends in two thousand and seven we paid about seven point six billion dollars dollars oh is that all one hundred million and that's everything terms of advertising product promotion i would ask the amount of your compensation but do you receive bonuses if you looked at my total compensation granted last year it was twelve point five billion if you include a one year accrual of my pension fund that would take it maybe maybe it's not the right number forty point six billion forty point six billion well ok back number and how much in compensation out of that i don't have that answer congressman ok but when you look at how much we we invested i think is one of the things you're going to i mean how does investment mean we don't know what that means and ways we understand that you have to invest in ways that will improve the probability of the company that you've got to invest and as you say repining really expansion you've got to do a lot of things but we don't know when you say investment whether or not  investments are a realistic as they relate to how much you end up with and how much you have to charge a at the pump i mean i could take you know forty point six billion and best of all i suppose if somebody could not me i could i would but i want to know whether or not there's a percentage of that earnings that's reasonable for investment or whether or not when you come here and you talk to us and you tell us investment we don't get the picture what did you invest in well if you look at it over a longer period of yes we have invested more and we have oh so you operate in that a deficit when you look at earnings that when you look at earnings we have invested more than what we were in over a long longer period well well but we can't deal with that you know why we can't deal with that because i don't know what period of time you're talking about i don't know how much investment that's a nice general statement but the fact of the matter is we know you're not broke we know that the compensation a big zagat is is very high we know that you get your bonuses we know that you spend a lot on promotion so we don't we don't like to hear that you are broke and that you have spent more money than your earning it just doesn't sit well with us and i would certainly doesn't sit well with me yeah certainly wasn't trying to imply that we're broke congresswoman but if you look at l and looked at it and i said we invested about twenty one billion now let me explain what that is that's investing in projects to bring on oil and gas supplies around the world to expand our refineries to expand our chemical plants and meet our chemical customers requirements but although there's profits after all of that was done in two thousand and seven you earned forty point six billion dollars after all of that was that to dollars forty point six billion was the profitability that's right so let's deal with that you earned forty point six billion dollars but you continue to raise prices at the pump why is it necessary what you did i don't want you to tell me about the pennies i'm going to congressman now you not give me if you want i want to i want to know where do you like another round of courtesy we've already given you more time i appreciate that mr chairman but let me just say this i and appreciate your generosity and i'm going to yield back my time because this is an exercise in futility and our constituents you killer thank you very much mr chairman i want to thank all our witnesses for being here today mr simon i will begin with you for a few questions for exxon let me state pull him a narrowly i agree with much of your testimony before the senate specifically i agree that the principle component of the price of gasoline is the price of crude oil i agree that crude oil is determined by the law of supply and demand and that nothing we can do in congress can alter that fundamental law of supply and demand i agree with you that there are things we can do to help influence it by drilling anwar and by providing more drilling for the deepwater oil reserves i think those are good steps one of the things you just testified about however is that you wanted to clear up some misconceptions and i want to give you some straight talk about the two issues that from a parent's perspective you may feel helpful you would like to address and i'll give you both issues and then give you a chance to fairly go through and give your side of both of them let's first address the issues that you might want to address from a parent's perspective moms and orlando florida are paying three dollars and seventy five cents a gallon today at the local exxon mobil gas stations exxon paid its former c e o lee raymond four hundred million dollars and retirement compensation this situation is unacceptable people in central florida are hurting and they want to hand not a finger now you all are nice guys you're respectful i would not dare suggest any of you dislike me wouldn't give them the finger but i want to convey the anger and frustration that i hear from them on a regular basis at townhall meetings and give you a fair chance to respond to it the second issue that i would like you to address from a perception perspective you just testified today that exxon's profit margins are tight and that your long term investments are huge it appears to some people that it's your profits that are huge and your long term investments in building new refineries in this country are tight specifically exxon just recorded a profit of forty point six billion dollars in two thousand and seven the single largest annual profits and u s history for any u s company to put that in perspective wal mart is number one on the fortune five hundred list exxon's profits are literally more than triple those of wal mart's in two thousand and seven at the same time exxon has not made any long term investments in new refineries in the united states in the past thirty two years beyond the expansion of existing ones so i want to give you a chance to respond to those i have some very detailed questions for you on the refineries but first in fairness you do you have any response to clear up any misconceptions that you feel are out there with respect to what some believe to be exorbitant pay that you're using this money for well when you refer it was our former chairman i think the number and we've tried to  clarify that that number itself when you look at the four hundred million about ten percent of that was associated the one year and the rest of it was what was earned over many years and a lot of that did not pay out till much later i however say we recognize that is a large amount of money it's determined by independent directors is not management that makes those determinations and we pay our executives based upon that and that's where you look at competition and what others with comparable responsibilities and authorities are paid it is a lot of money i know that now let's come back and talk about the standby that you think that's a fair level of compensation four hundred million dollars for one individual well again let's put it into perspective that wasn't four hundred million dollars in one year that was about ten percent of that was in that year ok about seventy seventy five percent was not paid out until by ten years into the future from that period and a lot of it was what was earned over a long career in terms of a pension payout which was about ninety eight million but you understand if you were at my gas station in orlando and you saw single mom there with their kids and she was paid eighty bucks to fill up the minivan it probably be a hard conversation for you to have to say look we paid our c e o four hundred million bucks we disposed of the largest profit in american history and i need a hug here because there are more our margins are tight now i understand i understand that fully again that was a few years back it was of course has not any impact on this year on last year's profitability but i recognize the point the point i would talk about is when you look at the profitability on the gasoline that we sell at the pump and this talk about that again when you look at the united states in the refining and marketing business last year it was four cents on the dollar now you compare that four cents on the dollar of revenue that's compares to about seven point eight cents on the dow industrials so it's about half of that i recognize it's a big a big impact on consumers but again when you look at the what's driving that it's not just not the profitability on that drive in the higher prize it is the cost of the raw material that we have to buy in order to produce those products we buy ninety percent of the raw materials that we used to produce those products on the open market mr simon my time is expired  fairness to others who haven't asked their questions let me let me say this and wrap up and i'll defer the chairman i raise those two issues the executive pay and the failure to build a new refinery in thirty two years because you wanted to clear up some misconceptions and i got about twelve or thirteen more questions about the refineries to give you a fair chance to address the refinery issue too as well as to talk about solutions and so i just want you know we want to be there and raising these issues and when we come back to a second round a question we're happy to be happy to ask you those questions and you've got a fair shake and get your side out on those as well i really would appreciate the opportunity to address refine it absolutely and i promise you'll get that my first question we get back and thank you  you mr chairman were any of you or colleagues that you work with and communicate with participants in the energy task force meetings conducted by vice president cheney beginning of the bush administration and if meeting our chief executive met with with with vice president cheney there was a general discussion i'm told i was not there around the world oil production and early two thousand and one thank you no one from philips or conoco phillips was there no one from chevron participated in that but at the time when the new administration came aboard we wrote a letter to the president united states and sent a copy to every congressperson and every senator on both sides of the with our recommendations for energy policy and frankly a lot of it is playing out exactly the way we describe and i was working overseas during the early years of the bush administration so it was not a party to any we looked into the history of shell's involvement with the white house and we do know that on the periodic interval  various members of the white house on energy matters but were not part of the task force ok i have a question mr simon you had the opportunity to talk to representative waters about the the profits and the breakdown and today i think it was there was a story in the washington post and i just want to see if this is accurate it says that exxon mobil made a forty billion i understand it forty point six billion dollars profit last year repurchased thirty one point eight billion dollars of stock is that correct i'm sorry thirty thirty one point eight billion dollars of stock gave out seven point six billion dollars in dividends that correct that's correct paid its top five executives seventy six million dollars is that correct i have not checked that number but i don't know if that's correct or not what do you think is it in the neighborhood would you know if it's in the neighborhood seventy six million dollars i've got to check congresswoman i just don't have the answer to that where you asked this question by the senate the question i was asked by the senate was what my compensation and i answered that earlier in this hearing as well that was twelve point five point five granted in compensation including stock and everything else last year and then there was an additional increment if you allocated back one year accrual of my pension and that would take it to fifteen but that doesn't pay to after i retire so i did not mention that i mentioned the twelve and a half in terms of my compensation two in the company in terms of i'm a director and we've got one other director in course that's our chairman and it says the top five executive suddenly six million dollars if you could get back to me with the answer that question i would appreciate it and that you invested roughly ten million dollars in renewable energy now that that number is not correct and if you would give me the opportunity i would like to talk about our renewables approach what i would like to know not just from you but from because i heard a lot of discussion about the investment that you're making a new energy  what is the percentage that you're investing in renewable energy could i you can start what when you look at what we were what we were doing in order to i think to be our mutual objective of reducing the amount of fossil fuels that we consume and mitigating greenhouse gas emissions when you look at what we're doing to accomplish that objective it's somewhere around two billion dollars over the last four years now that's a three pronged strategy one is to improve efficiency in our own operations refining in chemicals operations where we're improving efficiency of two to three right person  two to three times the rate of the average of industry and there we're putting about one and a half to billions over the last four years into that the other prong is how do we help our customers to utilize our products more efficiently and when you look at what we've developed right now it's applied in the u s vehicle fleet would save about five billion gallons of gasoline and that would be equivalent to removing eight million cars off the road when you look at our own operations it was you're talking about putting investment in and if you could just get back to me with that number two that would be great all right will mister last year was about ten percent of our capital seven hundred fifty million next this year it will exceed that it will be something in excess of ten percent phillips investments are primarily in the research phase so we spent about one hundred fifty million dollars last year but if those research things such as carbon capture and storage if those come to fruition those would be multibillion dollar projects but they are in the research phase of this point it's a serious project we have a company that sells energy efficiency and shows customers how to become more energy efficient by by putting in other good practices or putting in solar panels or fuel cells or whatever fits that particular customer and their experience has been reducing energy costs by thirty percent on those three areas ethanol second generation ethanol geothermal energy and energy efficiency we will spend two and a half  billion dollars over the next three years we spend about two billion dollars over the last five years and you guys can't tell me what percentage it is that you're putting into to these projects based upon all the money that you're saying that you're investing i can tell you that we're going to spend this year twenty three billion so we're at a phase in that work that it's not an issue of how much money you spend it's an issue what you spend it on to try and develop some technology that will work so we're not rich we're not constrained by money in terms of these projects so when our courage in you to universities in california military bases post offices they average over over