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Frist Calls for Hearings on Fuel Profits

With Democrats making gas prices a campaign issue, more in the GOP are asking why oil industry earnings are breaking records.

October 28, 2005|Richard Simon | Times Staff Writer

WASHINGTON — Oil industry executives will be summoned to Capitol Hill to explain why gasoline prices are so high -- the latest effort by Republican lawmakers to head off political fallout from high fuel costs.

Senate Majority Leader Bill Frist (R-Tenn.) called Thursday for hearings into fuel prices, becoming the second congressional Republican leader this week to raise questions about the soaring profits of an industry that long has been a GOP ally.

With the industry posting record profits, House Speaker J. Dennis Hastert (R-Ill.) earlier called on oil companies to plow more money into increasing fuel supplies and lowering costs to consumers.

"Our free market works best when all know and follow the rules of the road," Frist said in a statement on his request for hearings. "If there are those who abuse the free-enterprise system to advantage themselves and their businesses at the expense of all Americans, they ought to be exposed, and they ought to be ashamed."

The GOP moves come in response to an aggressive Democratic effort to highlight energy prices as an issue in next year's congressional elections, from staging press conferences at gas stations to pushing for a windfall profits tax on oil and gas companies.

"Very simply, these guys are running for cover," oil economist Philip K. Verleger Jr. said of the GOP efforts.

The Bush administration also is expected to soon come out in support of additional federal aid to help low-income families pay projected increases in heating bills.

Sen. Ron Wyden (D-Ore.) said he was skeptical that hearings would accomplish anything.

"We've had hearings," he said. "What's needed is action."

Wyden has called for government investigations into price gouging and other alleged industry misconduct.

Sen. Olympia J. Snowe (R-Maine), however, welcomed Frist's move. "At a time when the American people are struggling to pay their energy bills and the residents of my own state of Maine will be hard-pressed to pay their home heating costs this winter, it is deeply concerning and, frankly, outrageous that oil companies are boasting record-breaking profits," she said.

On Thursday, Exxon Mobil Corp. reported a quarterly profit of $9.9 billion, its biggest ever.

Details of the hearings still must be worked out, such as when they will occur, who will be asked to appear and whether witnesses will be put under oath.

Frist asked the Senate Energy and Natural Resources Committee and the Commerce, Science and Transportation Committee to conduct the hearings jointly. He also asked the Permanent Subcommittee on Investigations to begin an inquiry into price gouging. Frist said that "if the facts warrant it," he would support a federal law against price gouging.

Oil industry executives were called to Capitol Hill during the 1970s energy crisis and received a bipartisan grilling about their profits, among other things. During a six-hour hearing before a panel headed by Sen. Henry "Scoop" Jackson (D-Wash.), the oilmen turned aside attacks, denying misconduct and defending their earnings. Oil company executives also defended their pricing at Senate hearings in 1980 and 2000.

Legislation has been introduced in the Senate to offer the industry tax breaks to encourage the construction and expansion of refineries. But additional tax breaks for the oil and gas industries are likely to face trouble, given the latest earnings reports.

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