Gouged at the Gas Station: Big Oil and America's Pain at the Pump (Hearing, 2022)
Summary
Record of the hybrid hearing "Gouged at the Gas Station: Big Oil and America's Pain at the Pump" before the Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce, April 6, 2022, Serial No. 117-80, with Ms. DeGette presiding. In opening, Ms. DeGette said the average price of a gallon of regular gasoline was under $3.00 one year earlier and over $4.00 at the time. Witnesses were David Lawler of BP America, Inc., Michael K. Wirth of Chevron Corporation, Richard Muncrief of Devon Energy Corporation, Darren W. Woods, Scott D. Sheffield of Pioneer Natural Resources Company, Gretchen H. Watkins of Shell USA, Inc. and H.R. McMaster of the Hoover Institution. Answers to submitted questions are in the record.
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“Gouged at the Gas Station: Big Oil and America's Pain at the Pump (Hearing, 2022).”
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[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
GOUGED AT THE GAS STATION: BIG OIL AND AMERICA'S PAIN AT THE PUMP
=======================================================================
HYBRID HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
APRIL 6, 2022
__________
Serial No. 117-80
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Published for the use of the Committee on Energy and Commerce
govinfo.gov/committee/house-energy
energycommerce.house.gov
_______
U.S. GOVERNMENT PUBLISHING OFFICE
60-333 PDF WASHINGTON : 2026
COMMITTEE ON ENERGY AND COMMERCE
FRANK PALLONE, Jr., New Jersey
Chairman
BOBBY L. RUSH, Illinois CATHY McMORRIS RODGERS, Washington
ANNA G. ESHOO, California Ranking Member
DIANA DeGETTE, Colorado FRED UPTON, Michigan
MIKE DOYLE, Pennsylvania MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois STEVE SCALISE, Louisiana
G. K. BUTTERFIELD, North Carolina ROBERT E. LATTA, Ohio
DORIS O. MATSUI, California BRETT GUTHRIE, Kentucky
KATHY CASTOR, Florida DAVID B. McKINLEY, West Virginia
JOHN P. SARBANES, Maryland ADAM KINZINGER, Illinois
JERRY McNERNEY, California H. MORGAN GRIFFITH, Virginia
PETER WELCH, Vermont GUS M. BILIRAKIS, Florida
PAUL TONKO, New York BILL JOHNSON, Ohio
YVETTE D. CLARKE, New York BILLY LONG, Missouri
KURT SCHRADER, Oregon LARRY BUCSHON, Indiana
TONY CARDENAS, California MARKWAYNE MULLIN, Oklahoma
RAUL RUIZ, California RICHARD HUDSON, North Carolina
SCOTT H. PETERS, California TIM WALBERG, Michigan
DEBBIE DINGELL, Michigan EARL L. ``BUDDY'' CARTER, Georgia
MARC A. VEASEY, Texas JEFF DUNCAN, South Carolina
ANN M. KUSTER, New Hampshire GARY J. PALMER, Alabama
ROBIN L. KELLY, Illinois, Vice NEAL P. DUNN, Florida
Chair JOHN R. CURTIS, Utah
NANETTE DIAZ BARRAGAN, California DEBBIE LESKO, Arizona
A. DONALD McEACHIN, Virginia GREG PENCE, Indiana
LISA BLUNT ROCHESTER, Delaware DAN CRENSHAW, Texas
DARREN SOTO, Florida JOHN JOYCE, Pennsylvania
TOM O'HALLERAN, Arizona KELLY ARMSTRONG, North Dakota
KATHLEEN M. RICE, New York
ANGIE CRAIG, Minnesota
KIM SCHRIER, Washington
LORI TRAHAN, Massachusetts
LIZZIE FLETCHER, Texas
------
Professional Staff
TIFFANY GUARASCIO, Staff Director
WAVERLY GORDON, Deputy Staff Director
NATE HODSON, Minority Staff Director
Subcommittee on Oversight and Investigations
DIANA DeGETTE, Colorado
Chair
ANN M. KUSTER, New Hampshire H. MORGAN GRIFFITH, Virginia
KATHLEEN M. RICE, New York Ranking Member
JAN SCHAKOWSKY, Illinois MICHAEL C. BURGESS, Texas
PAUL TONKO, New York DAVID B. McKINLEY, West Virginia
RAUL RUIZ, California BILLY LONG, Missouri
SCOTT H. PETERS, California, Vice NEAL P. DUNN, Florida
Chair JOHN JOYCE, Pennsylvania
KIM SCHRIER, Washington GARY J. PALMER, Alabama
LORI TRAHAN, Massachusetts CATHY McMORRIS RODGERS, Washington
TOM O'HALLERAN, Arizona (ex officio)
FRANK PALLONE, Jr., New Jersey (ex
officio)
C O N T E N T S
----------
Page
Hon. Diane DeGette, a Representative in Congress from the State
of Colorado, opening statement................................. 2
Prepared statement........................................... 5
Hon. H. Morgan Griffin, a Representative in Congress from the
Commonwealth of Virginia, opening statement.................... 8
Prepared statement........................................... 10
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 15
Prepared statement........................................... 17
Hon. Cathy McMorris Rodgers, a Representative in Congress from
the State of Washington, opening statement..................... 19
Prepared statement........................................... 21
Witnesses
David Lawler, Chairman and President, BP America, Inc............ 26
Prepared statement........................................... 28
Answer to submitted questions................................ 168
Michael K. Wirth, Chairman and Chief Executive Officer, Chevron
Corporation.................................................... 32
Prepared statement........................................... 34
Answer to submitted questions................................ 174
Richard Muncrief, President and Chief Executive Officer, Devon
Energy Corporation............................................. 39
Prepared statement........................................... 41
Answer to submitted questions................................ 185
Darren W. Woods, Chief Executive Officer, Exxonmobile Corporation 44
Prepared statement........................................... 46
Answer to submitted questions................................ 192
Scott D. Sheffield, Chief Executive Officer, Pioneer Natural
Resources Company.............................................. 49
Prepared statement........................................... 51
Answer to submitted questions................................ 209
Gretchen H. Watkins, President, Shell USA, Inc................... 58
Prepared statement........................................... 60
Answer to submitted questions................................ 216
LT. General H.R. McMaster (U.S. Army Retired), Senior Fellow,
Hoover Institution, Stanford University........................ 66
Prepared statement........................................... 67
Answer to submitted questions................................ 224
Submitted Material
Article ``Energy Dividend Trend is Catching On. Not Everyone's on
Board'' Barror's, by Avi Salzman, submitted by Ms. DeGette..... 164
GOUGED AT THE GAS STATION: BIG OIL AND AMERICA'S PAIN AT THE PUMP
----------
WEDNESDAY, APRIL 6, 2022
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:30 a.m., in
the John D. Dingell Room, 2123 Rayburn House Office Building,
and remotely via Cisco Webex online video conferencing, Hon.
Diana DeGette, (chair of the subcommittee) presiding.
Members present: Representatives DeGette, Kuster, Rice,
Schakowsky, Tonko, Ruiz, Peters, Schrier, Trahan, O'Halleran,
Pallone, Jr. (ex officio), Rush, Eshoo, Castor, Sarbanes,
Welch, Dingell, Cardenas, Kelly, McEachin, Clarke, Blunt
Rochester, Barragan, Soto, Craig, Fletcher, Griffith
(subcommittee ranking member), Burgess, McKinley, Long, Palmer,
Dunn, Joyce, McMorris Rodgers (ex officio), Scalise, Latta,
Guthrie, Bilirakis, Johnson, Bucshon, Walberg, Mullin, Carter,
Duncan, Lesko, Pence, Crenshaw, and Armstrong.
Staff present: Kate Arey, Content Manager and Digital
Assistant; Sarah Burke, Deputy Staff Director; Michael Cameron,
Policy Analyst, Consumer Protection and Commerce; Energy,
Environment; Jerry Couri, Deputy Chief Counsel for Environment;
Theresa Gambo, Financial and Office Administrator; Marissa
Gervasi, Counsel, Oversight and Investigations; Brittany
Havens, Professional Staff Member, Oversight and
Investigations; Jack Heretik, Press Secretary; Nate Hodson,
Staff Director; Peter Kielty, General Counsel; Emily King,
Member Services Director; Bijan Koohmaraie, Chief Counsel,
Oversight and Investigations Chief Counsel; Tim Kurth, Chief
Counsel, Consumer Protection and Commerce; Mary Martin, Chief
Counsel, Energy and Environment; Brandon Mooney, Deputy Chief
Counsel for Energy; Clare Paoletta, Policy Analyst, Health;
Olivia Shields, Communications Director; Alan Slobodin, Chief
Investigative Counsel, Oversight and Investigations; Peter
Spencer, Senior Professional Staff Member, Energy; Michael
Taggart, Policy Director; Everett Winnick, Director of
Information Technology; Austin Flack, Junior Professional Staff
Member; Waverly Gordon, Deputy Staff Director and General
Counsel; Jessica Grandberry, Staff Assistant; Tiffany
Guarascio, Staff Director; Caitlin Haberman, Senior
Professional Staff Member; Perry Hamilton, Clerk; Fabrizio
Herrera, Staff Assistant; Rebekah Jones, Counsel; Zach Kahan,
Deputy Director Outreach and Member Service; Rick Kessler,
Senior Advisor and Staff Director, Energy and Environment;
Mackenzie Kuhl, Digital Assistant; Will McAuliffe, Counsel;
Elysa Montfort, Press Secretary; Tyler O'Connor, Energy
Counsel; Kaitlyn Peel, Digital Director; Caroline Rinker, Press
Assistant; Chloe Rodriguez, Clerk; Kylea Rogers, Staff
Assistant; Harry Samuels, Professional Staff Member; Andrew
Souvall, Director of Communications, Outreach and Member
Services; Medha Surampudy, Professional Staff Member; Caroline
Wood, Staff Assistant; Tuley Wright, Senior Energy and
Environment Policy Advisor; and C.J. Young, Deputy
Communications Director.
Ms. DeGette. The Subcommittee on Oversight and
Investigations hearing will now come to order.
Today the Committee is holding a hearing entitled, ``Gouged
at the Gas Station: Big Oil and America's Pain at the Pump.''
Today's hearing will examine the oil industry's role in the
recent increase gasoline prices in the United States.