eight hundred projects thirty percent energy savings that's a lot bigger source of fuel for the economy by saving energy than most of these other things i've talked about for shell or approximately a billion dollars over the last five years on renewable energies we believe that that is a prudent amount given the maturity of the technology for that billion dollars there is a negative return on investment which actually you know prompts us to think very seriously about how quickly we could spend more we do believe we can commercialize in time and this year we're  continuing to spend on a percentage basis it's very small it's less than one percent and at the same time we are learning about what we need to do if we were to spend more in the future i really appreciate that  development as a subset of the unconventional congressman i'd have to confirm that number i don't have it at my fingertips over the you know i think it's public record that between oil sands in canada alberta canada and oil shale we are spending in the billions in order to develop projects but the colorado effort is currently a research effort so it's in the hundreds of millions but i had a peptic check to confirm the  number think you hundreds of millions actually quite a good good number for this purpose and i know that chevron has also been dusting and technology and recognize the difference between production which is could be very large numbers the question is just  how much you put into shale oil technology development if you have a sense i can't tell you the answer to that i can tell you that it's a significant research project that's going on using chemistry to try to figure out how to how to produce this stuff you know we are we use steam floating around the world to pre sell through wells by putting steamed in and and they all sense and can in the future will they find a way to put heat into the ground to produce produce that all through wells and similarly in the statement and quote in the desert news i think today is a statement from the great hall chairman of the resource committee we simply cannot drill our way out of lower prices at the pump but of course and that's true if you  shale position leon when we acquired tasco which was mainly refinery but tasco actually stood for the oil shale company do you have any sense of what the commitment has been historically over i sorry i know that we invested a lot of money back in the seventy's it's mostly in the research side at this point and let me just point out you today that it doesn't is vastly important because you take that base of understanding and add the new technology that's developed over the last thirty years and it changes the the nature of the calculation of what's available at what cost mr malone do you get a sense of what b p has done i'm not aware of any development opportunities that we have in the oil but in the oil sands in canada we just announced a joint venture with husky oil five point five billion that will bring oil to our toledo refinery toledo ohio refinery and we'll invest in the refinery as well sh what we've done at this point is again mainly in the research area although we have a technology that i know my colleagues wouldn't agree with that we think is superior in terms of developing shale oil resources that is an important resource it should be below land and i'm thinking about introducing a bill that would allow the president to cut through the permitting process by drawing together groups of people that understand what needs to be done and what the environmental problems could be would is that something that you're companies who are those who are interested in oil shale would invite and if so would you actually pursue development oil shale properties and let me start in the trough mr again i think congressman it would be a tremendous improvement which would enable us to get to a commercial decision on such projects in a much faster timeframe you know i'm not familiar with the details of the way you described it sounds like it's something we ought to  commercial we would certainly pursue yes certainly we're in favor of access somewhere very much in favor of having a clear permitting process said we don't have an act of war we we never say never and one time a predecessor company was in white river oil shale there in utah with the current oil price we could make it economical but we're always watching certainly anything i believe that would open up that and allow access to it and allow commercial applications of whatever technology to have a be very welcome congressman mr chairman i recognize duplicate that when i came to congress the first thing i did was to try and stop the l m from a ship shutting that mine down it is now up and available but it's taken over two years to get the permits that we thought were going to happen in six weeks the permitting process would become a terrific problem an impediment the way we solve the problem of four dollars a gallon oil is by making more resource available at a low which can deliver or oil at a lower cost that's the only way we're going to do it and in fact we have those resources my minivan that i drive my family around in and you know sixty eight million dollars isn't real and sixty eight dollars isn't real money to someone who makes twelve and a half million but it is certainly real money to working families in america who are struggling to make their mortgage payments and pay for their groceries and make sure that they can take afford to pay the co payments on their health insurance if they even have health insurance and so when faced with the insensitivity that it appears the oil industry has for the plight of americans who are struggling to fill the gas tanks of their minivans it's really hard for me to understand and it's difficult when i stand in front of my constituents at a town hall meeting and you are and they throw at me that the oil industry is making record profits and that you are charging record prices it is difficult for me to explain to them how you are not manipulating the price of gas and manipulating the price that is paid at the pump so in fact i probably want all of you to answer this question but you know i really i can't say that there is evidence that you are manipulating the price but i believe that you probably are so prove to me that you are not well congresswoman i can assure you that we are not doing anything to manipulate prices now how i can convince you that i'm not sure other than to say well you've got to go beyond your word and show me give you my word and i would also comment that the f t c has investigated our industry more than any other that i know of on average about three times per year over the last thirty five years and have never found in one of those any evidence of anti competitive behavior i fully understand and i know it's hard for you to think that i empathize with the consumer but we do and i do and we're doing all we can to try to put downward pressure on the prices we can do that in two ways what are you doing to put downward pressure but you're not expanding capacity ye are a congresswoman i did want to make that point when you look at what industry is done let me talk about industry first and then let me talk about what we've done as a corporation the industry over the last ten years has brought on the equivalent of one new refinery every year by incrementally expanding existing capacity how many have yours has your company but we have we have expanded capacity at a rate forty percent above the industry average how many refineries have you opened in the last ten years we have not opened any new refineries but we have brought on the equivalent of we don't need new refineries congress what we can do is we can take what we have and incrementally expand that and do that at a lower cost and do it much more rapidly than we could by bringing on a new refinery the third grade economics that was referred to earlier i have two third graders and there's not a whole lot of economics that they're learning but it is the law supply and demand is pretty basic and it is hard for me to understand how the prices keep going up and up and up if you are expanding capacity  enough proportion to bring down the price well if you're not when you look at what's happened between last year and this year prices of the product has gone up when you look at what is behind that our profitability in the refining and marketing business has gone down why is that because crude prices gone up about eighty percent your profitability is gone down but you made forty point six billion dollars last year to profitability and the  profitability in the refining and marketing business here in the united states which is making those products you're talking about has gone down it's about forty percent this year of what it was last year why is that is because the price of the raw materials crude oil has gone up about eighty percent the products you and i are talking about when you look at diesel fuel it's gone up about fifty two percent and in order to gasoline up only sixty i mean how many gas stations have you opened in the last five years in america i wouldn't have that number but when you look but when you look at the number of gas stations in this country about one hundred sixty five thousand the number that we own and operate and therefore set the price is only about a half a percent of that of most of those gas most of those outlets are owned by independent businessmen and business women but while we open up more but there are ciliated with your company the owned and operated by the independent business business men and women but they have they are companies and they are branded their branded exxon mobile and frankly our market share has actually dropped since the merger has dropped from fourteen percent down to ten percent before i go back i mean so the bottom line here which is indisputable is that you've opened no refineries you say you've expanded capacity in the existing refineries yet the prices continue to go up your profits continue to go up and you have absolutely and if you could get back to me with the number of gas stations that you've opened in the last five years in america i appreciate it expanded the the access points exponentially so we're making the gas the the place you can get gas more available but we're not making more gas available and the price is going up and you profits as well as your salaries of your top tier executives are going up that is inherently unfair and it causes the members of congress in front of you to stand in front of our constituents and have to defend how it is we're going to address the rising cost of energy and you have no solutions but i did mention that our refinery capacity has expanded gardeners wellman whether we brought on new refinery but it isn't doing us any good because the prices are not coming so i think and i think it has done some good as mentioned before products relative to crude oil has come down the only real matter all behind it costs almost seventy dollars to fill up a minivan i understand and that's the price that matters and that's because of the raw materials that we have to buy in order to produce those products well you need to be more a part of the solution then you have been and you can say that you have been but it isn't working so it's time to go drop back to the drawing board about the balance of my time the distinguished gentleman from california darr thank you mr chairman and thank you ms was it was mrs washerman so short i couldn't have asked for it to be better set up for the debate that was really going on here i'm listening and say ok we've established through years of hearings that it is incredibly expensive and just about impossible to open a new refinery we established during the jimmy carter era there were there was this incentive to open a bunch of small inefficient refineries and over the years they've gone away in favor of larger more efficient refineries and we've established that there's a risk of these large refineries because they are better targets for terrorists they have other fundamental problems but that is the world that we live in let me understand that was the world we lived in with twenty nine dollars oil that was the world we lived in two dollars ago in gas and oil prices not true ok so all of those truisms of thirty forty years of bad or no energy policy haven't changed i just want to make sure that i understand that seven minutes plus was used to berate you mr simon on what i think was a very unfair tack because you don't control retail prices we've had hearings to make it very clear as medically have had hearings about the question of whether the interchange fees from credit card companies are more profitable than your gas revenues at the retail so having gone through that let me move on to a couple of other areas and i'll give you a break mr simon i think quite honestly i think you need the glass of water in a little a little moment mr malone british petroleum i was in book two a couple years ago when the pipeline was opened would you tell us a little bit about your global activities and other words how much new capacity as a world company have you brought on outside the u s which goes into the same pool of available or oil and then how much have you been able to bring on net inside the u s during that same r in the time we've been arguing about voting on it we've also been extremely active off the west coast of africa and gola in particular has been a real opportunity for us of course development continues in the nor sea just about geographically all around the world we've been in but i sitting at the rate of about nineteen billion a year right and shorten it down you brought on if i understand correctly more outside the u s where you had opportunity than you've been able to in the u s on  net basis yes our production has been declining in the u s we're now just roughly a half a million five hundred thousand ok mr low same sort of a question i know that you you spent some time and energy in a number of markets that became off limits or unavailable to you remember right you were involved in syria helping to develop those oil wells that have never been properly developed but how do you view u s versus the rest of the world and how much would you say you brought a net in each place well i think one of the items that does seem to get lost in all this is we deal with a depleting resource and so it's very challenging particularly here in the u s where the depletion rates  oftentimes are double digits so your production is going down all other things being equal by ten percent or more a year and so it's very difficult to keep production anywhere near flat here in the united states where the largest producer in alaska production continues to go down there you know mr malone mentioned earlier the anally alaska pipeline that would be a thirty to fill forty possibly even higher than that billion dollar investment to bring about a million barrels a day of production about two million barrels a day of consumption how much opportunity of you had in california to have an access to any new fields at all in order to try to take that reduction reducing amount that's being produced in california and get it reversed in congress or not much in california our biggest investments in california are in the same old place in the san joaquin valley where we've put an enormous amount of money and in fact just in the last few weeks produced a two billion