“Why are gas prices still high, even after crude oil prices have fallen?” – energy CEOs grilled at House hearing

Big oil executives defended themselves Wednesday at a U.S. House hearing on high gasoline prices as Democratic lawmakers asked pointed questions.

Democratic Rep. Diana DeGette of Colorado, who chairs the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee, focused on how crude oil prices have fallen since a recent peak, but gasoline prices have not retreated.

“Why are gas prices still high, even after crude oil prices have fallen?” she asked the executives. “Why is there such a disconnect?”

“It’s a very complex set of factors that impact the price of gasoline,” said BP BP,
-0.31%
US President David Lawler in response.

“So, for example, the price of oil that comes into a refinery could have been bought at a higher price, and so that price then trickles down to the station. It is not necessarily an instant market.

CLC Chevron,
+1.07%
CEO Michael Wirth, ExxonMobil XOM,
+1.34%
CEO Darren Woods, Devon Energy DVN,
-0.44%
CEO Richard Muncrief and Pioneer Natural Resources PXD,
-0.99%
CEO Scott Sheffield, along with Shell SHEL,
+0.50%
United States President Gretchen Watkins.

“No company sets the price of oil or gasoline,” ExxonMobil’s Woods said in its opening statement to the hearing, titled “Gougé at the Gas Station: Big Oil and America’s Pain at the Pumps.”

“The market sets the price based on the available supply and the demand for that supply. Continued investment in new production is the only way to achieve balanced markets and more affordable prices that bring real relief at the pump. The government has a key role to play here. Policies must provide certainty and greater predictability.

Woods also said ExxonMobil expects its total oil production this year to be the highest in 15 years.

Meanwhile, Democratic Rep. Frank Pallone of New Jersey warned leaders against “garbage” responses and appealed to their patriotism.

“I don’t want to hear, ‘You know, we just do the wholesale pricing. This is all done at the retail level. That’s a lot of waste,” said Pallone, who chairs the House Energy and Commerce Committee, during his opening remarks.

“At the end of the day, you set the wholesale price, and that’s the biggest part of the retail price. So don’t tell us there’s nothing you can do about it. You can do something about it, and we expect you to. Maybe it’s a matter of patriotism.

During his Q&A, Pallone called on industry leaders to commit to both increasing production and reducing share buybacks and dividend payments, but largely did not. party was unable to obtain such a commitment on redemptions and dividends.

U.S. drivers paid record prices for gasoline last month, such as CL00 crude oil,
-5.70%

BRN00,
-5.35%
reached its highest level in nearly 14 years after Russia invaded Ukraine.

Market experts say that while there may be instances where consumers have been overcharged at the pump for RB00 fuel,
-4.01%,
The main factor that pushed retail gasoline prices to a record high in March was Russia’s invasion of Ukraine, which came as the global oil market was tight. Oil demand has recovered rapidly from the COVID-19 related lockdowns, outpacing supply growth.

To see: Why U.S. motorists suspect rising prices at the pump — and how much gas stations actually profit from a gallon of gas

Read also : What can Biden and Congress do to fight inflation? “Just not much”

“For Democrats, high-energy XLE,
+0.65%
costs are a key political vulnerability in an election year; a plurality of voters blame the ruling party for high gas prices, and with limited options to directly affect prices, Democratic strategy focuses on shifting blame to oil companies and investors,” Eurasia Group analysts said in a recent note.

When Americans were recently asked Quinnipiac University Poll what they think is most responsible for the rise in gas prices, 41% cited Biden’s economic policies, 24% blamed the war in Ukraine and sanctions against Russia, 24% attributed it to the oil companies charging more and 5% cited increased demand as the COVID pandemic subsides.

Biden last week ordered the largest-ever release of the U.S. Strategic Petroleum Reserve, as his administration struggled to deal with high gasoline prices and blamed much of it on the Russian president’s decision. Vladimir Putin to invade Ukraine.

Republicans, who hope to regain control of the House and Senate in November’s midterm elections, continued to focus during the hearing on who was responsible for the recent rise in gas and other commodity prices. necessities on Democratic policies that are not pro-fossil fuels. as on Democratic spending measures, such as last year’s $1.9 trillion COVID relief package.

“President Biden and the majority of Democrats should accept their responsibilities,” said Rep. Cathy McMorris Rodgers of Washington state, the top Republican on the committee. “It’s not Putin’s price hike, or the result of companies suddenly deciding to make money in 2022. It’s Biden’s price hike.”

CL.1 Oil Futures Contracts,
-5.70%
plunged on Wednesday as traders weighed a new round of Western sanctions against Russia, while U.S. stocks SPX,
-0.93%

DJIA,
-0.48%
fell as the Federal Reserve was about to give details of its plan to reduce its balance sheet.


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Felix J. Dixon