Due to the COVID-19 public health emergency, members can
participate in today's hearing either in person or remotely via
online videoconferencing. In accordance with the updated
guidance issued by the attending physician, members, staff, and
members of the press present in the hearing room are not
required to wear a mask. For members participating remotely,
your microphones will be set on mute for the purpose of
eliminating inadvertent background noise. Members participating
remotely will need to unmute your microphone every time you
wish to speak, but note, once you unmute your microphone,
anything that is said in WebEx will be heard over
theloudspeakers in the committee room and subject to be heard
by the live stream and C-SPAN.
Because members may be participating from different
locations at today's hearing, all recognition of members like
for questions will be in the order of subcommittee seniority.
Documents for the record can be sent to Austin Flack at the e-
mail address we've provided to staff and all documents will be
entered into evidence at the end of the hearing.
The Chair will now recognize herself for an opening
statement.
OPENING STATEMENT OF HON. DIANE DeGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Americans today are facing extraordinarily high gas prices
at the pump. The average price of a gallon of regular gasoline
one year ago was under $3.00. Today, the average is over $4.00
a gallon, and in some places, it's nearly $6.00 a gallon. These
prices are straining our constituents' budgets and their
patience.
Today we will hear from the heads of some of our Nation's
largest oil companies, companies that are making record
profits, which will hopefully shed some light on why Americans
are paying record high prices for gasoline and what they can do
to bring those prices down as quickly as possible.
Now, this committee understands it's a complicated issue.
It's often stated that oil's a global commodity and its price
is determined by the global marketplace. Surely we don't
dispute that, but the price of oil alone is not what is
alarming most of us on this panel. It's the price at the pump.
When Russia's brutal invasion of Ukraine began on February
24, the cost for a barrel of oil was $102 and the price that
Americans were paying at the pump was $3.70 a gallon, but
today, the price of oil is again back to $102, but for some
reason, Americans are now paying $4.20 for a gallon of gas.
This chart shows the recent disconnect between the price
that companies are paying for oil and the price that American
consumers are paying at the pump. It shows that as Russia's
invasion of Ukraine began, both the price of oil and the price
at the pump began to rise, but it shows that on or around March
7, the price of oil peaked at nearly $130 a barrel, while the
price of gas hit $4.20 a gallon.
But then it shows--then it shows that while the price of
oil has dropped significantly from the peak, the price that
Americans are paying at the pump has not. And this is what I
want to know from our witnesses today. Why?
We understand that oil's a global commodity whose price is
determined by the global marketplace. We understand that the
COVID-19 pandemic threw that global marketplace into disarray.
And we understand that Vladimir Putin's senseless, vicious
invasion of Ukraine has further reduced the world's oil supply
as more and more companies are unwilling to buy Russian oil and
rightly so, but here's the thing. If the price of gas is driven
by the global market, why is the price of oil coming down, but
the price at the pump is still near record highs?
If it's an issue of supply and demand, wouldn't that be
reflected in the global price of oil as well? Something just
doesn't add up.
Some of our witnesses today have stated publicly that their
focus is not on helping American families or on fueling
America's economy. It's enriching their shareholders. It's that
type of focus that led these six companies alone to
collectively report over $75 billion in profits last year.
When oil companies are honest about why they haven't
increased the supply of oil, they say it's pressure from their
shareholders, not government regulation that's holding them
back. And one of our witnesses today even told the media that
it wouldn't matter if crude were as high as $200 a barrel, they
just simply weren't going to produce more than they already
plan to.
But you know something, it's not just about the
shareholders. The American people, who we represent, provide
the industry with more than $30 billion a year in subsidies,
while the oil and gas companies report record high profits and
while American families are forced to pay record high prices at
the pump.
Frankly, this committee is not going to sit back and allow
this system, which forces American taxpayers to pay oil
companies out of both pockets, first at the pump and then
through tax breaks, to continue in its current form.
The Biden Administration announced last week it's taking
several substantial steps to help alleviate the price that
Americans are being forced to pay at the pump, including by
releasing a million--up to a million barrels of oil per day
from the Strategic Petroleum Reserve, and now it's time for
Congress to do whatever it can to help alleviate the pain that
too many Americans are feeling at the pump.
If this crisis has showed us anything, it's why we as a
country must work to break our addiction to oil as quickly as
possible, and it's reinforced the urgent and existential need
to transition to a more sustainable energy future. For the sake
of our economy, our environment, and our national security, we
must work as quickly as possible to go to that clean energy
future.
I do want to thank the witnesses for appearing today and I
now want to invite them to be part of the solution to lower gas
prices and now.
[The prepared statement of Ms. DeGette follows:]
Prepared Statement of Hon. Diana DeGette
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. DeGette. With that, I'm pleased to recognize the
ranking member, Mr. Griffith, for 5 minutes.
STATEMENT OF HON. H. MORGAN GRIFFITH, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF VIRGINIA
Mr. Griffith. Thank you, Chair DeGette, for holding this
hearing.
I believe surging energy prices and their impact on
American wallets is an important topic for this subcommittee,
but the majority is laying the blame for the problem at the
wrong feet.
When President Biden points to Vladimir Putin or Big Oil or
other scapegoats as the culprit, I'm reminded of the words of
the Wizard of Oz. Pay no attention to that man standing behind
the curtain. Rather than deflect blame, President Biden should
consider his own culpability for higher energy prices thanks to
his relentless pursuit of policies that discourage domestic
energy production, driving gas prices up to levels not seen
since Mr. Biden was Vice President.
Over the past few decades, innovative and responsible
development of the American resources yielded a reliable,
affordable, secure domestic energy supply. This supply drew on
all the resources of our country, oil, natural gas, coal,
nuclear, hydropower, and renewables.
Unfortunately, today we face an entirely different
landscape. Since President Biden took office, the prices of
crude oil and many other energy commodities have risen to the
highest level in more than a decade. As a direct result of
President Biden's anti-American energy agenda, prices have
rapidly risen for more than a year.
On day one, the Administration made clear that it would do
all that it could to shut down America's energy production by
canceling the Keystone XL pipeline. Later, the President
imposed a moratorium on fossil energy development on Federal
lands and increased pressure from financial regulators to halt
fossil fuel investments, and he has no plans of stopping his
assault on the energy industry.
Even while gas prices skyrocket and allied countries cry
out for new energy sources, President Biden continues to
announce new taxes and initiatives that are designed to shut
down domestic production. One of the first actions of the Biden
Administration was a ban on new oil and gas leases on public
lands or in offshore waters, signaling a desire to restrict
growth of domestic energy or oil production and did so almost
immediately. The Administration made it clear that Federal
acreage is not open for business.
It is impossible to generate confidence or investment in
production today when future production is clearly being
blocked by this Administration.
President Biden's rush-to-green agenda involved--involves a
whole of government approach that advised multiple Federal
agencies to play some part in making it more difficult for oil
and gas production. For example, the Administration has
pressured companies to halt investments in fossil fuels.
There is no denying the fact that the Biden Administration
has promoted an increasingly complex and challenging regulatory
environment for energy companies. While President Biden should
have been working to encourage domestic energy production, he
went to OPEC to ask for more oil. Since that failed, the
Administration is reportedly considering lifting sanctions so
the anti-American regimes in Iran and Venezuela can increase
their production.
It has become painfully clear that the--that President
Biden's anti-American energy policies embolden Putin, and in my
opinion, helped to invite the attack on Ukraine.
The words and deeds of the White House expose a fundamental
misunderstanding of the operations of an industry it seeks to
dissolve. After Russia's invasion of Ukraine, President Biden
stressed the short-term need to increase oil and natural gas
output and expedite liquified natural gas, LNG, project
development.
The oil and gas industry does not operate well on short-
term proposals, however. Due to the nature of the industry,
companies like the ones before us today need long-term
certainty. A temporary green light to produce oil from the
Biden Administration will not undo the damage and the layers of
red tape and aggressive anti-fossil fuel polices driving gas
prices to new highs.
Given the interconnection of the global economy to pressing
U.S. energy production also affects our trading partners. Thus,
Biden's restrictions in the U.S. forced our allies to depend on
Russia and other dictators to power their economies. We need to
look for ways to increase our domestic production and export
capacity, such as increasing our LNG exports to help our allies
break free from Russia.
We need energy policy that promotes energy security, while
also taking advantage of America's abundant, reliable, and
affordable energy resources. In a time when it has never been
so expensive before to live in America, we need real solutions
to disperse the geopolitical shock and provide certainty to the
global market.
With that, I want to thank the witnesses for appearing
before us today. I look forward to discussing the current
barriers the oil and gas industry face and gaining your
insights into suggested regulatory or legislative actions we
need to take to restore American energy.
Thank you. I yield back.
[The prepared statement of Mr. Griffith follows:]
Prepared Statement of Hon. H. Morgan Griffith
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. DeGette. Chair now recognizes the chairman of the full
committee, Mr. Pallone, for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Let me thank Chairwoman DeGette. I don't think
that we could have a more important hearing than the one that
you're chairing today.
And we're here to get answers from the Big Oil companies
about why they're ripping off the American people. At a time of
record profits, Big Oil is refusing to increase production to
provide the American people some much needed relief at the gas
pump. Instead, they're buying back their stock at an estimated
cost of about $40 billion this year.
Big Oil is lining their pockets with one hand and taking
billions in taxpayer subsidies with the other. Meanwhile, the
American people are getting ripped off as these companies
choose to keep production low so that their own profits stay
high. The American people are understandably fed up with these
prices and we're here today to demand answers from Big Oil
about when they will finally start providing the American
people some relief.
As oil prices rise and Americans are hurting, the six oil
companies testifying today made more than $75 billion in
profits between them last year. It's also likely these
companies are making even more money this year. In fact, on
Monday, Exxon announced that its first quarter profits may be
more than $9 billion. That's higher than last year's first
quarter profits of $8.8 billion. And all these profits, while
Americans are getting taken for a ride at the gas pump.
Even in the face of a devastating war in Ukraine and a
bipartisan agreement to ban the import of Russian oil, several
of the companies testifying today told their shareholders that
they would rather make money off high prices in the market than
invest in additional oil production.
If these companies really wanted to do something about high
gas prices, they would put their profits to work by increasing
supply. Right now, the oil and gas industry has more than 9,000
approved but unused drilling permits and they should focus on
using them. The problem is not a shortage of permits or land.
Big Oil is choosing to keep supply low, prices high, and their
pockets lined with the hard-earned dollars of struggling
American consumers.
And the game that Big Oil is playing is unfortunately
nothing new. For decades, American consumers have been subject
to the whims of global petro-dictators and the oil companies
have benefited from doing business with them. Foreign
adversaries like Russia's Putin can make prices unpredictable
and unstable and Big Oil is profiteering from our continued
reliance on this volatile global commodity.