barrel from an old field that was started up in eight hundred ninety nine in kern river we put billions of dollars into that field over the years but the new access has been almost nothing now and globally word where we're going to be increasing we have over this five year period we're in the middle of increasing about three percent a year and in terms of our production decline rates are about four percent so that means you've got to have seven percent we preach about two point six million barrels a day that the opportunity we have in the u s a primary that people are gulf of mexico if it's a major projects that one was coming on this year one coming on next year just one of those is a four point seven billion dollar project in five thousand feet of water so the places where we can invest in united states we are we would love to invest more than two thirds of our capital outside the united states we'd love it to be a lot more in the united states but the opportunities just haven't been there but that's a decision that we can make from the day as that is a decision that can be grown incredibly changed by policy and united states mr hofmeister  is certainly known as a global leader in many ways known less as a u s company than as a global leader how do you find opportunities in the u s versus elsewhere when it comes to us being part of the solution of new production well fortunately shell was a leader in the deepwater gulf of mexico and continues to produce in the in the gulf of mexico and invest in those areas where we have leases so we see the gulf of mexico as a continued growth opportunity more recently we making it taking a very very big bet on offshore alaska with multiple leases in the beaufort sea in the chuck cheese sea regrettably we are seeing tremendous legal action trying to stop every move we make  in trying to get to a drilling season which of course is limited in the amount of time we have to drill so it is and this is not an area that is off limits so check to see before to see or not off limits but there are others who are trying to prevent it from occurring by test by testing in the courts whether the us that has been done by the department of interior is adequate for the purposes of our of our perspective drilling but our growth primarily is coming from outside the u s at the moment but i'd like to thank you for continuing to try to produce in the u s i think it's important to leave people recognize that we're part of the problem unless we allow you the opportunity to be part of solutions inside the u s and i bank thank you mr chairman gentlemen i've missed some of this and i might have missed this i'd like to see i read that congressional quarterly today mr coral that coral davenport said that that i depends entirely on the performance of the company one hundred percent if you they were valued last year in the proxy statement of five million dollars so if you add those two together i got seven hundred million dollars last year where do you think he got fifty or she got fifty point six million dollars i have no twelve and a half well and a half million in terms of compensation granted last year although some of that pays out over time and then if you were to take a one year accrual of the pension fund it would actually take it up to fifteen and how much  you make the previous year previous year i don't remember would it have been that much it would have been that much it would have been less it had been less how much less would it have been i don't know have to get back to you on that could it have been six million dollars i don't believe it was that low but i just don't recall so it may be double it wasn't that low no could it have been double sixes not done it would not be double not double would it be forty percent more no i don't believe so but again i'll get back to me on that but it was more it was more how much more did you work this year than the previous i work probably about the same this year as i have other years so why did you make more money if the money that i get is again not determined by management inside our corporation it is determined by a committee of directors they look at my responsibilities and my accountability and they're going to pair that with others on the outside and then we got that out of the way i got that but this is what confused me you're saying that the price of oil is driven by supply and demand and you said that you're eighty percent less profitable is that correct not on a toll worldwide basis no i didn't say that's just un american that's talking about in the us on refining and supply which is the part of the business that makes the products that we're talking about we're you making all this record profit most of the profitability that we make is outside of this country this year of in the first quarter of this year about eighty one percent of our profitability was outside the united states last year of that forty point six billion seventy five percent of it was outside the united states and that's just on the sale of gas no that's in terms of producing oil and gas selling that also running our refineries producing products selling those and also our chemical operations could if the profit percentages profit percentage must've gone it's gone up obviously so the profit at exxon mobil is not based on supply and demand so i think the profit of exxon mobil is based on supply and demand because the market is what determines the price that we get for the commodities that we sell well it does but it doesn't profit margin and that's up in different i mean you know that you sell different to the public but your profit is figured differently in that you know it was a profit the way you determine profit is first of all look at the price that you get for the products to sell that is determined by supply and demand and then you look at the cost of producing those products you subtract the cost from the revenues and that gives you the profit but if your profit is that couldn't couldn't you sell your gas at a lesser price and still be higher than your cost and by setting your price where it is to see record profits you're setting the price at the pump and not supply and demand setting it no i don't agree with that congressman because again the price that is established for the products that we sell is established by the marketplace this take this year and this look at the profitability on a gallon of gasoline this year first quarter it was one point four cents for every dollar that we collected in revenues now that's down from last year and it's down because the cost of raw materials has gone up that we had to buy to produce those products and the price of the products that we sell have not gone up as much as crude oil so the margin has actually been squeezed year to year but your profit is up the overall global profit this year is not up is about i would say roughly where it was last year last year forty point six first quarter this year ten point nine but if you charge less for gasoline you're you wouldn't be making a forty point six billion dollars profit you could maybe back a twenty billion dollars profit if you charge less well gasoline is only a small component when you look at what we make on refining and marketing this year it's about four percent of what our first quarter profitability was last year about ten percent when you look at what the  sphere where you're making the money on lottery tickets it's just for do same in selling oil and gas when you look here in the united states when you look here in the united states we produce producing oil and gas and we're selling most of that on the open market for example we run about five and a half million barrels per day in our refinance around the world we produce two point four million barrels a day of oil and only half of that goes in our own refineries so most of the refineries that we operate around the we're buying raw materials on the open market now the biggest piece of our that accurate now that's not correct that was one piece one piece of one project but what we are doing is trying to accomplish what i think you're driving at and that is how do we read how do we reduce the amount of fossil fuels that we consume less or in our dependence and how do we reduce greenhouse gas emissions and what we're doing primarily is focusing on sixty percent of the equation and that is oil and gas oil and gas is going to continue to be the dominant source how do we use that more efficiently in our own operate how much temperature your company investment in renewables last year in reign in what you would call renewables it would probably be about one hundred million dollars and that's compared to a two and a half billion over three years because again we have looked at all current technologies every nubile fuels these are current technologies we have not identified any that have any appreciable impact in terms of adding supplies or reducing greenhouse gas summations the hundred million i'm talking about is looking at that next generation and we're funding all of the opportunities and leads that we have there and we think we have some very promising leads mr lowe and mr malone to your companies more on that in line with the two gentlemen to your right or are with exxon mobile last year we invested in two thousand and seven seven hundred fifty million ten percent of our capital this year will invest one billion something in excess of ten percent and mr low ours is primarily on the research side about one hundred fifty million dollars last year thank you any all have any solace or any hope you can offer the american public for what they're going to be paying for your record profits this year i would say there's two things that we can do one is work on supplies and we've already talked about that what do you mean work on supplies you mean like get access to supplies and and the other aspect is how do we produce more product and we're looking at expanding our capacity we've already expanded it considerably already in terms of refining and when you look at the industry is projected about the equivalent of five new refineries will be coming on stream between now and the year two thousand and twelve and to put that five into perspective that's about three refineries more than  is required to meet projected demand growth the point is the market is working i know it's painful but the market is working and it will work to the ultimate benefit of the consumer if we don't put additional tax burdens on the industry let the market work and don't put in place additional mandates for self anybody have any better hope for the consumer than just the markets working at four dollars is good congressman in my opening statement i said if this nation led by the congress the administration set a goal of producing two to three million more barrels of oil today day in the near future over this in the next ten to fifteen years plus the renewable fuels mandate that we got from last year's energy bill plus the efficiency standards of the miles per gallon improvement we could knock this issue of ever higher futures on its head futures are based upon the prediction of more supply and by the united states of america coming to grips with the fact that it was now beginning to address the issues it has not addressed in years gone past we can say to the world we're not going to come ask you for more production we're going to do our own production that in my opinion would give the media relief to the american consumers knowing that this government was focused on solving the problem together with the industry  solution is getting away from gasoline and getting into hybrids get into something we don't have to depend on the folks in the middle east or anybody else and can be concerned about both the consumers and their pocketbooks and the planet and that's not going to work by simply more drilling and more drilling and more drilling you can't grow yourself out of this problem because the problem is bigger than that and it goes back to my opening statement about you know the land belonging to the is a title to the farmer but the reality is society rest upon the land so all people own it that was jefferson and an analogy a situation can be made to all and there are some ways that people think about you know you might have title the or right now but really since society rests on it you have a duty to the rest of the folks on this planet and the profit ya'll are making are unconscionable and to continue and i've listed all this and maybe add into that there are great economic course but i think there's something wrong when you all are increasing your profits so much and your salary so much and all you tell us is drill drill you know y'all are gal ging the merican public and it needs to stop and you can look for when fall profits tax and any gal jing and price competition and any trust and there's a whole lot of other ways that this can happen because it's obvious we all don't have the american public at heart whatsoever well i disagree with that congressman i do think we have the american public's interest and we're doing all we can to produce as much supplies as we can put downward pressure on prices for the american consumer and other consumers around the world well i have a discussion here five of you and five of  us steve simon i'd like to invite you to my next town hall meeting who would you like to bring since i've got the top guy here and i'd like to bring you back again you're going to you know never been reluctant about anything before or since i've known you in the congress i don't know i think there would be a great advantage to have one of these executives with you at the next  these individuals particularly exxon mobil which i have to admit that i've got stock in and you know that's i've had a for for forever but that they should you should be doing more in alternative energies and trying to see if the public is served and i just really can't believe that mentioned that he would like mr hofmeister because they're doing more with renewables and you're out of the room when he said that they were using less than one percent of their investment money in renewable so they're doing more and it was less  percent that's bit of a of an issue but i think i'd invite any of them all of them all of you come come to the thirteenth district and talk to my my constituents and and i'd also like to  invite my colleagues from across the aisle who said that the american people don't understand thank you sheila jackson lee whom among these distinguished witnesses she'd like to bring to her next to hall meeting on the price of gas every one of them mr chairman i believe they each have a perspective that should be heard and i when i pose my questions i hope i'll get some of that perspective out time killer for his choice and his question thank you mr chairman they're all welcome at my event with these a fluid gentleman i don't have to pay for valet parking so i can save some money here but i'd love to have him here because i think even though they're on the hot seat today they've been very cool under pressure and and respectful and i admire that whatever we may think of the board of directors decision of exxon to pay four hundred million dollars to one individual at a time when people are hurting mr simon your salary today based on twelve and a half million dollars is thirty four thousand two hundred forty six dollars and most folks out there watching this probably think you earned it and we appreciate