Senate Majority Leader Bill Frist (R-TN) wants the nation's leading energy executives to appear at a joint Senate hearing to answer questions about why energy prices have gotten so far out of hand. As energy companies turned in record profits last week, Republicans and Democrats alike began dusting off proposals to impose taxes on the windfall profits.
He has asked two Senate committees to hold a joint hearing at which executives of energy companies will testify about the escalating prices. Frist also directed a Senate subcommittee to begin an inquiry into possible price-gouging. His announcement came on the heels of news reports that ExxonMobil Corp. posted record profits of nearly $10 billion for the third quarter. Shell, ConocoPhillips and British Petroleum also reported significant increases in their earnings.
"At the same time that oil companies are posting record profits, Americans are paying more than ever to fill up their cars and heat their homes. Whether it is fluctuating gas prices, disparities in gas prices at stations right next to each other, the sharp rise in natural gas costs, or the anticipated crunch for home heating oil, Americans are wondering what has happened to push costs through the roof," he said.
The public paid more than $3/gallon for gasoline in the wake of Hurricane Katrina, which struck the Gulf Coast in late August. But that pales in comparison to the increases in heating fuel costs that are expected this winter. The Energy Information Administration forecasts that natural gas customers can expect to pay 48%, or $350, more (under normal weather) from October through March for natural gas as wholesale prices average $11.40/Mcf.
The record oil company profits reported for the third quarter this past week sent Republicans and Democrats alike into action on Capitol Hill. Sen. Judd Gregg (R-NH), chairman of the Senate Budget Committee, said it was time to take a "serious look" at reinstituting an excess profits tax on oil companies, with proceeds going to pay for the Low-Income Home Energy Assistance Program (LIHEAP) and deficit reduction. "I intend to pursue options in this area over the coming weeks."
Sen. Charles Schumer (D-NY) introduced a bill to tax the windfall profits of large energy companies to raise money for Katrina relief and reduce the federal deficit, up to $60 billion over two years. Other Democrats have proposed anti-gouging measures.
Frist said he has asked the Senate Energy and Natural Resources Committee and Senate Commerce, Science and Transportation Committee to schedule the joint hearing on energy prices. Given that the Senate will be focused on the budget reconciliation process in the upcoming week, the earliest the two committees could possibly schedule the hearing is for the week of Nov. 7, a spokesman with the energy committee said.
Frist also called on the Senate's Permanent Subcommittee on Investigations to look into allegations of price-gouging. "And ultimately, if the facts warrant it, I will support a federal anti-price gouging law," he said.
Energy Secretary Samuel Bodman told a Senate panel last week he would oppose any plan that would seek to levy a tax on oil companies to help pay for LIHEAP this winter.
"That is not something that I would be in favor of. That would be the equivalent of some kind of windfall profits tax," he said last Thursday during the Senate Energy and Natural Resources Committee's fourth post-hurricane hearing exploring energy recovery efforts and needed policy changes.
He noted that LIHEAP is one of a number of initiatives that is being discussed "at the current time" by the White House. Bodman said he expects a proposal to be issued in the "relatively near future."
LIHEAP, which has been funded mostly by the federal government, provides grants to states to assist low-income customers and senior citizens in paying their energy bills during the winter heating season.
The House has approved $2 billion for LIHEAP in fiscal year 2006, the same amount sought by the White House, while the Senate has allocated $2.2 billion for the program. By 28 to 22, the House Energy and Commerce Committee on Friday raised the House's allocation for LIHEAP by $1 billion as part of its budget reconciliation package. The committee rejected a Democratic amendment to increase the House LIHEAP appropriation by $2.92 billion. Energy industry representatives say the allocations fall far short of what will be required to assist the needy with the anticipated higher heating costs this winter.
In other action in Congress, Sen. Jack Reed (D-RI) last Thursday called on the executives of nine leading energy companies to contribute a portion of their quarterly profits to assist low-income customers and senior citizens in dealing with higher heating bills this winter.
Reed's plea came a day after the Senate rejected for a second time an amendment to provide additional funding for LIHEAP. The proposal would have provided $2.9 billion on top of the $2.2 billion already earmarked by the Senate.
Reed urged ExxonMobil Corp., Chevron Corp., ConocoPhillips, Sunoco Inc., Valero Energy Corp., Marathon Oil Corp., Amerada Hess Corp., Tesoro Corp. and CITGO Petroleum Corp. to contribute to the LIHEAP program this winter.
"Energy companies are earning record profits this quarter. Therefore, we urge you to act as good corporate citizens and invest earning profits into programs, such as fuel funds, that will provide energy assistance to low-income Americans," he said.
"U.S. oil companies' profits for the first nine months of this year increased by more than 35% over last year. Contributing just 10% of your company's profits to assist low-income families faced with high energy burdens will have a substantial impact this winter."
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