Republicans continue to push the same old oil above all
policies, ignoring that these policies have led us to greater
dependence on this volatile commodity. And where has all this
gotten us? The United States now produces more oil and gas than
any other country in the world, but Americans are still subject
to the actions of the Big Oil companies.
And democrats have a different plan. We're focused on
actually reducing costs for American consumers at the pump and
today, we also demand or we're also involved in enacting 21st
Century, all of the above policies that will give consumers
real options, not just a 1970's choice between oil, diesel, and
gas.
The best way to protect Americans from oil price spikes is
to curb our dependence on oil and transition to renewable
energy, which is more stable, affordable, and generated right
here at home.
So democrats have worked hard to bring real energy security
to the American people. We have devoted billions of dollars to
the Weatherization Assistance Program to reduce energy costs
for homeowners and the Low-Income Home Energy Assistance
Program to offset rising energy costs. We've invested in
electric vehicles to give consumers a choice and make high gas
prices a thing of the past.
And just last week, as mentioned by Chairwoman DeGette,
President Biden announced an unprecedent release of oil from
the Strategic Petroleum Reserve to help drive down prices for
American consumers.
So we've done our part or we're doing our part to try to
produce or have more oil available on the marketplace, but now
it's time for Big Oil to take some action to reduce the pain at
the gas pump. Produce more oil, produce more with the wells you
have, the 9,000 permits that you're not using.
I look forward to hearing from each of the witnesses today
about how their companies can help the American people instead
of lining their own pockets. And I certainly don't want to hear
from any of them that, ``That's not our responsibility. You
know, we're just companies trying to make a buck.'' If anybody
says that to me, I'm going to say that's--you know, that's
unbelievable if that's your attitude here today.
You can make a difference, whether it's more production or
somehow, you know, reducing prices, your wholesale prices. I
don't want to hear that, you know, ``We only do the wholesale
prices. This is all done at the retail level.'' That's a lot of
garbage.
The bottom line is you set the wholesale price and that's
the biggest part of the retail price. So don't tell us that you
can't do anything about it. You can do something about it and
we expect you to do that. Maybe it's a matter of patriotism. I
don't know what to call it, but something must be done on your
part.
I yield back. Thank you, Madam Chair.
[The prepared statement of Mr. Pallone follows:]
Prepared Statement of Hon. Frank Pallone, Jr.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. DeGette. I thank the gentleman.
Chair now recognizes the ranking member of the full
committee, Mrs. Rodgers, for 5 minutes.
OPENING STATEMENT OF HON. CATHY McMORRIS RODGERS, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON
Mrs. Rodgers. Thank you, Madam Chair.
I want to be very clear with the American people. This
hearing is a deliberate distraction. We're not convened to
address the pain you've been feeling at the pump for more than
a year. If that were the case, Energy Secretary Granholm would
be here to discuss how we can work together to flip the switch
on domestic American energy to drive down the high cost of gas
prices.
Today is purely political. President Biden needs cover for
his war on American energy that has caused gas prices to
skyrocket. First the Administration tried blaming Putin. They
called it the Putin price hike, but anyone who's been filling
up their tank since last January knows this is not true.
The average gas price when President Biden took office was
$2.38 and it climbed over $1.00 a gallon well before the
invasion, and the American people are too smart and have not
fallen for this. So the blame is shifting to the industry. This
isn't a new tactic. Just last year, Energy and Commerce
democrats held a price gouging hearing to blame the increased
prices Americans are facing across the board on corporate
greed, another deliberate attempt to deflect from the negative
effect of the Biden Administration's policies and their own
record spending. The American people didn't buy it then and
they're not buying it now.
President Biden and the majority democrats should accept
responsibility. This is not the Putin price hike or the result
of companies suddenly deciding to make money in 2022. This is
the Biden price hike and it's been a steady climb since he took
office.
Energy is foundational to life. When energy prices go up,
so does everything else in every part of our lives. Thanks to
President Biden's skyrocketing energy prices, Americans are
suffering across the board for everyday expenses. Why isn't
this Administration reversing course? High gas prices are a
feature of this Administration's policies, not a bug.
President Biden seems to want high gas prices for Americans
to feel pain every time they fill up their tanks. Democrats
have never made driving down gas prices a priority. Why?
Because they want to usher in a green revolution. If you're
wondering what life is going to look like under the Green New
Deal, you're getting a small taste of it now. It's not reality
and it's not something that people can afford.
Oil and gas are going to be needed for decades to come.
Instead of accepting this reality, they continue to shut down
American energy. Sadly, this should not come as a surprise. In
March 2020, candidate Joe Biden said, quote, ``No more
subsidies for fossil fuel industry. No more drilling on Federal
lands. No more drilling, including offshore. No ability for the
oil industry to continue to drill, period.''
President Biden put a place--and put in place a moratorium
on new drilling. In May 2020, candidate Joe Biden pledged to
stop the Keystone XL pipeline. He delivered on day one. And
there are countless other examples of this Administration's war
on domestic American energy.
This radical agenda is hurting our national security. Not
only will the democrats rush-to-green force America to be
reliant on China, it also weakness our geopolitical leadership.
We must return to the pre-Biden days of energy independence. We
must lead the world in energy production to help our allies and
counter our adversaries.
Instead of ramping up production here, President Biden has
begged OPEC and Russia to drill more oil, considered lifting
sanctions on the brutal Maduro regime, wants to reinState the
Iran nuclear deal, told suffering Americans to buy an electric
vehicle, and depleted our Strategic Petroleum Reserves.
Republicans are focused on solutions to drive down gas
prices. I'm co-leading the American Energy from Russia Act, to
flip the switch on American energy and unleash production. This
legislation would remove barriers to LNG exports and unlock
America's energy potential by requiring leasing and permitting
of energy and mineral development on Federal lands and waters.
It would also immediately approve the Keystone XL pipeline,
force the DOE Secretary to have a plan to increase domestic
production before allowing any more non-emergency SPR
withdrawals.
We must also build energy infrastructure in America, like
pipelines and LNG export facilities. We need to focus on
domestic mining and critical minerals production. That's how we
secure our energy future, guard against foreign dictators, and
bring prosperity and optimism to America.
Americans need relief and we stand ready to deliver
results.
I yield back. Thank you.
[The prepared statement of Mrs. Rodgers follows:]
Prepared Statement of Hon. Cathy McMorris Rodgers
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Ms. DeGette. The Chair now asks unanimous consent that the
members written opening statements will be made part of the
record.
And without objection, so ordered.
I now would like to introduce our witnesses for today's
hearing who, unfortunately, will be appearing remotely.
Mr. David Lawler, the chairman and president, BP America,
Inc.
Mr. Michael Wirth, chairman and chief executive officer,
Chevron Corporation.
Mr. Richard Muncrief, president and chief executive
officer, Devon Energy Corporation.
Mr. Darren Woods, chief executive officer, ExxonMobil
Corporation.
And Mr. Scott Sheffield, chief executive officer, Pioneer
Natural Resources Committee Company.
And Ms. Gretchen Watkins, president, Shell USA, Inc.
Lieutenant General H.R. McMaster, senior fellow, Hoover
Institution, Stanford University.
And I do want to thank all of the witnesses for appearing
before the subcommittee today.
All of you know the committee's holding an investigative
hearing and when doing so, we have the practice of taking
testimony under oath.
Do any of you have objections to testifying under oath?
Please State yes or no.
Let the record--let the record reflect the witnesses have
responded no.
The Chair then advises you that under the rules of the
House and the rules of the committee, you're entitled to be
accompanied by counsel.
Do any of you desire to be accompanied by counsel during
your testimony today? Please unmute and State for the record.
By the way, I can see all of you on our screen here. So
that's good.
So now I'm going to swear you in, and so, if you would,
please raise your right hand so that you may be sworn in.
[Witnesses sworn.]
Ms. DeGette. Let the record reflect the witnesses have
responded affirmatively and you're now under oath and subject
to the penalties set forth in Title 18, Section 1001 of the
United States Code.
And at this time, the Chair will recognize each witness for
5 minutes to provide their opening statement.
Before we begin, I want to make the witnesses know that
there's a timer on your screen that will count down your
remaining time.
Mr. Lawler, you're now recognized for 5 minutes.
TESTIMONY OF DAVID LAWLER, CHAIRMAN AND PRESIDENT, BP AMERICA,
INC.; MICHAEL K. WIRTH, CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
CHEVON CORPORATION; RICHARD MUNCRIEF, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, DEVON ENERGY CORPORATION; DARREN W. WOODS,
CHIEF EXECUTIVE OFFICER, EXXONMOBIL CORPORATION; SCOTT D.
SHEFFIELD, CHIEF EXECUTIVE OFFICER, PIONEER NATURAL RESOURCES
COMPANY; GRETCHEN H. WATKINS, PRESIDENT, SHELL USA, INC.; AND
LTG H.R. MCMASTER (U.S. ARMY RETIRED), SENIOR FELLOW, HOOVER
INSTITUTION, STANFORD UNIVERSITY
STATEMENT OF DAVID LAWLER
Mr. Lawler. Thank you.
Chairman Pallone, Chairwoman DeGette, Ranking Member
McMorris-Rodgers, Ranking Member Griffith, and members of the
committee, my name is David Lawler. I'm the chairman and
president of BP America and a resident of Denver, Colorado.
Thank you for the opportunity to appear before you today.
I appreciate the committee's attention to the hardships
that families and businesses are feeling due to the rising cost
of energy. We share these concerns. We are committed to
continuing to help meet America's near-term energy needs, while
also continuing to transition BP to a low-carbon future.
BP has a 150-year history in the United States. We employ
more than 12,000 people here and maintain a larger presence in
the U.S. than in any other country.
Before continuing with my testimony, I want to acknowledge
the crisis in Ukraine. We are witnessing an act of aggression
by Russia that is having tragic humanitarian consequences of
the region. Our hearts go out to the people of Ukraine and all
of those impacted by this crisis.
BP will continue to support those affected in Ukraine and
the wider region. At the same time, we are helping ensure that
the energy supply remains secure given that Russian oil and gas
is deeply integrated into Europe's energy system.
The price of oil, gasoline, and other refined products are
driven by international markets. Energy markets are complex and
global in nature. That means that products like refined fuel
reach end consumers through several different paths along the
supply chain.
The current volatile energy markets underscore the need to
invest in reliable energy, both low-carbon sources and
resilient hydrocarbons. This is the heart of BP's
transformation.