you being here under these trying circumstances i raised a couple of issues that you that i gave you a chance to clarify executive compensation i think you felt you had a chance to deal with that issue and i promised that i would come back and  about refining you remember that line of question would you agree with me that refining capacity has not kept pace with demand for gasoline but when you actually look at it congressman you look at it over the last ten or five years the refining industry has expanded capacity commensurate with demand growth you think refining capacity has kept pace with the demand for gasoline you're familiar with quote consumer demand just continues to grow and we can't grow as fast at the refining level you disagree with that statement as a member of his asian let me let me make a comment and then you decide whether i'm disagreeing or not when  you look at what we've done in the refining industry we've grown capacity at about one point one one percent per year demand has grown one point one percent per year so what we've got now and i will say this is we've got a much tighter supply demand situation in refining than we've had for many many years and it started about two thousand and three you go back before two thousand and three we had a big surplus in the refining and as a treat and now it's tied in this proudly told us that you're going to put online the equivalent of five new refineries through expansion over the past five years if refining capacity has kept pace with the demand for gasoline why in the world would you be expanding these no i no i didn't say exxon mobil i've said the outlook and this is the outlook is looking at what all everybody is planning and looking at and what is going to be coming on stream the equivalent of five new refineries for the industry are projected to come on stream between now and the year two thousand and twelve if you look at projected demand growth that's three refineries more than what we need we will return to the n money dot com and i will quote it for you april seventeenth two thousand and seven from the very organization there have been calls every year this decade for new refining capacity yet no new projects  said geoff sundstrom a spokesman for aaa the motors organization quote refining capacity has not kept pace with demand for gasoline numbers from the government's energy information administration prove sunday from correct hundred five american drivers burned about seventeen million more gasoline gallons of gasoline a day than the country produced according to the government's energy information administration the difference was made up for by imports by two thousand and five the latest figures available the gap had widened considerably to about thirty six million so we have the government's energy information administration saying refinery capacity has not kept pace with demand for gasoline we have the national petroleum and refiners association for which you remember saying refining capacity has not kept pace with demand for gasoline we have the government's energy information administration saying refining capacity has not kept pace with demand for gasoline we have you saying that you're going to expand capacity and yet everything's fine because refining capacity has kept pace with the price of gasoline and it's just dumbfounded me and you're more of an expert than i am to hear the conflict well again when you when i was talking with total products it is true that imports of motor gasoline have gone up that's true they are low cost imports out of europe much cheaper than what we could produce here in the united states by expanding capacity that's part of our supply chain ok but when you look at total products refining capacity has grown commensurate with the man when was the last year that exxon built a new refinery as opposed to expanding an existing one well over thirty five years ago but we don't need to build a new refinery so we haven't one hundred seventy three prior to that even ok we haven't built a new u s refinery in thirty five years have you asked for a permit to build a new us refinery in the last thirty five years not to my knowledge because we haven't needed to we can take what we have and expand it more than what is needed to keep pace with the man president bush has said that new refineries need to be built and he proposed to allow the oil companies to build these new refineries on old military bases as of today isn't it fair to say that you have declined to take him up on his offer i do not agree that we need a new grassroots refinery in fair to you if you want to tell us what you're proud about in terms of the last few years and what you've done and where you see us going in the future i think that's only fair and i'll be happy to defer and listen fully to your answer and then you'll back the balance of my time when you look is i mentioned before when you look at what the industry has done it is expanded capacity commensurate with the man for total product when you look at what our corporation has done we've expanded capacity at a rate forty percent higher than the industry in terms of distillation capacity i'm proud of that i think our employees are doing everything they can to produce as many products as we can for the american consumer and i think they're doing a very good job of that and i'm proud of it can understand the enormity of the frustration and frankly i think the challenge and maybe the disappointment is that as we continue to listen we are still sort of striking in the darkness to look for a real answer that as you walk out of this room this committee can come together and say there's one focal point that we need to do for immediate relief and i think that's the distinction gentleman between the questioning of how colleagues who have shown some degree of frustration because you have not answered the immediate question and i posed the immediate question in the context of a hypothetical  did on one of our cable stations that indicated that suppose there was a hurricane speed which wrecked havoc in the gulf we lost many of our drilling rigs and we wound up with a twelve dollars per  gallon cost to gasoline it would jeopardize on the actual security certainly on economic security and it would be a crisis and frankly all of you would be called upon to respond in a crisis mode well we're not with hurricane steve but we are in a crisis mode by definition of many americans and it is not all your fault because certainly the dollar is weak and it adds to the cost i imagine the international cost as well because to consumers but what i'm trying to press you for is an immediate answer and i would suggest responding to this why couldn't there be a moratorium on gasoline prices for example from june to october moratorium on gasoline taxes and the expense of that tax be paid by the profits that you've earned what would harm your overall bottom line profit i assume as a private entity that would be something that your board would need to approve shareholders range from my good friend to the right to retirees and others who probably look to you for the fiduciary responsibility of ensuring they can stay above the water during their retirement but you're not giving the american people if you will a direct and immediate relief so i pose that question to you as i show you that the minerals management service of two thousand and six says that we have about seventy nine percent of that of land open to leasing and therefore a smaller percentage not so it seems that we have a sufficient amount of how leasing properties of ala bill for drilling and then this is another one that is prepared that says that as we look  at the prices of gasoline they actually lead to higher profits and that's of course what provokes the american people when it comes to asking congress to find a solution and let me pursue just another point before i yield to you for questions this is an antitrust dance floors and you've already seem to refute the idea that there is collusion but let me give you a definition it is clues in as a will force a version of the normal operation of free markets and to result in serious harm to consumers suppliers in the economy it virtually always results directly in inflated prices to consumers and denial of choices in the marketplace in the that is its purpose now for non lawyers they saw and heard this being read the word collusion they'd make a simple assessment that i'm being hurt there's inflation i'm paying a higher price for gasoline there must be collusion so i think what we are trying to generate here today is some small measure that refutes the collusion theory that require an investigation by department of justice a collaborative effort with us and mr lowe i'm really going to start with you because i look at your list here and i agree with everything that you've said i mean i wear somewhat of a different hat from the region that i come from and i'm i'm somewhat at a loss as to what congress has not done and i'll read it quickly and i've asked several questions and  beg your indulgence but mr low has in his mind in his statement encouraging conventional supplies optimizing biofuels production encouraging alternative and unconventional sources lowering the carbon intensity of energy supplies improving energy efficiency and encourage technology innovation what has congress not done that's what i don't understand we have tried to do everything that we could and i would say to you and i will yield to you for your answers on this the one thing we have to get away from is that the republicans have the answers and the democrats don't and i frankly believe that that is what you've been operating on for a number of years and there is a new day in congress your representatives who are here in this room barely see us we don't even know their names hardly and i will qualify those that i do b p and shell but any others we don't know there's no interaction there's no sense that we're in this together that there are those of us who look different from you who know energy care about it and want something good to happen you don't respect us and so i don't think there is a coming together in a meeting of the minds because you're not broadening the goals we are discussing this issue with shell got a wide view from your roving tour conical so to the same thing i assume you saw the man and woman of america and got an earful but also probably found some common ground so i'm going to yield to mr simon first on the question that the polls originally is refuting this question of collusion and the idea that you don't have enough  places to drill according to our federal resources here or documentation you're drilling in a large part of this country and then why we seem to have a  policy that is a single answer and then don't forget my gasoline taxes if you would well thank you very much a congresswoman when you first of all talk about collusion this exam a little bit about the industry is take refining first of all there's fifty five different refinery companies there's about one hundred forty five individual refineries in the united states where one of the largest we have seven refineries we have eleven percent market position and that's actually down from where it was at the time of the merger so usually in a concentrated market that would not be the case also when you look at independent marketers their market share has actually grown from eight percent up to twenty five percent mrs simon the american people don't really define it that way they look at the fact that you've got exxon mobil b p conoco phillips you've got chevron that shell and after that then you get second tier maybe somebody else that i missed and then they're domestics they look at you as an entity that is now marriage to huge companies and they asked the question whether the small numbers that have now gone down in size from twenty years ago and not actually engage in making sure that the prices are being set it a certain amount and that's what i'm trying to do to get across here that i understand the perception but the facts are not that in other words we've actually lost market share not gained it since the merger when you look at the retail side of the business there's one hundred sixty five thousand retail outlets exxon mobil owns and operates and therefore sets the price and only a half a percent of those our market share again has gone from fourteen percent down to ten percent we have lost market share and so have all of the majors he does know the marlins share impact on still the opportunity to set prices even though you've lost market share that's the perception that the american people have you energy companies marriage energy companies prices go up but the concentration of the industry when you compare the concentration of our industry vs other it is one of the lesser concentrated industries in the united states it has been repeatedly investigated by the f t c and not a single one of those investigations which have been one hundred over the last thirty five years an average of about three per year not a single one of those have found any evidence whatsoever of price collusion or anti competitive behavior here today you have offered us a presentation that doesn't seem to pinpoint in an effective way i appreciate your response as to why this price gets keeps accelerating short of  here that the industry agrees with the price set now i am not suggesting that it would be proven i am saying that it would be suggested and it seems to be that there are a small number of companies and the prices going up but let me let you move on quickly to the your other question so the others can answer about the gasoline tax and calling a moratorium and having the energy companies pay for that tax moratorium from say june to september out of your profits did you want me to address the drilling aspect if you can do it quickly yes when you look at that chart you had that is unfortunately i wish we were developing more but boy is an everywhere we have leases where there is oil we are developing that these are mature well established areas where the prospects are a lot lower and therefore you don't find the oil everywhere well just access to those areas that are promising less or develop where we know there's good prospects for oil and you didn't answer the gasoline tanks when you look at the gasoline tax again you ask the question why the prices are going to you know what well as the question of whether or not you would absorb that in a moratorium on on gasoline taxes would you absorb that through your profits well would you be willing to do that if you were asked you what you want a half of the american people what you would see congresswoman if you eliminated that tax you would see a drop in the price but what would happen then is you'd have an increase in the man that price would go back up and i think it's impossible for any of us to say that that the price wouldn't recover where supply and demand would get back in balance well i would say this i would venture and be willing to try it and in the instance that the market play as it would in that instance and then come back again in september since it would be a mor only briefly and reorder it but i think some relief is is owed and the question is whether you'd be willing to pay those taxes so that the highway trust fund is maintained no we couldn't pay those taxes when you look at our profitability is one point four cents this year on a on a dollar whereas