Oil Executives Set to Testify Before Congress Regarding High Gas Prices

by Suzanne Halliburton
oil-executives-set-to-testify-before-congress-regarding-high-gas-prices
Joe Raedle/Getty Images

Congress will host executives from several oil companies next week for a hearing to explore why prices continue to escalate.

It may get testy. The House Committee on Energy and Commerce, controlled by Democrats, announced Tuesday that the hearing will include executives from BP America, Chevron, Devon Energy Corp., ExxonMobil Corp., Pioneer Natural Resources Co., and Shell USA. However, no refinery executives will be participating.

At a Glance: Oil Executives to Speak to Congress

  • Executives with the country’s major oil companies will testify at a hearing conducted by Energy and Commerce committee. It’s set for April 7.
  • Gas prices have stabilized, but they’re still high.
  • AAA says demand for gas has dropped this month,

Here’s why the hearing could get adversarial. Committee chairman Frank Pallone, D-N.J., already has accused oil executives of using the Russian invasion of Ukraine to price gouge. He issued a joint statement with Diana DeGette (D-Colo) who chairs the subcommittee for Oversight and Investigations.

“While American families struggle to shoulder the burden of rising gas prices from Putin’s war on Ukraine,” the statement said, “fossil companies are not doing enough to relieve pain at the pump, instead lining their pockets with one hand while sitting on the other.”

(Photo by Mario Tama/Getty Images)

Gas prices already were increasing before Russia began its invasion of Ukraine, Feb. 24. But the invasion of Ukraine made prices even higher. Here’s why. Russia is the third-largest producer of oil in the world. The United States and other countries announced a boycott of Russian oil as part of the economic sanctions for the invasion.

Prices have jumped significantly in the past month. According to AAA, the average price for a gallon of unleaded gas cost $3.60 a month ago. That cost now is $4.24. California, at $5.91, leads the country.

Meanwhile, a barrel of West Texas Intermediate, the national benchmark, sold for $105.55 to close Tuesday. It sold for $91.59 on Feb. 25. It reached a high of $123.70 this month. Prices are higher around the world. A barrel of Brent crude, the international benchmark, sold for $111.48.

AAA analysts observed that the price of gasoline has stabilized this month, albeit at a high price because demand is dropping. Part of that is due to China shutting down cities because of COVID restrictions, taking millions of drivers off the road. Plus, people don’t want to pay the high price to drive.

“The global oil market reflects the volatility caused by the war in Ukraine grinding onward,” said Andrew Gross, an AAA spokesperson. “And with oil prices refusing to fall, the price at the pump is likewise meeting resistance at dropping further.”

Oil executives speaking to Congress likely will explain why they can’t escalate production. There are several reasons. One is a simple case of supply and demand. Other owners of oil companies have pointed out that investors no longer want them to invest in more production.

Oil executives also argue that the federal government won’t allow them to drill on some land. Or, it’s taking too long to secure permits. Still others have pointed out that there are supply chain issues impacting them.

Almost half of all oil production in the United States is from Texas. And production is going up in the Lone Star State. There were 326 active rigs in the state as of last Friday. That’s up by six from the week before. A year ago, the rig count stood at 205. For context, the rig count exceeded 400 in the month before the pandemic decimated the business in the Spring, 2020.

The House Committee on Natural Resources planned a hearing, on April 5. But executives with three oil companies turned down an invitation to testify. It appears the meeting will be canceled.

Outsider.com