In 2020, BP established a new purpose, reimaging energy for
people and our planet. At the same time, we announced a new
ambition, to become a net zero company by 2050 or sooner and to
help the world get to net zero. We aim to be net zero across
our operations, production, and sales by 2050 or sooner. BP
also set several near-term targets and aims along our path to
reach net zero by mid-century, and BP is in action toward this
transformation.
In 2021, we invested $2.2 billion in low-carbon energy
sources, up from $750 million in 2019. Globally, over the past
two years, our pipeline for renewables increased more than four
times, from six gigawatts to 24.5 gigawatts.
We plan to continue investing in low-carbon energy sources
in the years ahead. By the end of the decade, we aim to invest
$4 to $6 billion per year. This means roughly a third of our
capital expenditure will be in low-carbon energy.
A large portion of these low-carbon investments are being
made in the United States. This includes a $1.1 billion initial
investment in a partnership in Ecuador's two wind leases
located off the coast of New York and Massachusetts. Between
them, we aim to develop 4.4 gigawatts of low-carbon energy.
That's enough to power than two million homes each year.
BP aims to steadily increase our investment in low-carbon
energy, while continuing to invest in resilient hydrocarbons
here in the United States. BP's Gulf of Mexico business
exemplifies this approach. In the Gulf, we're producing some of
BP's highest value energy anywhere in the world. This year, BP
aims to safely startup Argos, a fifth production platform that
will increase our production in the region by 25 percent.
Our U.S. onshore oil and gas operations, BPX Energy, a
business that I lead, is driving down emissions while safely
producing oil and gas in Texas and Louisiana. BPX plans to
spend more than $1 billion to install a state-of-the-art
infrastructure network that will significantly reduce emissions
from our U.S. onshore operations through electrification.
In uncertain times, one of BP's primary roles is to
maintain the safe, secure supply of the energy on which
societies depend. The importance of this role has rarely been
clearer than in recent weeks. At the same time, BP will pursue
our mission's targets and aims, while continuing to increase
our supply of energy from low-carbon sources.
Thank you again for this opportunity. I look forward to
your questions.
[The prepared statement of David Lawler follows:]
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Ms. DeGette. Thank you. Chair now recognizes Mr. Wirth for
5 minutes.
STATEMENT OF MICHAEL K. WIRTH
Mr. Wirth. Chairs DeGette and Pallone, Rankin Members
Griffith and McMorris-Rodgers, members of the subcommittee,
thank you for the opportunity to speak with you today. My name
is Mike Wirth and I'm the chairman and CEO of Chevron.
We are living through a critical and unprecedented moment
in history. Over the last six weeks, we've watched the events
in Ukraine with grave and growing concern. Russia's actions
have cost many lives and displaced millions of people from
their homes. The senseless violence and loss of life are
heartbreaking.
We appreciate the efforts of leaders across the globe to
find a path to end the hostilities and we support a prompt and
just diplomatic resolution.
In addition to the toll on human life, the crisis has also
led to a surge in commodity prices, particularly with respect
to energy. It is affecting people around the world, including
here in the United States. This has added to the tremendous
pressures that our economy and citizens were already
experiencing from a global pandemic.
At Chevron, we understand the hardship that rising energy
costs have posed for so many Americans. From higher prices at
the pump, to increased rates for natural gas, heating, and
electricity. And as the global landscape continues to evolve,
we're focused on doing our part to provide Americans with
access to affordable, reliable, and ever cleaner energy.
I also want to be very clear about where Chevron stands. We
do not control the market price of crude oil or natural gas,
nor of refined products like gasoline and diesel fuel, and we
have no tolerance for price gouging.
In his remarks last week about the release of supplies from
the Strategic Petroleum Reserve, President Biden stressed the
critical role that companies like ours have to play in
increasing domestic supply of oil and gas. At Chevron, we're
committed to doing our part to contribute to this goal. We are
pursuing the responsible development of oil and gas, while also
investing to advance a lower carbon future.
We're answering the call for strong domestic energy supply
by focusing on Chevron's core strategy, leveraging our
strengths to deliver lower carbon energy to a growing world.
Chevron has already committed to increase our capital spending
this year by more than 60 percent compared to 2021, with
approximately half of that increase going to oil and gas
production and the other half to renewable fuels and lower
carbon energy.
This is expected to grow our production in the Permian
Basin here in the United States from 600,000 barrels of oil
equivalent per day last year to over one million barrels per
day by 2025. As we make these investments, Chevron is focused
on innovating to meet the energy demands of today and tomorrow.
We're increasing American energy production and we're also
producing energy that is ever cleaner. That's why we've
committed $10 billion between now and 2028 to lower the carbon
intensity of the energy we supply.
We also remain mindful that energy security is national
security and that maintaining American leadership is important
for the world. We intend to continue working with Congress, the
Biden Administration, and the whole of government to achieve
our shared goal of delivering affordable, reliable, and ever
cleaner energy to American consumers.
Recent events underscore the importance of our industry
working collaboratively with policymakers on these critical
issues. Whether it's accelerating programs for new energy
exploration or streamlining the permanent process for the
development of critical energy infrastructure, we believe there
are a number of policy steps that could bolster American energy
supply and place on sounder footing for the future. I look
forward to a continued dialog on these important issues.
I've been truly inspired by the--the American people to
respond to today's challenges with extraordinary resilience,
and I'm optimistic about all that Chevron is doing to meet the
world's needs for affordable, reliable, and ever cleaner
energy.
Thank you and I look forward to your questions.
[The prepared statement of Mr. Wirth follows:]
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Ms. DeGette. Thank you.
Chair now recognizes Mr. Muncrief for 5 minutes.
STATEMENT OF RICHARD MUNCRIEF
Mr. Muncrief. Chair DeGette, Pallone, Ranking Member
Griffith, and members of the committee, thank you for the
opportunity to discuss the current State and importance of U.S.
energy production before you today. I'm Rick Muncrief, CEO of
Devon Energy.
We are in a moment of crisis given Russia's unprovoked and
unjustified invasion of Ukraine. Devon Energy is an independent
exploration and production company headquartered in Oklahoma
City. Founded in 1971, Devon employees more than 1,600
hardworking people with operations in Oklahoma, Texas, New
Mexico, Wyoming, and North Dakota.
In January 2021, we completed a merger with WPX Energy and
are proudly producing more American made oil and energy today
than at any time in our 50-year company history.
Devon is an upstream company. We find and produce oil,
natural gas, and natural gas liquids. We do not refine or sell
refined products. We invest heavily to recover these resources
and then contract to sell them at prices dictated by a complex
global commodity market. We do not set or have significant
influence over the price of our products.
Multiple factors impact the price of any global commodity,
and over the past two years, we have extreme volatility. As the
COVID pandemic all but shut down global economies, demand for
our products decreased drastically and the market price for
crude oil plummeted. In fact, in April 2020, crude oil futures
actually went to a negative $37.00 a barrel. As economies began
reopening, markets adjusted and we at Devon adjusted and began
increasing production again.
The events in Ukraine have now added upward pressure in the
markets. While we're seeing prices level off, uncertainty still
continues, which creates volatility and I don't believe out of
the woods yet.
Now, shifting to our operations, Devon operates on private,
State, Federal, and Indian leases and must follow numerous
stringent permitting processes before we can begin production.
One of the permits we must obtain is an APD or an application
for permit to drill. The APD only covers the drilling and
completing activity that will be done on the lease itself.
We also must obtain additional permits or rights-of-ways
for pipelines, roads, water disposal, electricity system, and a
host of other activities that will occur off the lease. Under
normal circumstances, in the Delaware Basin, our practice is to
plan on getting from APD to drilling in five to six weeks if
there are no infrastructure or permit issues to slow progress.
Additionally, the process to drill and complete a well and
bring it to full production may mean that a significant number
of weeks transpire before a well reaches its full potential.
Now, with the significant delays due to global supply chain
constraints, and quite honestly, a shortage of workers, the
time is substantially increased and is now closer to six
months.
Even with these challenges, Devon's net domestic oil
production increased to a new record high in 2021, reaching an
average of nearly 300,000 barrels of oil produced each day,
making us one of the largest oil producers in the U.S. Now, to
build upon this momentum in 2022, our plan is to increase the
rig count from 14 that we had in 2021 to 19 today, which is
we're at, representing an investment of approximately $2
billion.
This level of activity is expected to bring more than 300
new producing wells online and bolster our productive capacity.
I can assure you that at Devon, we are pragmatically investing
in our business for the long haul and we have a responsibility
to more than 660,000 shareholder owners to be prudent and
thoughtful.
As a publicly traded company, a significant component of
Devon's owners consist of pensions that representative
government employees, teachers, police, firefighters, and non-
profit organizations. We're also owned by many hardworking
individuals through their retirement plans or brokerage
accounts. Like other sectors in the market, our shareholders
expect us to operate in a way that delivers on a return on
capital invested while providing additional value in the form
of cash returns. We're focused on achieving these objectives
while pursuing environmental and operational excellence,
including strong targets to reduce our carbon footprint.
What's required now is a thoughtful, collaborative dialog
between policymakers and the oil and gas industry, pragmatic
solutions that ensure our Nation's energy security, and
leadership in the global marketplace must be fostered by clear
and consistent regulatory policies.
We know that oil and gas will remain a critical energy
source for decades to come, and Devon is proud to produce it
safely, responsibly, and with care for the environment and our
stakeholders.
Thank you again for the invitation to address the committee
and further this most important discussion.
[The prepared statement of Mr. Muncrief follows:]
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Ms. DeGette. Thank you.
Chair now recognizes Mr. Woods for 5 minutes.
STATEMENT OF DARREN W. WOODS
Mr. Woods. Good morning, Chairwoman DeGette, Ranking Member
Griffith, Chairman Pallone, Ranking Member McMorris-Rodgers,
and members of the committee. I'm Darren Woods, chairman and
CEO of ExxonMobil.
I welcome the opportunity today to discuss fuel pricing
with the committee, but first, speaking on behalf of all of
ExxonMobil, I want to emphasize that we stand with communities
around the world in deploring Russia's aggression and the
devastation it has inflicted on the people of Ukraine.
Within days of the invasion, we started work to exit the
Sakhalin-1 project. We've operated in Russia's Far East since
2003 and announced that we would make no new investments in
Russia.