taxes are somewhere up around fifteen well your profits show that they are a little larger than that but let me yield to mr malone let me  try to repeat because i agree with a lot that simon said on the on the issue of collusion you know most of our retail outlets are not owned by us that are owned by independent individuals and also reinforce that you know we have investigations even going on now and have had continuously you know they have yet to ever find that there was an issue on the market there is a point i'd like to bring up because i think it keeps getting lost in take that a barrel of oil is forty two gallons right today's price just buy that barrel is about three dollars and twenty cents today to buy that barrel of oil roughly the retail outlets we talked about this yesterday eight to ten cents so now you're about three dollars and thirty cents taxes state federal local are about let's use fifty cents ok you're now it three dollars and eighty cents that is built into this system at three dollars and eighty cents we are going to have to get that barrel of oil on a ship a train a boat a plane get it to our refineries refine it and then distribute i market and this is getting lost that the big piece is the three dollars thirty cents a gallon due to the rise in the price of crude oil it's an enormous piece on your question  about about a tax holiday we believe first of all the street price is not set by us and even if there was a moratorium i can't say that the retail outlets would keep the price up because it's a commodity let's say they did bring the price down i think it would be very short lived and that we could actually see a run on those kind of stations soon the supplies gone and it's going to come in from overseas it just the supply demand economics play here on the access only make one one point and that is when congress opened up the deepwater gulf of mexico and you and i have talked on many different times i just want to use an example the price of oil was so low that it was not economical for many of us to go into the deep water gulf of mexico congress provided royalty relief it encouraged us to go in at very low prices we're just bringing up one of our platform it's a multibillion dollar pla and it's coming up with we have partners in this seven thousand feet of water and five miles if we go down below the surface it's a multibillion dollar one we're now flowing about one hundred fifty thousand barrels a day and it should flow as much as two hundred  fifty thousand access to where their source of oil is does work and there has been time governments help we don't need the subsidies to relief in the gulf of mexico in fact they've gone are you at capacity in the gulf of mexico no building more platform is the energy industry at capacity in the gulf of mexico we're all out there trying to develop member where you're pushing the front two years of technology and we agree with it then i don't know why we're complaining about supplies and access because there you are in the gulf and there's more that can come online that same gulf that same geology appears to go right around florida and up the east coast and right around and as you well know we will not be able to grow drill there without consensus in those areas where we have consensus is off the gulf and i say come one come all but the point that's being represented is that we don't have enough but we're not at capacity in the gulf off of texas and louisiana you know and i'd be happy to i know what we're doing on our leases i can't speak for anyone and we're utilizing our leases and developing across our lease space and we'd love to see more available to us mr low you have a whole list and you say we're not doing and we're doing all of that and why wouldn't conoco phillips want to give relief to the that there's plenty of evidence that that the companies represented here are starved for access kind of well it's just in the past six months six months or so the last three bid rounds chuck cheese sea and the two gulf of mexico  been high bidder on more than a billion dollars worth of leases and we have been outbid by our peers on on well over a billion dollars of other money that we were willing to put at state so we are starved for access i mean that we are not making that up it is a fact we do need more access to more prospective acreage on the the gas tax i just echo the comments earlier that  concern i do believe that supply and demand works and that we have seen a reduction in gasoline demand with the higher prices and my concern would be that if we lower lower the prices that that would reverse itself and and we'd actually exacerbate the problem so that that would be my concern on the gas tax if i could just mention one of the things and and i put to the m a smiling because i would want you to give that gift to the american people  them decide that for a period of time but let me you know back to the conoco phillips that thirty five of these what we call conversation on energy as i did a number of reno nevada scranton pennsylvania richmond virginia and it it's it it is it's a very healthy debate it didn't hurt you did it what did not hurt you that you came out ok it was very educational i think on both both sides and i would be i'd actually appreciate the opportunity to do one of your town halls you're extremely thoughtful i think it would be very good for for both of us and when you ask kind of what are we doing i think my feeling is  that there seems to be a lack of a recognition of how big this business is and how much it's a global business the u s people in america we enjoy a great quality of life and that quality of life has come a lot foundational really from energy other people around the world want that same quality of life and so we are engaged in a real competition for energy so we are competing every day whether it's crude prices whether it's natural gas prices you see we have an empty elegy port in the gulf coast because the price of natural gas united states is well below what the natural gas prices and asia and europe and so we cannot compete for that natural gas the elegy away from elsewhere in the world so we need to recognize that we are it's a global economy this is a global business and we can do things here at home to provide more access to provide more supply to also work on the efficiency side we need to do everything and we need to work on that together thank thank you it's robinson and while you're answering this ramos and what did you do in venezuela well let me start with venezuela we stayed there we knew we negotiated agreement that was acceptable to us and so we remain producer in the bus canfield and we remain a producer in the thing that's a may may be because i have a certainly i feel the current situation is not really about refineries in the united states not really about whether we have service stations it's not really about whether the markets well supplied with gasoline is well supplied with gasoline this plenty of gasoline the problem is again what others have been saying it's the features that are going to cuba or so that all of a sudden becomes a bigger issue than the united states one out of every four barrels of oil in the world is consumed a united states so so we're competing with the world we've got and you know one of the things that the that i know is we got twenty seven thousand employees here in the united states that are doing everything they know how to continue to look for develop and produce energy for people united states and we've got lots of other american employees around the world in all kinds of difficult circumstances in you know you could start and list off the countries i'm in venezuela nigeria kazakstan  a whole host of countries producing only gas you know one fourth of which on average comes the united states so there's a you know we're in this competition with the rest the world that we can't get away from it we are using one out of every four barrels is produced in the world so it's we're part of that system and as a result of the fact that many other and it's been mentioned before many other economies are growing rapidly and many of the large population centers of the world products are subsidized i mean not just subsidized people are paying very very low prices for gasoline and diesel on those other products so they're not even seeing the market price signals today so those economies are moving forward and they're continue to use these products and we're competing with those people for products united states so i mean the issue is what can we do jim there's only two things we can do we're going to reduce the demand the use of these products and the american people frankly are reducing the use of these products i mean we've been looking at data you know the first couple of months this year they were down two percent it's down right now looking at our service station sales probably down six seven percent so i mean the demand is going down the other thing we have to do the other part of it is increasing supply and you know so so we've got you know and then enormous number of people working americans working very hard every day to supply energy to the american people and they're competing with the rest of the world and they're doing a heck of a good job and what we need to do is allow them to do more of what they're doing in the united states would you pay for the gasoline taxes for a period of time to give americans an immediate relief i can representations of the witnesses is very complex for anyone to understand you try to decipher between the retail upstream and downstream you're trying to suggest you don't have any gasoline stations so it's not your fault you're not giving any relief what would the wrong we reduce need or reduce usage you say that the gasoline for gallon will go down i'm saying that if demand in the world and a man in the united states goes down that will have an effect on price and that's and that's the crux of the issue whether the demand in the world well are told ours is a big part of the demand of the world so it will have an effect on price that that will be the key to whether or not our going down reflects on the overall world price are is only we are only part but again w a united states where we see a decrease then when it come back to the consumer that we see a d v d will remember my own surprise a gasoline you think will be down to three dollars i have no idea i can't tell you that i can tell you that i can tell you on the on the on the gas in a system that's obviously an increase the need in the united states for crude oil and increase the price of crude oil and that's not that's backwards from what really frankly needs to happen here so that's my answer and i don't know if the minivan drivers are understanding hofmeister congresswoman i don't think my company is qualified to get into national tax policy i think that's for government to manage i do think however that a temporary suspension with a spring back that would affect families at the end of the summer season would have as much negative impact on perception of what has been occurring but really if you want to reduce the price of gasoline at the pump the most dramatic step that this government could take is to commit to the united states people that we will solve this problem of restricting supply for once and for all this nation has for thirty years told us go away companies go elsewhere go to kazakstan go to brazil go to africa go to nigeria go anywhere but the united states except in that fifteen percent of the outer continental shelf where we are doing everything we can to maximize production in that fifteen percent if this nation said to the world and to its own citizens we want a dramatic increase in the quantity of production that is possible from america's own natural resources it would knock the futures market on its head it would be unprecedented and traders would immediately get discouraged about bidding up the price knowing that additional supplies would be coming into the market in the coming years which would cause them to begin taking other positions rather than simply bidding up the price it would tell the world the u s is serious about its own supply i think the tax idea is not a good idea can speak to the florida people on this issue i personally happen to be in favor of drilling for the deepwater oil reserves but you hear two objections from florida and i would like each one of you to this briefly give us your response number one they don't want to see the oil rigs so i'd like to ask you how many miles off the coast do you have to be in order to not see that already twenty miles thirty miles fifty miles you tell me and then the number two issue is they don't want to have risk their tourism based economy because of  the oil spill that might happen even though it's unlikely so i would like you to address whether there is ever been such an oil spill by any of your companies that ended up with oil on the beach and then what what solutions or what comfort you can give to folks that there wouldn't be in the future so the three questions at least one how far does the rate have to be so you don't see it as your company ever had a spill that resulted in a comment on the florida beaches and three what assurances can you give that that wouldn't happen in the future mr hofmeister just respond very quickly i think the curvature of the earth would be fourteen miles so that's and most of the drilling would be well beyond fourteen miles as far as i could tell the question of i'm not aware of any oil spills on the beaches  of the gulf of mexico that have come from any shell oil wells we went through the summer of zero five with seven named hurricanes we shut down platforms seven times in one summer we had katrina and rita in the same year coming through nearly the same region of the gulf of mexico and although we took sustained damage and although the industry lost some ninety platforms there were no spills on the beaches louisiana or texas or alabama the technology that did not exist when the santa barbara blowout occurred many years ago has improved dramatically to the point that shut in valves and the manner by which we design rigs designed the sub see the subsurface and the sea surface equipment including the pipelines is such that well nobody could ever say there would never be a spill because we don't control nature it is hard to imagine such equipment failure that we would have a spill the scene you couldn't see the rigs in fourteen miles they come has made i think during these hurricanes a thousand wells in the gulf of mexico are destroyed ripped up torn up bent over and not one to my knowledge leaked significantly so the technology is here to withstand serious natural spending lots of money to get the leases and lots of money to drill exploratory wells we could not get the money to develop we have enchanted that time to turn the leases back so what is happening we have rigs offshore angola the people there have rigs offshore we're developing l n g sorry our work that we've done is in sync with the fourteen miles we don't have i don't have any knowledge i don't believe we've ever had any spills that would affect the florida coach coast and i agree with the  updated technology impact mr malone nothing to add congressman to the other side of what they've said has b p ever had a spill that ended up on the florida beaches mr simon nor has exxon mobil i would echo what my colleagues have said i would make one more