The head of a congressional committee failed Tuesday to get executives from the five biggest U.S. oil companies to promise they will invest 10 percent of their earnings in alternative energy development.
The executives appeared before the House Select Committee on Energy Independence and Global Warming, where they were the target of the ire of members being hammered by constituents about record gasoline prices at a time of record oil company profits.
The five companies – ExxonMobil, Royal Dutch Shell, BP, Chevron and ConocoPhillips – earned a combined $123.3 billion last year, or 8.4 percent, on sales of nearly $1.5 trillion.
Company executives told the House panel that they were not responsible for record gas prices and defended the industry’s record profits for 2007.
The oil industry is cyclical – it will experience ups and downs, said J. Stephen Simon, an ExxonMobil Corp. senior vice president.
These days, he acknowledged, “we are currently in an up cycle.”
The American Petroleum Institute trade group says the overall industry average in the fourth quarter was 7.4 percent of revenue, in line with 7.1 percent for companies that make up the Dow Jones industrial average.
Committee Chairman Edward Markey, D-Mass., especially flayed ExxonMobil for investing what he said was “one-half of 1 percent” of earnings on non-petroleum research.
Simon told the panel that the company’s “best and brightest” engineers and scientists have probed alternatives but found none able to replace significant quantities of oil in the near future. “We need to have a breakthrough, world-changing technology.”
A piqued Markey said, “You can’t be nickel-and-diming renewables and at the same time reporting $40 billion in profits.” Repeating a goal he laid out at the beginning for all five of the companies, he said to Simon, “Exxon should make a commitment to put 10 percent of its profits into renewables,” and demanded, “Are you willing to make that commitment?”
“We will do that,” Simon said, “if we can identify an area where we think it will have that (big) impact.”
ExxonMobil is giving $100 million to the Global Climate and Energy Project at Stanford University. The contributions began in 2002 and are spread over 10 years, according to Exxon spokesman Gantt Walton.
He noted that Exxon spends more than $1 billion a year on research and development but wouldn’t break out a total for alternative energy. Oil companies generally refuse to disclose investment details, saying they are “proprietary information.”
Exxon has been involved for two decades in lithium-battery development; last year it perfected a film to keep the batteries cool. Lithium batteries are expected to be used for future electric and plug-in hybrid electric vehicles. Keeping the batteries cool is a major issue.
Chevron spokesman Donald Campbell said the company plans to spend $2.5 billion from 2007 through 2009 on “renewables, alternatives and energy efficiency services.”
Robert Malone, president of BP America, told the hearing that BP will spend $30 billion in the next five years for research from oil to solar panels.
Referring to legislation passed by the House in February that would raise taxes on just the five companies at the hearing by $17.7 billion to be spent on renewable energy, he cautioned that “taxing one form of energy to encourage production of another” would only lead to “even higher prices at the pump” as oil companies raised prices to cover higher costs. The House has passed similar legislation previously, but it has failed to pass in the Senate.