Here in the United States, the impact of the invasion is
also being felt. American families are paying more at the pump,
increase in the cost of living that is already rising as a
result of inflation. Even before the invasion of Ukraine, as
the world emerged from the pandemic, we were seeing a growing
imbalance in global oil and gas markets. The invasion has
further demonstrated how quickly and dramatically markets can
be disrupted and how that impacts the everyday lives of
Americans.
Many of us will recall the Arab oil embargo of the early
1970's, the long lines and rapidly rising prices. It was a
disruption caused by a sudden and significant drop in supply
when around two million barrels of oil a day were withdrawn
from the global markets.
The opposite occurred during the early days of the
pandemic. A sudden drop in demand sent oil prices crashing, to
the point where they were actually negative, meaning our
industry sustained huge losses, to the point many went out of
business. All cut back on their investments. This reduction in
investment laid the foundation for our current market and
supply challenges.
Today, Russia provides roughly ten percent of the oil
needed to meet global demand and about 30 percent of Europe's
natural gas demand. A loss of this volume will be much more
significant than the impact of the Arab oil embargo and would
represent the largest supply distribution in the history of our
industry.
Unfortunately, there's no quick fix, but in the near term,
the answer is straightforward. If we want to reduce prices, we
need to increase supply. Our industry needs to make substantial
investments just to maintain constant production levels.
Without investment, the volume of production declines roughly
seven percent per year. That's why, even during the depths of
the pandemic, when oil prices collapsed and ExxonMobil lost $22
billion, we continued to invest to increase supply. That was
not without risk and was often criticized, but ExxonMobil's
focus in the long-term fundamentals and continued investments
are today delivering more supply to Americans.
In the Permian Basin in Texas and New Mexico, for example,
we expect to increase production this year by 25 percent over
2021, which was up 25 percent versus 2020. Outside the United
States, we're also increasing production through a number of
projects, including a world-class development in Guyana. In
fact, we expect our total oil production this year will be the
highest in 15 years.
In addition, with new technologies and innovation, we can
increase supply to meet the need for reliable and affordable
energy, while helping society achieve its ambition for a net
zero future. ExxonMobil is committed to meeting the need for
energy, while also developing solutions to lower emissions and
address the risk of climate change.
Our low-carbon solutions business is advancing projects
with the potential to significantly lower emissions in the
hardest to carbonize sectors of our economy. And while we do
not own or operate any gas stations here in the United States,
we know that today's high prices at the pump are hurting
Americans. The impact of high energy costs underscores the
importance of reliable and affordable energy supplies.
Finally, no single company sets the price of oil or
gasoline. The market establishes the price based on available
supply and the demand for that supply. Continued investments in
new production is the only way to achieve balanced markets and
more affordable prices that bring real relief at the pump.
Government has a critical role to play here. Policies need
to provide certainty and improve predictability. Consistent,
efficient, and effective policies will help spur further
investment in U.S. oil and gas production. Access to reliable
and affordable energy is essential to modern life and underpins
economic and social progress around the world.
ExxonMobil is proud to contribute to this progress by
reliably supplying the energy the world needs, strengthening
global energy security, and playing a leading role in the
energy transition.
Thank you.
[The prepared statement of Mr. Woods follows:]
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Ms. DeGette. Thank the gentleman.
Chair now recognizes Mr. Sheffield for 5 minutes.
STATEMENT OF SCOTT D. SHEFFIELD
Mr. Sheffield. Chair DeGette, Ranking Member Griffith,
Chairman Pallone, Ranking Member Rodgers, and distinguished
members, thank you for the opportunity to testify.
Pioneer was one of the first companies in the U.S. to
publicly speak out against evasion of Ukraine. The company and
its employees have pledged over $20 million for humanitarian
needs. Pioneer and other U.S. oil and gas companies are doing
much more to help Ukraine protect the U.S.
The only natural gas that we produce have proved to be a
geopolitical asset for the U.S. It's also the critical offset
to Russian gas in Europe. Without U.S. natural gas delivered as
LNG, Europe would have even greater difficulty standing up to
Russia.
Pioneer is the largest producer and most active driller in
the Permian Basin, which is considered the largest oilfield in
the U.S. Over the past decade, our company has invested $45
billion to quadruple production to over 600,000 barrels of oil
equivalent per day.
Pioneer is solely an upstream company. Our products are
purchased by refiners and utilities. Pioneer operates
exclusively on private lands, does not refine its oil and gas
commodities, produce gasoline or operate retail gas stations.
Pioneer is a price taker. We do not set the sales price of our
products. Prices are determined by international markets based
on global supply or demand fundamentals.
Over the past ten years, growth from the U.S. shale
revolution has added over eight million barrels of oil per day
and 90 bcf of natural gas per day in this country, which has
provided jobs, increased energy security, reduced energy costs,
and significantly reduced greenhouse gas emissions.
Past shale production growth proved to be based on a
destructive financial model. We overspent and overborrowed as
an industry and contributed to the oil price wars of 2014 and
2015, 2019, and 2020, which led to hundreds of bankruptcies. As
a result, the industry's returns were dismal.
We ended up at the bottom of the S&P 500 in stock
performance over the last several years. This led the industry
falling from 12 percent of the S&P 500 to less than four
percent. It became abundantly clear that for the industry to
survive, the model of production growth at any cost needed to
change. The investment community of mutual index and pension
funds, which represents the retirement funds of millions of
Americans, demanded change.
A new model of sustainable growth generates returns more
consistent with other industry sectors in the S&P 500. Instead
of the U.S. growing up to 1.5 million barrels of oil per day in
some years, and oversupplying the market, the long-term annual
growth rate is expected to be 500 to 700,000 barrels of oil per
day over the next several years in this country.
Long term, the Permian Basis is the only drilling oil shale
basin in this country. The drilling inventories in the other
U.S. shale basins are limited. The Permian Basin is producing
today at a record high of five million barrels of oil per day,
20 bcf natural gas per day. Based on current internal
forecasts, it will reach eight million barrels of oil per day
and over 35 bcf of natural gas per day around 2030.
Pioneer's providing its share of long-term growth at
approximately five percent per day and we expect to produce
over a million barrels of oil equivalent per day by 2030.
Why can't Pioneer and the industry grow faster? The
industry not only has to spend significant capital just to
offset existing production declines, but is experiencing severe
cost inflation, a labor shortage due to 3 downturns in 12
years, shortages of drilling rigs, frack fleets, frack sand,
steel pipe, and other equipment and materials and the need for
pipelines and LNG facilities. Given these constraints, it would
take 18 to 24 months to add any meaningful incremental
production.
Further, the capital available to our industry is severely
impaired with equity offerings, private equity, and bank
financings essentially non-existent in the industry today. We
face a future oil price curve that declines by more than $25
over the next 5 years.
In the face of Russia's destabilization, aggression, now is
the time to come together for another bipartisan effort to
protect America's energy security and to ensure that the U.S.
can continue to provide global leadership. We need more oil and
natural gas pipelines, LNG plants. At the same time, we need to
support adding nuclear power and other sources of alternative
energy that are made in America and not in China.
American energy security, whether from oil and gas or
alternative sources, is important to all of us and I do not
want my grandchildren to be dependent upon foreign energy
supplies, the way our country was for most of my life. That's
why I feel so strongly American focused, all-of-the-above
strategy is needed to maintain affordable energy and energy
security for the benefit of future generations of America.
Thank you.
[The prepared statement of Mr. Sheffield follows:]
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Ms. DeGette. I thank the gentleman.
Chair now recognizes Ms. Watkins for 5 minutes.
STATEMENT OF GRETCHEN H. WATKINS
Ms. Watkins. Chair DeGette, Ranking Member Griffith, and
members of the subcommittee, thank you for the opportunity to
be here today to discuss Shell's response to the invasion of
Ukraine, the global energy disruption caused by the invasion,
and our efforts to address rising energy costs in the United
States.
I lead Shell USA, the U.S. subsidiary of Shell PLC. Shell
strongly condemns the unprovoked attack on Ukraine and we have
acted swiftly in response. Shell announced that it would
withdraw from all Russian hydrocarbons, halt the spot purchases
of Russian crude and LNG, exit our equity partnerships in
Gazprom related joint ventures, and end our involvement in the
Nord Stream 2 pipeline.
The phased withdrawal from our downstream operations in
Russia is being planned with a priority on the safety of our
staff and operations and in line with relevant legal
obligations. We will continue to work with governments across
the world as they assess the incredibly difficult challenges
presented by responding to the war in Ukraine, while managing
the effects on global energy supplies.
The global energy disruption has highlighted the importance
and difficulty of moving toward a future in which global
economies are less dependent on fossil fuels. We believe
Shell's powering progress strategy continues to be the right
approach and we remain committed to helping society achieve its
goal of net zero emissions.
At Shell, we recognize that rising energy prices as a
result of building pressure on oil supply pose a significant
challenge for consumers and businesses. Shell is focused on
doing our part to ensure a reliable supply of energy products
and mitigate the disruptions caused by efforts to move away
from Russian hydrocarbons in the global marketplace.
Because oil is a global commodity, Shell does not set or
control the price of crude oil. Similarly, Shell does not set
or control the price that consumers pay. Indeed, it would be
illegal for Shell to do so because nearly all Shell branded
retail stations in the U.S. are owned by independent operators
who set their own prices in the marketplace.
Shell already had in progress actions that will allow us to
respond to the current crisis. In the Gulf of Mexico, we
recently started production from the PowerNap project at 20,000
barrels of oil a day, and just this morning, we have announced
first oil at another project in the Gulf which will provide an
additional 15,000 barrels a day. We also expect to bring online
new production from the Vito field by the end of this year.
Shell offers three thoughts regarding the challenges posed
by today's energy environment. First, we cannot depart from the
past toward diversification and lower carbon sources. We are
diversifying our own portfolio through several recent
developments, including our recent acquisition of solar and
energy storage provider Savion, substantial wind power
investments, including our recent $390 million investment in a
50-percent stake in an offshore block in the New York Bight,
and renewable natural gas ventures in Oregon, Idaho, and
Kansas.
Second, the government should continue to advance the
approval of and permitting of otherwise ready oil and gas
projects that would bring new supplies of oil and gas online
within weeks or months.
And third, the Interior Department should end its pause on
Federal oil and gas leasing, especially in the Gulf of Mexico,
which is among the lowest greenhouse gas intensive productions
in the world.
Even in the current crisis, Shell is unwavering in its
commitment to the energy transition. The market challenges
presented by the reduction of Russian oil and gas in the global
market presents an opening for policymakers to look for a
realistic pathway that would blunt the disruptive effects of
the ongoing crisis and accelerate the transition to a lower
carbon future.