point and that is that we are developing oil and gas all around the world elsewhere in vironment much more difficult much more challenging than we would  here in the united states in a very very environmentally responsible fashion and we're absolutely convinced we could do it here as well so to sum up for you back to my good good friend and colleague from texas you are the you make up to five of the largest oil companies in the united states it is your collective opinion that with respect to drilling off florida's coast you wouldn't be able to see the rigs pass fourteen miles there has never been an oil spill from any of your major companies landing on the florida beaches to your knowledge and you believe it can be done safely and securely and environmentally friendly manner because you went through hurricane katrina and even though that was so devastating you had no oil spills show up on beaches there and you've also had drilling in the past in places like destin down without oil spills and you're comfortable can be done in the future is that a fair summary ok i yield back to my colleague from texas and banker i thank you i will conclude because the chairman has been enormously generous but this is this hearing to prove  were predisposed to answers that would suggest that was happening but it is a hearing as well to find solutions and i would argue that you have given some but they are not sufficient to immediate relief and i do believe that this will require more heads than one and a bipartisan approach the gentleman from florida is a republican and i'm on the other side and i happen to agree with him  that there can be safe and secure drilling in places that there is not but i can assure you that none of that will occur unless there is continued explanation and interaction with this  bipartisan body politic here in the united states congress going forward and though this is an aside it is not occurred and i believe we're going to change minds and really understand what the price is a fixed i really understand with his connection to your compensation to fix prices so high prices then this will have to be an ongoing dialogue even beyond a committee hearing because a deal jay can investigate we can call for an investigation but parallel to that prices will continue to rise so i hope that we will have these gatherings that the chairman is so generously offered to various members because i happen to believe that a moratorium on gasoline prices is not fixing prices but it has a real perspective to it and i've gotten answers that say quite the contrary but i hope that out of this will come the opportunity to really get down we're going to how we can lower these mr simon i appreciate what's in your bio that indicates that you work with the national action council for minorities in engineering that's correct it's very important to that you serve on the board of the urban league and to mr robertson i guess i want to ask you had some point what do you do with the u s saudi arabian business  council but i want to say thank you for your volunteer is a man your contributions dealing with social issues and helping in you know our neighborhoods and with our nonprofits and i just want you to know this is not personal thank you very much for being here now having said that i want to get back to all this money you're making and i want to talk with you about whether or not there statement as waters may i take that on but before i do i would like to apologize for a number that i gave you earlier that was incorrect on what we are spending in terms of promotion and sponsorships and advertising  hundred million it's actually two hundred seventy million so i did want to correct that number i knew it's more than that but i thought maybe you had just didn't have the it at your fingertips that the title thank you for giving me the opportunity to do it when you look at we currently have about seven million acres under lease and on every one of those leases we either have evaluated our evaluating or have specific plans to evaluate and every one of those that have prospects commercial prospects we are developing upon the lease terms we wish we were some invest what is your amount of your oldest lease i'm sorry how i want to know how long you have had the leases and i want to understand to the best of my ability how long have you had you said they bury some of them you may have had ten years some you may have had fifteen years what is the longest period of time you have had  that ok so if you've had them around ten years you have been exploring and researching to see what they could produce and those that we have found that have prospects for commercial  s we are developing so those that aren't are those that we have not found commercial prospects for and again these are established mature areas where you would expect to have a lower  prospects the access that we would like to get are these those that are not developed undeveloped where we know the prospects are much greater than those that we have now in the mature developed areas such as like the parts that are currently off limits so seven million acres only about two or three million are worth derailing if that and if that how many acres do you have i'm sorry congresswoman i'd have to get back to you with a number i don't know ok good tips write down the line how many do you have i don't i do not know how many acres we have many lease many leases that are producing a been around we've had for twenty thirty years because we're producing on them the are rules the federal government has rules and so you can't just hang on to until going to the spare that you have to have a plan you have to be doing something and when they if it's a ten year lease when the ten years expire if you haven't done the work that you committed to do you lose it so  all the leases that we have we're paying rentals so we pay to keep them and we don't keep ones we don't need and we don't and the government won't let us keep ones that we're not doing doing some work on so i mean it's an active program on all of them think i've been told about a half million acres ninety five percent of that acreage is in production the remaining five percent are in development expiration development now i don't know the acreage in the deep water gulf of mexico but  six hundred fifty eight leases there one hundred fourteen are producing the rest are under exploration and development congressman when i get add we have a hundred federal isa blocks again we gave you the acreage and by the end of this year only one of those will likely be producing and most of these will expire next year again we have not found prospects on there is a small handful that we still believe deserve study but very little ok again you may have heard this information before it is stated that the areas with the best majority of all and guests are already open to drilling according to federal government surveys eighty two percent of the gas in the outer continental  and seventy nine percent of the oil and the outer continental shelf is suitable for leasing and this was before congress opened more space in the gulf of mexico for drilling in two thousand and six and i'm not sure what information you're talking about there my information is that about eighty five percent of the offshore is off limits and even on shore about this about seventy five percent is either off limits or severely restricted so there's a significant amount of acreage that is unavailable off limits and there's been estimated is about thirty billion barrels of oil and about one hundred twenty five trillion cool cubic feet of gas that's enough oil to back out imports per period of over eight years enough gas to heathrow you disagree with this information that i have that eighty two percent of the gas in the outer continental ship and seventy nine percent of the oil in the outer continental ship is available to lease that's that's not something you're familiar with you don't know that unless we've got different definitions i can identify with those numbers i'm sorry ok when i first started the questioning i ask about your need to and while we're trying to find out the real relationship between the cost of a barrel of oil and the cost at the pump when ever the arl increases the barrel of oil a barrel of oil increases we automatically get these increases and would have us believe that it is absolutely necessary to do because and we don't know whether or not there is a direct connection ought to narrowly in managing your budgets and managing your income you would say that when the price of commodities commodities increase and you got to spend your money you have got to earn more money or you lose you spend more money in order to do it but i don't see that connection yet with the barrel of oil and this pie this increase at the pump tell me one all the way down to the pump pass all of your profit you have a hundred and twenty three billion in property that collectively and you have had in two thousand and seven that forty point six billion that i keep getting back to and so what if they increase the price of a barrel of oil you still have big profits why do you have to why does that translate automatically to an increase at the  again we've got different campolo meant of our business when you look at the piece of the business here in the united states that produces those products we have to buy that raw material on the open market ninety percent of what we refine here we buy on that open market and so we refine it and market it and then we sell it so if the price of that raw material goes up if we don't pass that through the profitability on that piece of the business goes down and it david  got instead of making boy the point six billion what if you made twenty five billion but that be enough for you well we're going to because i understand what you're saying you have got to go out on the open market  that raw material i understand that you have got to refine it you have got to do all of these things but in the final analysis after you do all of that you had forty point six billion dollars that's correct i'm asking you is this  n the name of patriotism why can't you just have thirty billion dollars or twenty dollars for that year that you make forty point six billion you have bought all you material you've done all your investing you have explored you have drilled you have done everything and you've got a body point six billion dollars left why does that price at the gas pump have to increase over the next five years we're going to be investing over one hundred twenty five billion dollars if we're not strengthening our balance sheet now we're not going to be able to sustain long term investments of that level with me the projection of your property just like you give me the hundred twenty five billion dollars over the next five years how many artists and what our profitability is because we don't know what our probability is going to be well we passed as much in profitability as we do and hire let me just say this i cannot believe that you don't have the ability to do projections on your profits given everything that you know and everything that you build everything you speculate that you build you guys are very very good you have some of the best technology for research and you do know and you do have projections about what your profits will be in the next five years so i don't want to hear about the investments over the next five years without hearing about your projections for profits over the next five or so and i can assure you we do not have projections of our profitability over the next five years because we don't know what the price of crude oil is going to be we do not know that yes but what i'm saying is you certainly don't know but you see how it has been increasing and if you take the history of the encrease and if it keeps going in that direction you should be able to say if this continues to happen this is what's going to happen to our profits and we're going to either reduce our investments so that we can maintain this huge profit that we have we recognize that we're not going to make as much money and we'll continue to invest it you can do i know that you do what we do is we have a long term outlook and we're not assuming that prices are going to stay where they are today i cannot tell you when they might come down whether they're going to go up higher but we've got a long term projection we are investing and we don't change that investment whether we're in good times or bad times or if you go back to nine hundred ninety eight when crude was ten dollars a barrel we were investing as much in that the year as we were in the years before and after when much higher we have a long term outlook that hundred twenty five billion that i've talked about we will be doing that regardless of what the price of what the profitability is or those next five years let me as it were in a tin to fifteen year business here you can't in my estimation run a business without projecting and without anticipating that you have to do cutbacks perhaps depending on how much money you want to make and how much you want to pay your dividend you want to pay you investors you've got to do that and so to say to me our investments are constant and we don't care if we lose all the money all the profits we're going to continue to invest now you know that does not make good sense now and i that i agree with that nor do we expect that we're going to be losing money but i'm telling you that we don't expect to be where we are now either and we map out that and we look at it over a ten year period we don't look at it next year or the following year that has and up and up to you get to two thousand and seven with body point six billion and you cannot tell me how to reduce the price of that gas well that's the way we can reduce the price of the product is to work on raw materials and also to reduce the demand for products we either supply more or we reduce demand and the way we supply more product again is to have access to bring on more so we can impact price of those raw materials and reduced demand but that you paper raw materials you made the point six billion dollars we do we did not make forty point six billion dollars on the part of the business where we bought the crude  it doesn't matter because in the final analysis whether you do your accounting so that you separate out how much you are spending on one aspect of it like your raw materials are in other ways the bottom line is forty point six billion dollars that's what you made that's what your overall profit now and i understand where you're coming from but each one of our pieces of the business has to stand on its own or we go out of that business we could be out of the refining business we could be out of the marketing business and just sell their crude and gas in the natural gas is a decision would be if you can contract with somebody who can refine it for you cheaper you ought to do that and when and if we could do that we would and in some areas in the retail business now we are actually moving distributor part of that forty point six billion dollars and expand refinery capacity we have expanded refining capacity at a faster rate than demand has grown there's no shortage of products today in the united states well why don't you just keep on expanding your refinery capacity capacity that brings down the cost right we are we are expanding our refining capacity at a rate faster than demand is growing