WASHINGTON - MAY 22 - Although Americans are paying increasingly high gas prices and the oil industry is making record profits, the nation’s top oil companies are not adequately investing their windfall into projects to help consumers or to ease the nation’s addiction to oil, Public Citizen told Congress today. Instead, the companies’ largest capital expenditure in 2006 was in stock buybacks and dividend payments.
Tyson Slocum, director of the Energy Program at Public Citizen, testified before the U.S. House Committee on Energy and Commerce’s Subcommittee on Oversight and Investigations about gasoline prices and oil company profits. According to Public Citizen’s analysis, the top five oil companies have spent almost $172 billion since January 2005 on stock buybacks and dividends, and as of April 2007, held nearly $56 billion in cash on hand. In 2006, the industry leader, ExxonMobil, spent $37.2 billion buying back its stock and paying dividends to its shareholders, while spending only $3.3 billion on U.S. oil exploration and refining.
Slocum also discussed how oil companies can gouge American consumers because of the consolidation of energy infrastructure assets and weak or non-existent oversight of energy trading markets.
“A decade ago, the top five refiners controlled one third of U.S. capacity. By 2005, because of all the mergers, that increased to 55 percent,” Slocum testified.
To hold oil companies accountable and relieve pressure on consumers from high energy costs, Slocum urged Congress to:
- Repeal all existing oil company tax breaks, close loopholes allowing oil companies to escape paying adequate royalties and implement a windfall profits tax, dedicating the new revenue to financing clean energy, energy efficiency and mass transit;
- Strengthen antitrust laws by empowering the Federal Trade Commission to crack down on unilateral withholding and other anti-competitive actions by oil companies and re-evaluate recently approved mergers;
- Establish a Strategic Refining Reserve to be financed by a windfall profits tax on oil companies that would complement America’s Strategic Petroleum Reserve and would be used to provide the nation with refined gasoline in case of supply disruptions;
- Re-regulate energy trading exchanges to restore transparency and impose firewalls to stop energy traders from speculating on information gleaned from the companies’ affiliates; and
- Improve fuel economy standards to 40 mpg within 10 years to reduce gasoline demand.
“This era of high energy prices and record oil company profits isn’t a simple case of supply and demand,” Slocum said. “Reforms to strengthen regulatory oversight over America’s energy trading markets and bolster anti-trust enforcement are needed to restore true competition to America’s oil and gas markets.”
To read the testimony, click here.