Shell recognizes that recent events have led to volatile
gas prices that pose challenges for consumers. To address these
burdens, I view it as our obligation to continue to provide a
reliable and secure energy supply for Americans and consumers
around the world. From the Shell employees working offshore to
produce oil, to our staff workers in refineries that have been
working throughout the pandemic, to our employees planning and
building new offshore windfarms, we take this obligation very
seriously.
Shell will continue to invest in clean energies and we will
continue to work with our customers to help them decarbonize.
We are committed to helping society achieve a low carbon
future.
Thank you for the opportunity to be here today.
[The prepared statement of Ms. Watkins follows:]
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Ms. DeGette. Thank you very much.
General McMaster, you're now recognized for 5 minutes.
STATEMENT OF LTG H.R. McMASTER
Mr. McMaster. Chairwoman DeGette, Ranking Member Griffith,
and members of the subcommittee, it is a privilege to testify
before this committee a critical moment for our Nation and the
free world. I hope that my statement for the record is useful
to you and the important work that this committee is
undertaking to strengthen our Nation and promote peace and
prosperity.
I believe that this committee, this Congress, and the Biden
Administration have a historic opportunity to overcome the
interconnected economic and security challenges we face,
especially those at the nexus of energy security and national
security.
Because we have been complacent, and I think preoccupied
with our own traumas and divisions, we are behind in doing so.
We urgently need new policies and new legislation to catch up,
strengthen our Nation, and build a better future for
generations of Americans to come.
In my statement for the record, I argue for policies and
legislation aimed at achieving the goals of, first, reducing
the coercive power of authoritarian regimes over energy
supplies; second, integrating energy security and climate
policies; and third, removing bureaucratic and regulatory
obstacles to progress to meet burgeoning global energy needs.
With the brutal and unprovoked Russian assault on Ukraine,
our post-cold war holiday from history has come to an end. As
more of the horrors that the Ukrainian people are enduring
become apparent, it is also clear that the United States fell
behind in realizing its potential to improve global energy
security and reduce Vladimir Putin's ability to wage
indiscriminate warfare while constraining the world's response
through dependence on Russian energy supplies.
Let us be inspired by the courage and determination of the
Ukrainian people who are fighting for the freedoms we too often
take for granted. It is past time to work together across
political parties and between the government and industry to
unleash the power of American energy, to weaken the
authoritarian regimes, and strengthen the free world.
Thank you.
[The prepared statement of Mr. McMaster follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. DeGette. I thank the gentleman.
It's now time for members to have the opportunity to ask
the panel questions, and before I begin, once again, I want to
remind members to mute themselves while not speaking and also
the witnesses, even during your question time. This will
prevent feedback for witnesses and listeners at home.
Chair will now recognize herself for 5 minutes.
Many of the witnesses today testified that demand for
gasoline went down during the pandemic and therefore, supply
went down dramatically as well, too, and that's because the
majority of the price of gas, of course, is determined by the
price of crude oil. The reality is that gas prices are high
because crude oil prices are high, and the reason why crude oil
prices are so high is because there's less supply in the global
market.
Does everybody agree with that? And I'm going to go right
down the list and ask you yes or no.
Mr. Lawler?
Mr. Lawler. Yes, there's less crude oil supply.
Ms. DeGette. Thank you.
Mr. Wirth?
Mr. Wirth. Madan Chair, fuel prices are impacted by a
number of factors, crude oil being a very significant one.
Ms. DeGette. So you don't agree that crude oil prices are
high because there's less supply?
Mr. Wirth. Crude oil prices are high because there are
concerns about potential disruptions to future supply----
Ms. DeGette. OK. I don't have time. I'm sorry.
Mr. Muncrief? Mr. Muncrief?
Mr. Muncrief. Crude oil prices are higher because we have
had some supply constraints.
Ms. DeGette. Right, and because there's less supply, right?
It's a supply and demand issue; isn't that correct?
Mr. Muncrief. There has been less supply and there's also
concerns about----
Ms. DeGette. Thank you.
Mr. Muncrief [continuing]. Even further erosion in supply.
Ms. DeGette. Mr. Woods? Mr. Woods?
Mr. Woods. It's a combination of higher demand and lower
supply.
Ms. DeGette. Thank you. That's what I said.
Mr. Sheffield?
Mr. Sheffield. Lower supply and higher demand.
Ms. DeGette. Right.
Ms. Watkins?
Ms. Watkins. Generally, yes, Chairwoman.
Ms. DeGette. Thank you so much.
So one of the things that has confused me, as I said in my
opening statement and it's making people mad, is why are gas
prices still high even after crude oil prices came down? And
this is the chart. I don't know if you can see it, it--on Zoom,
but you can see how when price per barrel of oil went down, the
price per gallon of gas stayed the same. I don't get that.
So I want to ask you, Mr. Lawler, BP operates a number of
gas stations in the U.S. and internationally. So, Mr. Lawler,
can you explain--people are saying, well, we don't own the gas
stations, but actually, BP does.
Why is there such a disconnect between the drop in cost of
crude oil and the much slower drop in the price of gas at the
pump?
Mr. Lawler. Thank you, Congresswoman.
So just as a point of clarity, you know, BP has branded
stations here in the United States of around 7,500 or so and
only about ten percent of those stations do we operate and set
prices.
Ms. DeGette. OK. So maybe you can tell me why is there a
disconnect between the drop in cost of crude oil and that the
fact gas prices are staying the same.
Mr. Lawler. Yes, happy to do so.
So as shared earlier, it is----
Ms. DeGette. Very briefly. I have another question. Go
ahead.
Mr. Lawler. OK. Thank you.
Yes, it is a very complex set of factors that impact the
price of gasoline. So, for example, the price of oil that's
entering a refinery could've been purchased at a higher price,
and therefore, that price then flows through all the way to the
station. It's not necessarily an instantaneous market.
There's also quite a reflection of supply risk. So we
talked about, just a moment ago, that crude oil supplies are
down. That actually applies to all refined products, whether
that's jet, diesel, gasoline, and that supply risk is
impacting----
Ms. DeGette. So you're saying----
Mr. Lawler [continuing]. The global market.
Ms. DeGette [continuing]. You're saying that the price at
the pump may be higher because of jet fuel prices? Is that one
of the factors you're saying?
Mr. Lawler. What I'm saying is that all refined products at
this point carry a supply risk, which----
Ms. DeGette. OK.
Mr. Lawler [continuing]. Is part of the complex pricing
equation that impacts prices at the pump.
Ms. DeGette. OK.
Can any of the rest of you, in the 41 seconds I have left,
tell me if you have an idea why price per barrel of oil is
falling, but price at the pump is still staying just as high?
Anyone else?
Mr. Wirth. Congresswoman, I think President Biden did a
pretty good job explaining this last week during his comments
when he announced the intent to release oil from the Strategic
Reserve and he talked about the fact that across the supply
chain, as prices flow, oil and product prices are correlated
over time, but at the retail level, the costs that a retailer
has paid for fuel a week or two weeks prior and the cost that
they may need to pay to--all factor into the competition and
the pricing that you see at the pump.
And so these things do correlate over the long term, but in
the short term, they don't always move in tandem.
Ms. DeGette. Except for here, they did correlate. So the
President was talking about the relief he's going to give to
the American taxpayers and the American citizens at the pump.
The SPRO is a short-term solution to that, but the question I
wanted to ask you, and which I will ask you later so you can
think about it between now and then, is what concrete steps can
each of your companies take right now to reduce the price at
the pump for my constituents?
And with that, I'm going to yield 5 minutes to Mr.
Griffith.
Mr. Griffith. Thank you, Madam Chair.
My time is short, so I would ask that you answer yes or no.
Mr. Woods, is your company taking advantage of the crisis
in Ukraine to keep prices artificially high in order to
increase your own profits?
Mr. Woods. Absolutely not.
Mr. Griffith. Mr. Wirth----
Mr. Wirth. Yes, sir.
Mr. Griffith [continuing]. Is your company taking advantage
of the crisis in Ukraine to keep prices artificially high in
order to increase your own profits?
Mr. Wirth. No, we are not.
Mr. Griffith. Mr. Lawler, is your company taking advantage
of the crisis in Ukraine to keep prices artificially high in
order to increase your own profits?
Mr. Lawler. Absolutely not.
Mr. Griffith. Ms. Watkins, is your company taking advantage
of the crisis in Ukraine to keep prices artificially high in
order to increase your own profits?
Ms. Watkins. No, we are not.
Mr. Griffith. And you all recall that you're under oath. Do
any of you wish to change your answers?
Hearing none.
All right. The Bide Administration's Fiscal Year 2022
budget request listed the following as a key objective, not
funding work that directly subsidizes fossil fuels, including
work that lowers the cost of production, lowers the cost of
consumption or raises the revenues retained by producers of
fossil fuels.
Do statements like this facilitate more domestic
production, yes or no, Ms. Watkins?
Ms. Watkins. I don't know----
Mr. Griffith. Yes or no.
Ms. Watkins [continuing]. I don't know the answer to that.
I don't know the context within which that was stated.
Mr. Griffith. This was the President's budget objectives.
One of the top objectives of his budget was not to fund work
that directly subsidizes fossil fuels, including work that
lowers the cost of production, lowers the cost of consumption
or raises revenues retained by producers of fossil fuels.
Mr. Lawler, do statements like that facilitate more
domestic production? Yes or no.
Mr. Lawler. Well, I'm unfamiliar with those particular
comments, so I could not provide any----
Mr. Griffith. All right. So let me--so apparently everybody
wants to get into the weeds and hide behind words. The
President says he wants to make sure that we do not lower the
cost of production.
Is that going to make you produce more or less? Mr. Woods,
more or less?
Mr. Woods. I think the government has a role in encouraging
investment and creating a positive investment climate.
Mr. Griffith. And when we create a negative climate, you
produce less. Isn't that true? Yes or no.
Mr. Woods. There tends to be a chilling effect with
negative words.
Mr. Griffith. There you go. There you go.
Mr. Wirth, you want to weigh in on this and give me a real
answer? Yes or no, is that hurting production or does that
encourage you to produce when the President says, in his budget
document, not funding work that directly subsidizes fossil
fuels, including work that lowers the cost of production,
lowers the cost of consumption? That'd be the consumers that
Ms. DeGette's been complaining about having to pay these high
prices and they don't want to lower those prices.
And when you hear statements like that, do you increase
production? Yes or no.