and if you look at the refining and marketing business over the next several years the outlook is we're going to be back into a surplus situation here and so the refining marketing business will be surplus what i cannot tell you is what's going to happen to the raw materials but the outlook in refining and marketing is we're going to be in a surplus situation it's going to be a sloppy market that's the outlook now whether that materializes i don't that's our outlook and that's other people's outlook if the price of the raw materials that we have to buy to produce those products i understand that very very much let me say this i am considered a liberal i am one of the persons who want to protect the environment i want to do good for a lot of poor people i want to make opportunities available people i'm one of those liberals who think the government has a responsibility to come to the aid of the people now as i watch gas go up past four dollars per gallon at the pump and i watch people who are putting their positions and order to purchase gas and people on fixed incomes who can't get to work who can't get their children to school i am prepared to talk about doing whatever is necessary to keep that from continue to climb i'm not going to be happy are some pathetic to the our companies that all while people cannot afford to pay five dollars a gallon for gas and you're making forty billion dollars collectively one hundred twenty three billion dollars in profits you got to know that and sell this to hofmeister says we can bring down the cost of this if you just let us know where we wanted to do what guarantees are you going to give this liberal about how that will reduce the cost of of gasoline at the pump if we let you drill where you say you want to drill what guarantees do you give me a congress moment it has worked for a hundred years in our industry that wherever there was adequate supply there were reasonable prices this prices collation is being driven not just by us lack of supply the global lack of point to the areas where you would like to drill how much you would get from that drilling over what period of time and tell me how much that's going to reduce the cost of gas at the pump well we're actually pursuing areas where we are allowed to drill and we are being stopped by lawsuits ok and i don't want i don't want to hear that i'm saying let's go to your ideal let's go first to the eastern gulf of mexico how much can you get don't know yet we have to have a seismic analysis  seismic survey well we're not even permitted to tell that well you know that there are gas deposits of oil deposits that would reduce the cost of the gas at the pump tell me where you don't have a general knowledge that off the middle atlantic states there  prospective opportunities ok how much do you think you can get out of there don't know yet we'd have to do an awful lot of analysis to be able to all this said and done there's nothing that you can tell us here but in the make about all you can guarantee reduction of the price at the pump if you were given the ability to go and drill where you say there is oil deposit on the contrary i can guarantee to the american people because of the inaction of the united states congress ever increasing prices unless the demand comes down and the five dollars will look like a very low price in the years to come if we are prohibited from finding new reserves new opportunities to increase supplies well everything that i see shows me that there are still areas on the lease that have not been explored by you i see that you have the money to as you say increase refinery capacity you have the money  exploration and investment and i think that you could do a better job than you're doing when you because the american people over the years keep at farming this price they cry and they scr somehow they continue to so i bet while wages are going down the east are stagnant there's going to come a point in time when it's not going to work and their american people are not going to be able to have saw five six seven eight nine ten dollar gasoline and guess what this liberal who would be willing to entertain drilling in places that are protected now in the interest of protecting my constituents and the american people won't feel so good if you don't take some steps now to guarantee us that you could in fact reduce the price at the pump and guess what this liberal would be all about this liberal will be all about socializing would be about basically taking over and the government running all of your companies and that i tell you is an extreme position venezuela is a nationalized what was a free market has been nationalized and we see what is happening under the government's leadership and yeah but you know working with them you're over there with them we know you are buying we would like to work and you're supporting it and everyone in the i don't want to hear i don't want to hear about venezuela they're your you don't care what they do as long as you're able to get better oil from them so don't talk about that what they're doing ok what i'm telling you is you don't want to see that happen in the united states you guys have got to get off of this you cannot keep coming in here with all of these profits and tell us you can't give us any guarantees even if the liberals are are convinced that you should go into some of the protected areas what do you expect us to do congresswoman i don't get any of us can guarantee you what's going to happen in the future but what what i think we can guarantee you is that if we have access to those supplies it will put a downward pressure on prices whatever they are at that point in time there our wish there were some silver bullets here i wish there w something that we could tell you today that if you did or we did tomorrow it would make a difference to the issue we've got in the challenge we've got is that ours is a long term business the things we're doing today don't really show up till five or six years but what we can do is we can work to help our consumers to use less of our products to take some of the burden off of them and for example we're working on technologies and we already have technologies available right now that we can show to our consumers to help him use less of our product to take that cost burden off of them and also put downward pressure on prices if you apply those in the vehicle fleet today that would say five billion gallons of motor gasoline and that's a significant amount and these are things like this when you look at we have a new tire inner liner which is applied keeps tires inflated over a billion gallons of oil of gasoline every year are consumed because consumers tires are under and so how do you how do you advertise how do you know why car advertised we're putting it in our we're working with tire manufacturers we're sending this out to our consumers we also have advanced economy engine oil so now in about on this committee heard of any of this stuff well i haven't had an opportunity to say it yet but i know but if you advertise it we should have seen it somewhere oh no i have learned about it somewhere it is advertised and we have mobil one advanced economy engine oil which improves the efficiency and that's now available and we started that april and if you put these into effect it can have is in the eating all we know is this you have a very complicated business you make a lot of money the profits are there you are compensated well and you may well deserve it i don't know but i know our constituents are hurting they are hurting and again you have been able to ride this wave of increases for a number of years and people have sought those costs and i know that in the back  ground people at thinkin well you know if it goes up to five they'll get used to it goes up to six they'll find a way to deal with it but i don't think so i don't think so and i want to tell you i don't see any effort to try and talk about how you either reduce your profits or how you utilize the space that you already have least to do the investment to to get the the products out of the ground i don't know how you use your influence sitting with the saudi arabian business council to try to influence the oil cartel i don't know any of that but i know one thing whatever you're doing you're not helping the american people to be able to have access to our products that we have all learned to depend on and a product that people are willing not to have to depend on if there were legitimate  sustainable alternatives to gas as we know it and so when you come here today and you put up with all of this is because as legislators we are so we we cannot we cannot abide this any longer we cannot continue to do this and so i'm hopeful that you will come up with something that will help us to reduce the price  that gas at the pump i'm really hopeful that mislead talks about i don't know interacting with you talking with you i don't need to do all that i just need for you to get it done i mean we're we're not going to learn we don't know how to do that you know how to do that and so i'm hopeful that you would do that i thank you for being here today if you feel a little bit beaten up on we all feel beaten up onto to share the pain you know we get we get our behinds kicked every day at our districts about what is going on so again i thank you for the work that you do with the volunteerism and the help that you give some of our nonprofits and the work that you do but you know for that father that we're trying to train at the urban league it doesn't do any good if you can't i don't i've i've hung in here this long i certainly not going to go nowhere i think i thank the chairman i think my colleague from tennessee as has been mentioned here obviously this is an antitrust taskforce and we're looking of about probing collusion and a while ago when the first round of questions i asked you guys questions about whether or not you or any of the officials from your organization had participated in the taskforce meetings the energy task force meetings that dick cheney vice president cheney held early in the bush administration and i just want to make sure that i understood what you all said because this is great that this hearing is taking place in the light of day so that the american people can have access to your answers to these questions and hear this exchange and see what's going on when i asked you that question i believe mr simon i want you to correct me if i'm wrong as we go down the line here mr simon you said you didn't participate in your organization did not participate is that correct that's correct mr malone you said that your chief executive officer  participated but not necessarily in the task force just had a meeting with the administration is that correct yes and i've since been informed we also have one meeting with the task force from our company so they're ok well yes we did meet with the we'll come back to that in the minute but thank you for that clarification and mr low you use that no one from your organization had participated correct ok and mr robertson if i recall correctly you said that while you didn't participate you sent some detailed policy recommendations or something to that effect correct and also to congress i said we did not to spit and i said when the new administration came in came and we sent a letter to the president or it's a copy to every in way back in two thousand and five i'm looking at a an article from the washington post headline document says oil chiefs met with cheney task force it says and i'll enter this into the record mr chairman  thank you the document obtained this week by the washington post shows that officials from exxon mobil corp conoco before its merger with philips shell oil company and b p america met in the white house complex with cheney aides who are developing a national energy policy parts of which became along parts of which are still being debated and of course this was again an article that is a couple of years old  and on the point of chevron it says chevron was not named in the white house document but the government accountability office has found that chevron was one of several companies that gave details energy policy recommendations and that is consistent i believe with what you said to the task force and on b p i think that maybe this is what you're referring to cheney had a separate meeting with john brown b p zigs chief executive according to a person familiar with the task force work  i am concerned about what what this says in relation to to everyone frankly but chevron because i do have the underlying document here too about  rouse obviously participated in this going on to b p mr malone it actually says that you participated in a taskforce meeting that is not correct i never ok well and again i'm going to put this into the record and i'd love to have your your you look at it because it says that mr ross actually was there february fourteenth twelve predecessors in the new administration but that had nothing to do with any task force and i think that might be the difference here congresswoman is that there are meetings that take place between us and government officials but not in th which was public knowledge it was out in the public it was shared with the press it shared with congress there was no intention there to try to influence policy in that tas well i would disagree that that's the way that it appears to either certain members of congress certainly or the american people and what this is entitled is energy task force meeting participants this document so if you're telling me that this is this is different than the other meetings that you had and that you were having meetings but we're calling them different things then and that's how you get all of this information to to work out together in a way that in some minds might appear consistent it just doesn't look consistent to me and i'm sure it doesn't look consistent to a lot of people in the american public and it's extraordinarily troubling as we see this and then we see gas prices where they are and we have the answers during this hearing which has been obviously very long and i'm sure not all that pleasant for you certainly not all that pleasant for us and certainly not all that pleasant for the american people given the subject matter of what we're doing here today i just want to i just want to do this one more time  mr simon did somebody from exxon mobil meet in the white house as part of the vice president's energy task force or in other meetings that were going on simultaneously in the same same time period early in officials in the white house during the early days of the bush administration i think our chairman had a meeting with vice president cheney at one time but it wasn't in connection with that task force that's what i'm trying to say congo is a separate subject other you recall meeting i do again i was not there when our former chief executive had the meeting it was not with the cheney task force but it was during that time period of your question our meeting was not that i was present that was not with the cheney task force but it was with a staff member peter davies is our global chief economist we were presenting our statistical review material with him ok and this staff member that you met with was to the energy task force staff i  mcghee stewart and stephen miller in the normal course of business did have discussions as i was testified and subsequent to that i have had