U.S. lawmakers grill Big Oil executives

Oil company executives are defending high U.S. gasoline prices and big profits at a congressional hearing in Washington, saying they also pay high taxes and shouldn't face more.

Rex W. Tillerson, chairman and chief executive of Exxon Mobil Corp., said in prepared testimony that additional taxes proposed by Senate Democrats are "misinformed and discriminatory."

"It's akin to a tax hike which jeopardizes the jobs of American workers," he said.

The Senate finance committee called the heads of the five largest oil companies to testify Thursday about proposals to repeal tax breaks for the five companies. In addition to Exxon Mobil and Shell, executives from ConocoPhillips, BP America and Chevron Corp. are scheduled to speak.

Senator Ron Wyden of Oregon played a video of a 2005 congressional hearing in which oil company executives said they didn't need generous tax breaks because oil was selling at $55 a barrel. As the hearing commenced, the price per barrel hovered just below $100.

"You all said you didn't need them in 2005," Wyden said. "You seem to be telling a different story today."

Chevron Corp. chairman and CEO John Watson said the companies don't want special tax benefits just the benefits that other industries get.

The hearings are part of an effort by Democrats to cut billions in tax subsidies for the industry and use the funds to get the federal deficit under control. Motorists are paying nearly $4 US for a gallon of gasoline in the U.S. as the oil industry reaps pre-tax profits that could hit $200 billion this year.

The industry counters that it paid Uncle Sam more than $5 billion directly in tax last year. The tax breaks that U.S. President Barack Obama wants to eliminate will cost the U.S. Treasury $44 billion over the next decade.

"Economists recognize that these subsidies, if we took them away, would not affect gas prices at all," Democratic Senate Majority Leader Harry Reid said a day before the hearings were set to begin. "The only purpose these subsidies serve is to line the pockets of these oil companies."

Billions in subsidies

The Senate is set to vote on a bill that would remove up to $4 billion worth of tax incentives as early as next week including one rider that's almost a century old, aimed at encouraging more U.S.-based drilling.

But early indications are that it's already dead in the water. The bill's backers need 60 votes, and there are only 53 Democrats in the chamber some of which have already said they don't support the bill as it stands.

Still, "flog-the-CEO" is a favoured tactic of whichever party is in charge on Capitol Hill during a crisis a reality well known to the powerful chiefs of Big Tobacco, automakers and Wall Street.

But Big Oil seems a particularly inviting target for Democrats seeking to defend their Senate majority in next year's elections.

"It won't do a thing to lower gas prices," top Republican Senator MitchMcConnell of Kentucky said."Raising taxes on American energy production will increase the price of gas. And it would also make us even more dependent on foreign sources of oil."

"Oil prices are set by the global market demand, not by companies such as ours," Tillerson said in his opening remarks Thursday.

Shell Oil's Marvin E. Odum said, "No one person, organization or industry can set the price for crude oil."