Mr. Wirth. Congressman, mixed messages from the government
do not encourage us to make investments with confidence in
future supply.
Mr. Griffith. Well, and I appreciate you don't want to get
stuck with answers, but the bottom line is that's not a mixed
message. That's a clearly anti-fossil fuel message from the
President of the United States at a time when he claims he
wants increasing production.
All right. President Biden recently has begun to stress
short-term need to increase oil and natural gas output and
expedite LNG, liquid natural gas, project development, but in
his Fiscal Year 2023 budget request, it focuses almost entirely
on transitioning away from fossil fuels. It even proposes tax
hikes on oil and gas production.
The proposal alleges that oil, gas, and coal tax
preferences distort markets by encouraging more investment in
the fossil fuel sector than would occur under a neutral system.
The provision also alleges that this market distortion is
detrimental to long-term energy security and is inconsistent
with the Administration's policy of supporting a clean energy
economy.
Are those proposed tax hikes--are these proposed tax hikes
on the oil and gas industry an incentive to explore and develop
more domestic production?
What say you, Mr. Sheffield?
Mr. Sheffield. Less production.
Mr. Griffith. Mr. Muncrief----
Mr. Muncrief. Less production.
Mr. Griffith [continuing]. More or less production?
Mr. Muncrief. Less production.
Mr. Griffith. All right. Thank you.
General McMaster, in your written testimony, you talk about
America's role in defeating the tyranny in World War II,
providing more--the U.S. provided more than 85 percent of the
allies oil use.
What do you see as America's trajectory today as global
leader helping to meet the rising demand for oil? And you have
5 seconds.
Mr. McMaster. The trajectory is negative. We need to
reserve it immediately. There--we should not be beholden to an
authoritarian powers for energy supply, and if we have the
right investments, we can make up for the gap in supply now
that we're all paying for.
Thank you.
Mr. Griffith. Thank you.
I yield back.
Ms. DeGette. Thank the gentleman.
Chair now recognizes the chairman of the full committee,
Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you, Chairwoman DeGette.
Let me say I appreciate the executives being here today and
particularly your willingness to move toward renewables. Every
one of you, I believe, stressed that you are moving toward
renewables, which, of course, is the real answer in the long
run, but for now, I do want to point out--I heard Mr. Griffith
say in his opening that you all, you know, were dealing with
the Ukraine crisis. But the reality is that during this crisis,
you've had record profits and stock buybacks, and the American
people want to know why they're paying such high prices at the
pump and giving your industry lavish tax breaks while your
profits are being turned over to shareholders.
So, first, I'd like to ask each of our witnesses here today
to please State your net profit from last year, that's 2021,
but it's a matter of public record. So if you don't tell me,
I'm going to tell you quickly.
So let me start with Mr. Woods. What was Exxon's net profit
last year?
Mr. Woods. $23 billion after a loss of $22 billion in 2020.
Mr. Pallone. Thank you. And I just saw the announcement on
Monday that Exxon's profits for only the first quarter of 2022
could be as high as $9 billion. That's incredible.
Mr. Lawler, what was BP's net profit last year?
Mr. Lawler. It was approximately $7.6 billion after a 2020
loss of $20 billion.
Mr. Pallone. All right.
And, Mr. Wirth, Chevron's 2021 net profit?
Mr. Wirth. 2021 was $15.6 billion after a loss of $5.5
billion the prior year.
Mr. Pallone. And Mr. (sic) Watkins, Shell's net profit,
2021?
Ms. Watkins. Yes. Shell's earnings last year were about $19
billion.
Mr. Pallone. Thank you, Ms. Watkins.
And, Mr. Muncrief, Devon's net profits in 2021?
Mr. Muncrief. $2.8 billion.
Mr. Pallone. Thank you.
Mr. Sheffield, Pioneer's net profit in 2021?
Mr. Sheffield. It's $2.1 billion after the largest loss in
the company's history before.
Mr. Pallone. Thank you.
Now, that's almost $77 billion in profit just from the six
companies testifying before us today, and there's nothing wrong
with making an honest profit, but as gas prices have soared,
your companies have funneled record profits back to
shareholders. In fact, for 2021 and 2022, the six companies
here today have collectively executed or announced
approximately $45 billion in share repurchase programs, in
addition to the almost $40 billion in dividends you issued to
shareholders last year.
Now, that's a lot of money to shareholders, but it's coming
at the expense of the American people who need you to
dramatically increase production, not shareholder wealth.
So it was mentioned that President Biden recently took the
step of ordering a massive release from the SPRO to increase
fuel supplies by up to a million barrels a day, but that can't
go on forever, nor should it.
For the American people to have relief from high gas
prices, your companies need to do their part and increase
production to meet demand and some of you said you are going to
do that. I heard the president of Exxon particularly say that,
but what I want to know is will you commit--and this is going
to be yes or no of each of you.
Will you commit to doing whatever it takes, including
increasing production, but also reducing dividends and buybacks
in order to lower prices for struggling American consumers? Yes
or no.
We'll start with Mr. Woods.
Mr. Woods. We are increasing our production, as I said in
our prepared remarks. The investments that we've made since
2017----
Mr. Pallone. Well, I need a yes or no.
Mr. Woods [continuing]. Laid the foundation----
Mr. Pallone. So is the answer yes or no, Mr. Woods. Yes or
no?
Mr. Woods. We will increase our production, yes.
Mr. Pallone. But you're not going to--that means you're not
going to reduce dividends and buybacks. Well, that's
unfortunate because we need you to do that as well.
Mr. Wirth, yes or no?
Mr. Wirth. Mr. Chairman, we're investing 60 percent more
capital this year than we did last year.
Mr. Pallone. I guess it--I guess the answer is no, you're
not willing to do--increase production and reduce dividends and
buybacks.
Mr. Wirth. Mr. Chairman, we can increase production and
return value to our----
Mr. Pallone. OK. I'm going to take that as a no.
Mr. Lawler, yes or no?
Mr. Lawler. Yes. I can't commit--I can't commit to a
reduction in buybacks and dividends----
Mr. Pallone. All right. I hear you.
Mr.--Ms. Watkins? Ms. Watkins?
Ms. Watkins. We think we can return value to our
shareholders, as well as increase production, as well as invest
for the future in renewables, low and no-carbon fuels for our
customers. We will be doing all of that.
Mr. Pallone. All right. That sounds like a yes.
Mr. Sheffield?
Mr. Sheffield. We are increasing production and the answer
is no on dividends.
Mr. Pallone. All right. That's an honest answer.
Mr. Muncrief?
Mr. Muncrief. Yes, we'll see production increases over time
and the answer is no on dividends and share repurchases.
Mr. Pallone. Well, I appreciate that. Now, of course,
we're--it's unfortunate that many of you are saying you're not
going to address the increased buybacks and more dividends to
your shareholders because I think that should be part of what
you do, but in any case, I appreciate your responses.
Thank you, Madam Chair.
Ms. DeGette. I thank the gentleman.
Chair now recognizes Mrs. Rodgers for 5 minutes.
Mrs. Rodgers. Thank you, Madam Chair.
I'd like to focus on energy security. The No. 1 thing that
we can do to lower gasoline prices is increase domestic
production of oil. It's really that simple. Unfortunately, the
Biden Administration has done the opposite and declared war on
American energy.
Under President Biden's leadership, American oil production
has declined by 1.5 million barrels per day. Permits for
pipelines and other important energy infrastructure has been
delayed or revoked outright. And the Administration is
pressuring banks to stop lending for fossil fuel projects. As a
result, gas prices are the most expensive in U.S. history.
General McMaster, can you explain why American energy is
vital in the competition between the free world and
authoritarian powers like Russia and China?
Mr. McMaster. Thank you.
It's absolutely vital because really what Russia endeavored
to do was to gain coercive power over the global economy and
over Europe's economy in particular, and we all witnessed how
they've used that coercive power over many, many years, not
just in connection with the renewed invasion of Ukraine, which
began in February.
The only way to break that grip on the global economy and
the course of power over Europe's economy, Germany's economy in
particular, is with alternative sources, and what's sad about
it is that we have it within our power to make up for that
production and to break Russia's and other authoritarian
regimes' coercive power over the energy market.
So this is one of the--a tremendous opportunity, I think,
to advance the interests----
Mrs. Rodgers. Thank you.
Mr. McMaster [continuing]. Of the United States and the
free world.
Mrs. Rodgers. Thank you.
What signal does it send to our allies when the Biden
Administration says no to a pipeline from Canada and yes to oil
from OPEC, Russia, Iran, and Venezuela?
Mr. McMaster. Well, I'll tell you it really makes no sense
at all. It doesn't pass the common sense test to cancel a
Canadian pipeline and green light a Russian one. And then, of
course, it doesn't make any sense either to put all these
obstacles in place for permitting and that would allow us to
increase our production and our exports and then to supplicate
to the Venezuelans and the Iranians to get them to increase
their production and exports.
So I think it is past time for us to do what makes sense,
and of course, this is consistent as well with the effort on
climate and C02 reductions because our production--
our export is greener, and of course, without our supplies,
what's happening is the world is ramping up coal consumption
and coal burning, which is the worst thing for the environment.
So it's time to----
Mrs. Rodgers. Yes.
Mr. McMaster [continuing]. Our policies, increase U.S.
production, and increase U.S. exports.
Mrs. Rodgers. Thank you. Thank you, General McMaster.
I'm concerned that part of the reason gasoline prices are
so high is because the democrats ultimately are opposed to
domestic drilling and hydraulic fracturing. They would rather
let OPEC, Russia, Iran, and Venezuela produce the energy to
meet our needs.
Is it true that Russia promoted and funded anti-fracking
propaganda in Europe and the United States?
Mr. McMaster. Absolutely. The evidence is overwhelming. In
fact, there have been hearings on this--back in 2014 in the
House that pulled the curtain back on quite a bit of it, and
there's been some very good investigative journalism as well.
And this is Russia's effort to portray fracking as unsafe and
to do so, so they can keep their coercive power over the global
energy market and on Europe in particular.
And, of course, this is a huge missed opportunity for the
world because the largest ever reduction of manmade
C02 emissions ever was associated with the
availability of cheap natural gas here in the United States,
which was, of course, connected to shale oil and fracking. So
we're denying ourselves----
Mrs. Rodgers. Yes.
Mr. McMaster [continuing]. A tremendous opportunity from a
security perspective, but also from a climate and
C02 emissions reduction perspective.
Mrs. Rodgers. Thank you.