meetings with my boss with the vice president i think that's good business i think that's in there i know of no prohibition in law that would prevent members of a company from meeting with elected officials in the white house thank you  thank you mr chairman i appreciate that that description and yes i did deal the two women i want that to be noted well just a couple of questions either any of you all to me start with  hofmeister just for just in general do you have any idea how much oil we use every day or any year what percentage will we use that is consumed in this country what percentage might be the oil that we use in the military in iraq and i know the americans use ten thousand gallons of oil a second in this country which is about twenty million barrels a day the amount of oil consumed in iraq i have no idea exploited and so they would be making a great deal theoretically a lot of money on what they're making noise as you are as well the iraqi government i have no way of knowing what their balance is or how much they're making on that getting a whole lot of criticism from us and from the american public but do you think a whole lot of that criticism that the american public has gotten outrage about the price of oil should be directed toward the middle eastern shakes and saudis and the people we spend all the money and lives going over there and no i don't believe that at all when you know when you look at our dependence on imports a gain about sixty percent of our petroleum consumed in this country is on imports when you look at where that comes from only about fifteen percent of our imports come from the middle east but the rest of it comes from other parts of the country other parts of the world and when you look at the at the market today in contrast to what i think some people would believe it is well supplied we're not short of supplies we have thirty five refineries around the world and there's not a single one of those as having any trouble finding the crude and feedstocks to fill up those refineries so we can be angry about it we can be frustrated about it i understand that but i don't think we point the finger at them it's a world market situation don't they help set the price i think the market sets the price for markets as ok with the that's just a disagreement i guess we have but they they're making the let me ask you this a few years ago mr raymond made four hundred million dollars one year mr simon is that money already paid out or are we still paying his four hundred million dollars for that year well when we have the stock programs that we have pay out over five in ten years so all of that has not even been vested yet so that's still being paid out and i think that was a misconception that he received four hundred million dollars in cash the year that he retired and that just wasn't accurate at all about ten percent of that little over ten percent was actually applied to the year that year and much of that about seventy five percent didn't even payout for five to ten years a lot of the rest of it was what he had earned over the previous ten years which hadn't vested yet and then he had a pension that was calculated the same way that everybody else's pension is calculated in our corporation and people keep throwing that four hundred million dollar number up and quite frankly it's just misrepresented and i think quite as for the record what was his position he was the chairman of exxon mobil and he left in what year he left two thousand and five and he did get a package though however if it's five years or six years the package is apparently four hundred million dollars seems to be excessive no that that's not accurate it's not it wasn't a package it wasn't a package he received a pension of about ninety eight million which was calculated based on his years of service and a formula that's applied to everyone else that's not a package he received compensation cash compensation in that year the total amount of compensation in that year was forty two million dollars out of the four hundred that you're talking about seventy five percent of that didn't pay out for five or ten years into the future and it was applied to a number of years in that year it was forty two million dollars not four hundred well to be honest with you i think forty two million dollars is is is even if you're a baseball player or a rock star or whatever well i understand that but i do think i just wanted to clarify that it wasn't all in one year and was not a package has done anything to assure that that won't happen again that that kind of payout package will happen if you have you reform your pension package in any way or you're a guy and it was not a package it was a pension calculated the same way everybody else's and we have not modified that how is his pension calculated it's based on the years of service and then a multiple and i'd be happy to give you that formula if you like it it's an alkie later the same way mine school to be calculated everyone else and gratulations believe me it won't be that high for me but little comfortable i'm not saying i'm not underpaid i am well paid that we don't drop in today that you and i understand that but again when you look at our compensation and you look at other people in comparable positions of responsibility and independent committee of the board determines that looking outside compensating our executives commensurate with what others are being compensated in similar positions what is the god pod the god pod  executive do you know what the chief executive of conoco phillips made last year no i know it's on page thirty six of the proxy though because i looked at my compensation last night on page thirty six of the proxy but i'm i don't recall  over there i think we made our point through the day mr chairman that that when i'm telling you what your compensation has been extremely good the profits have gone up extremely high i still have prop problem understanding why the profits have to be that great if you're just saying that it's just supply and demand somewhere there's profit and the profit is is paid for by that at the pump by the consumer and that's what's got people and the airlines  business and folks buying food where the food prices have gone up gas is the price of gas has affected the entire economy and and there really we have to do suppan other than just the idea of drill drill drill keller and mr cohen from tennessee that drilling can occur on the coastline of florida we are perplexed as to why then we can't  match that drilling what you're asking us for i think one of those points mr low made to a lower price of gasoline well gas at the pump and then the second part of that is there's a war in iraq as a war in iraq helped generate a greater opportunity for access to resources to any of your companies and have the policies in iraq if you will been such that it creates opportunities for american companies start to missed assignments determined by their answers i'm i apologize congresswoman up or get the first question the first one was if we give you that if republicans and democrats whoever agrees with drilling come together and say you now can go off the coast of florida i'm compromising i think and why doesn't generate much so my says it lowers the price one cents if you go in and wall but if you go off the coast of florida o c s off the coast of florida and your supply goes up are you going to tell me that we can get a lower price at the pump and in iraq as the iraq war contributed to a better access to energies in iraq of their policies such that you getting a greater supply potentially out of iraq in terms of access first of all i do not agree with the one cent associated with and we're not aware that you made it here and i don't want to pursue them but i believe it's sixteen billion i think sixt billion barrels and they say over twenty years it might lower one cents but when the eighty some eighty three billion elsewhere so let's talk about the o c s when you look at what is off limits today and i've seen numbers of thirty billion barrels of will be lower or higher than where it is today but i can assure you it would be lower than it would otherwise be if we're not given access and that what is what we all can say because it would add plus supplies and plus supplies are going to put downward pressure on prices because it puts downward pressure on the crew prize which today constitutes about seventy five percent of the price that your constituents and our customers are paying at the pump in terms of iraq i'm not aware i'm not in a position to say whether it's helped or hurt us what the policy is i will say that we're currently in discussions of a technical agreement with the offshore florida addition you could not see a vision of lower prices because of the increased supply again it would clearly put downward pressure on the crude price with  additional supply in the market absolutely ok that's that's that's that's a lower price answer you just give me a potential lower price at the pump yes the potential lower price at the pump because of that and then i've already said off shore florida by the way i and it would bring added supplies iraq while the opportunities are not there today the resource potential there is enormous and if we would have access to  at signing technical agreements not to help the iraqis get there no i understand but in the war contribute to helping you get access we had no access before so you would have supported the war in order to get access to oil that's putting words in my mouth i think that's an appropriate no all i'm saying is i'm just asking if that's what you're saying no what i'm saying is we had no access to iraq before and there are there's tremendous resource there whoever develops it there is tremendous resource there that could add to supply and did you tell me that the amount would go down at the pump if you had access and o c s off of coast of florida that's correct mr robinson  what i can tell you that florida is i don't know whether i think it would be a great benefit to the american people to drill offshore florida what we have drilled offshore fraud and we found natural gas i believe that from my knowledge is more natural gas off shore of rather than oil if we  it would have the impact of the gentleman said it would reduce the world market price of oil i think if we found yeah same same the same people that are say the same people that are that are paying the gasoline bills are also buying electricity and if we could produce gas offshore florida which we plan to do that would substitute for l n g this being brought in from the rest of the world the united states gas market natural gas market actually is pretty isolated and so i dish and supplies in the us will bring prices down bring it from l and g from angola is very expensive so drilling offshore florida finding natural gas would bring down electricity bills in florida which is the same kinds of consumer we're talking about that are paying for gas for gasoline so i think in both cases unoiled it's a world market it would depress the world market in gas it's much more of an american market and that would have a bigger impact and i would be very important so drilling offshore florida would bring jobs the united states lots of them would bring resources into the united states in the gas market and if we found our oil would certainly help depress to get the price of gasoline and that all be based on an agreement we couldn't go there if we didn't get a consensus in the con and in the population but i mean you know everywhere we go we have to have the agreement of the community before we can do it in iraq in iraq i mean like every elsewhere we're in discussions with the rockies and terms of technical support if the iraqis if and when they pass a petroleum law and allow people to compete for for access there then if the security situation is adequate shaaban will certainly see whether we can do something there but for that i have no idea what the circumstance would have been had there not been a war and certainly you know that's i guess that's the that's all i can say is all i know about that circumstance mr hofmeister with respect to the potential of more access in the eastern gulf of mexico i would stand by my prior state that more supply would bring less pressure on future oil prices and i believe that would have beneficial impact across the board to the whole global supply chain not only to the american with respect to iraq shell was in iraq for many many years until the iraqi government at the time nationalize the oil company in iraq shell was asked to leave we did leave there's a new government today in iraq if that and government invited us to all three of you all of you i'm sure we do as well what is halliburton do for you all mr lowe they provide technical services how much do you think their contract with halliburton is a year  hundreds of millions and it is and mr cheney was involved at that time he was the c e o of the company right so you dealt with him a bit and he could only deal with him he didn't know ok we don't either but know that we deal with halliburton every day and field services to help us produce wells to help us in a maryada different services for every service they provide us we pay them a bit of the contracted fee yeah and so they so they if it's more activity if we're spending more capital to find more you know it's kind of hard to believe it's almost surreal that we're defending that story and saying that oh this man didn't make four hundred million he only made forty two million forty two million comes to over one hundred thousand dollars a day even if you worked on saturday and sunday one hundred thousand dollars a day there's something wrong with that type of salary and if it's even just forty two it is obscene when people are having to pay four dollars a gallon the whole salaries are just obscene to halliburton do anything at renewables that all the all have the idea that they are they strictly oil yes or i'm  not aware of whether they do or do not but then again their business is a service business they provide services on request and and that's more their business than producing a product by itself who did mr o'reilly work with who did he work with is he still the c some options and performer shares that that are that will be valuable depending on the performance of the company when i read in the new york times that maybe his salary was thirty seven million dollars when you put it all together no six with that be accurate that that is that number thirty one million dollars is a number in the in the proxy but it that it includes appreciation of wars that he got previously and that's up again about one hundred thousand dollars a day but he didn't earn thirty one million dollars and you know i series didn't earn it thank you thank you mr chairman i wanted to be noted that i yielded to three different beautiful intelligent women all in the same day that's right thank you great honor we should end on that note he says something like that that should be for the record the testimony you've given and i think it this is a very important hearing and we look forward to you feeling free  make any additional communications with us to go into the record or not into the record that if there are any things that you want to amend or any corrections you want to make to your oral testimony we'll be happy to accept it and then again thanks for your contribution to the subject matter and