Is it true that Russia has worked to discourage American
exports and strengthen its grip on Europe's energy supplies
with pipelines like Nord Stream 2?
Mr. McMaster. Absolutely. And this is a story of rampant
corruption. I mean, look at Gerald Schroeder, at the former
chancellor, who received huge payoffs from the Russia oil
industry to begin Nord Stream 1. And then, of course, the--you
know, the continued corruption to try to coopt politicians
within Europe and within Germany to get Nord Stream 2 through.
So this is--this is a corrupt enterprise. It's part--
Russia's oil enterprise is part of their international criminal
enterprise and we have to recognize that the best way to
counter that is with alternative sources of supply and
especially American/North American supply. I would include
Canada in that as well and Mexico.
Mrs. Rodgers. Thank you. I really--I appreciate you being
here, your leadership, and your insights.
I yield back, Madam Chair.
Ms. DeGette. Chair now recognizes Ms. Kuster for 5 minutes.
Ms. Kuster. Thank you, Chairwoman DeGette, for hosting this
important hearing today.
The recent rise in gas prices has once again made it
abundantly clear that our Nation's dependence on oil is
unsustainable both in the short term and in the long term. The
American people are reminded of this each and every time they
fill up at the pump.
In New Hampshire, granite staters are paying even more than
the national average of $4.23 per gallon, and yet, while
consumers are being pinched at the pump, oil companies have
been raking in profits and pushing for policies that will only
make our country more dependent upon oil. It's long past time
we promote long-term American energy independence through
investments in clean and renewable energy production to
insulate our economy and our consumers from these short-term
crises.
This gas price rollercoaster might be great for your
companies' bottom lines, but it's hurting the American people's
pocketbooks. To the six oil companies before us today, you made
more than $75 billion combined in profits just last year, and
it looks as though with your first quarter, you're on path for
record profits again.
Now, to address your comments earlier, we understand you
did lose money during the pandemic. Most Americans did.
Everyone had a tough 2020, including businesses and the 60,000
workers that the oil industry laid off last year, but the facts
are that oil majors testifying here today still returned
billions of dollars to your shareholders in 2020, at the same
time that you were laying off your workforce.
So, please, don't use 2020 as an excuse for gouging the
American people today. In fact, other than in 2020, all four of
the oil majors testifying today made billions of dollars every
year between 2017 and 2021. So one bad year does not excuse the
practice of ripping off American consumers.
Now, I'd like to focus in on the four oil majors testifying
today to identify how much money your company spent in 2021 on
stock buybacks and dividends and how much your companies plan
to spend during this year of record profits on the clean energy
investments that several of you mentioned during your
testimony, and just the numbers will do. You know that our time
is short.
Mr. Woods, how much money did Exxon spend on stock buybacks
and dividends in 2021 and how much do you plan to spend on 2022
on low-carbon technologies?
Mr. Woods. We did not buy back any stock in 2021. Our
dividends were roughly $15 billion. Half of our stock are owned
by average American families. It was an important income stream
for them in the depths of the pandemic and during the recovery,
and so we were committed----
Ms. Kuster. So would you be surprised that the public
record shows $14.9 billion in stock buybacks and dividends?
Would that number surprise you?
Mr. Woods. That is the $15 billion in dividends that I
mentioned----
Ms. Kuster. I thought you just----
Mr. Woods [continuing]. With no buybacks.
Ms. Kuster [continuing]. Told that you would not spend any.
Mr. Woods. On buybacks. We had no buybacks. We had $15
billion in dividends, which goes to----
Ms. Kuster. $15 billion in dividends. And how much on low-
carbon investments?
Mr. Woods. We're ramping our low-carbon solutions business
and have a commitment of $15 billion through 2025 to invest
in----
Ms. Kuster. And how much last year when you were----
Mr. Woods [continuing]. Technologies that will boost
emissions.
Ms. Kuster [continuing]. Paying the $15 in dividend--$15
billion in dividends?
Mr. Woods. I think it's important to recognize that
dividends that we pay are----
Ms. Kuster. Would the number----
Mr. Woods [continuing]. Critical income to people and
during those difficult economic times, our dividends were
relied on----
Ms. Kuster. Right. I'm just trying to compare.
Mr. Woods [continuing]. For income.
Ms. Kuster. I understand that, but $15 billion in stock
dividends and $2.5 billion in low-carbon investments. Does that
sound about right?
Mr. Woods. That sounds about right. We recognize we are
growing our----
Ms. Kuster. OK. Mr. Wirth----
Mr. Woods [continuing]. Low-carbon solutions business.
Ms. Kuster [continuing]. The same question for you on
Chevron. How much in stock buybacks or dividends and how much
in low-carbon investments?
Mr. Wirth. Congressman (sic), in 2021, we paid out roughly
$10 billion in dividends. We bought back around $1.4 billion in
stock. And this year, we expect to spend between $4 and $5
billion on low-carbon energy.
Ms. Kuster. Thank you, Mr. Wirth.
Mr. Lawler, how much did you spend in stock buybacks and
dividends and how much in low-carbon investments?
Mr. Lawler. Yes, Congresswoman. We spent about $4.5 billion
in dividends and about $4.1 billion on buybacks. We spent
several billion dollars on low-carbon energy, ramping to $3 to
$4 billion by 2025, and then we will be at $5 billion----
Ms. Kuster. OK. Ms. Watkins at Shell, my time is almost up.
How much in stock buybacks and dividends and how much in low-
carbon investments?
Ms. Watkins. In 2021, we spent about $6.3 billion on
dividends and about $2.8 billion on share buybacks, and we--on
our renewable energy, we spent about $2 to $3 billion last year
and even more on low-carbon fuels and investments in low-carbon
fuels.
Ms. Kuster. OK. My time is up and I yield back.
Ms. DeGette. I thank the gentlelady.
Mr. Burgess, you're now recognized for 5 minutes.
Mr. Burgess. And I think the Chair. I thank our witnesses
for being here. I do wish you were here in person, but,
unfortunately, we don't do things that way anymore.
Mr. Woods, I just have to ask you who are the shareholders?
Are any part of those shareholders retired teachers in Texas
whose pension plans may invest in your stock?
Mr. Woods. Absolutely. A very large proportion of the
people who own our stock look for our dividends as a source of
income. One of the reasons why we walked such a fine line in
2020 during the pandemic was to maintain those dividends,
recognizing the important role they play in retirees and the
average American family.
Mr. Burgess. And I think that needs to be underscored. I
suspect the same is true for almost every one of our witnesses
here today.
I--to encourage production, and my thesis is that the
Federal regulatory burden has increased over the last 15
months, we saw what regulatory reduction did in the previous
administration and led us to a situation where really we were
energy independent. We were energy dominant in the world.
So on that thesis of lowering regulations and increasing
the performance of the Federal agencies that are supposed to
provide you with the permits to drill, I'm concerned because at
the Federal agency level, we've got a ton of people who haven't
yet returned to work. They're still working from home and I
can't help but feel that that impacts your ability to get an
answer from a Federal agency in a timely fashion.
So for that reason, I introduced a bill that will withhold
any future unallocated COVID funding from the Department of
Interior until they return to work to address your permitting
problems.
I've also introduced a bill that would immediately restart
all oil and gas leasing permitting on Federal land and prohibit
the President from delaying the issuance of future oil and gas
leases, permits approvals or authorizations on Federal land
authorization.
This Administration needs to get back to work and they need
to rescind their anti-energy executive orders and ramp up
production here in America. We cannot forget in September 2019,
in an unguarded moment, then former Vice President Joe Biden
promised a young voter, ``I guarantee you, I guarantee you we
will end fossil fuels.''
So, Mr. Woods, let me ask you, the Biden Administration has
claimed that the oil and gas industry is sitting on more than
12 million acres of non-producing Federal land, with 9,000
unused but already approved permits for production. So can we
go through this?
Just talk to us a little bit about how you obtain a Federal
lease.
Mr. Woods. I would tell you today, Congressman, we have
about 2,000 leases on Federal lands and all but about one
percent those are producing oil or gas.
Mr. Burgess. So after you get approved for a Federal lease,
can you immediately start to drill?
Mr. Woods. It is a fairly complicated process that requires
understanding, one, what's on the lease, developing plans to
produce that, the discoveries that you have on the lease,
putting gathering systems in, getting permits for that,
infrastructure to move product oil. So it is a fairly complex,
interdependent system of permits and investments across from
the drill well all the way to the market.
It's a fairly complicated and long process, particularly
with delays in the regulatory process.
Mr. Burgess. Yes, and I appreciate that. And, you know, it
almost seems like the Administration is being disingenuous when
they accuse you of not performing on these leases. It is a
complex and complicated process precisely because we make it a
complex and complicated process.
Let me just ask you again, Mr. Woods, do you think Congress
could play a role in providing greater clarification of
Department of Interior's leasing and permitting procedures to
avoid potential litigation?
Mr. Woods. I think increased clarity, increased certainty,
increased predictability, more efficient and effective
permitting processes and regulatory processes would benefit the
industry significantly.
Mr. Burgess. Thank you. And I've got a ton more questions
I'm going to submit to all of you for the record, but, Mr.
McMaster, let me just ask you we've seen now the releases from
the Strategic Petroleum Reserve in a non-emergent situation. We
hear over and over again that energy security is national
security.
Are we putting our national security at risk with these
releases from the SPR?
Mr. McMaster. I don't know what the extent of the risk is,
but if there is risk associated with it, I think it's going to
be important to replenish those reserves at some point,
hopefully when prices are lower, but I do think that this is
obviously a short-term measure for what is really a long-term
what I would characterize as an opportunity to increase U.S.
production in a way that satisfies the global market and again,
reduces the--power of authoritarian regimes.
Thank you.
Mr. Burgess. Thank you. And thank you for your testimony
today. Thank you for your written testimony.
Ms. DeGette. Chair now recognizes Miss Rice for 5 minutes.
Miss Rice. Thank you, Madam Chairwoman.
And I'd just like to make note of the reference that--the
reference that was made before to the credibility of Russian
propaganda when it comes to energy issues. I just wish that
more of my colleagues could give that same credibility to
Russian propaganda when it comes to impacting our elections and
the future of our democracy, and hopefully, we--more of them
will go in that direction.
Mr. McMaster, I would like to direct my questions to you.
We've all talked about Putin's unprovoked invasion of Ukraine
and how it has sent global markets into disarray, caused
unspeakable tragedy for the citizens of Ukraine. Gas prices
have spiked partly in response to this latest global crisis,
but we have been here before during the Arab oil embargo, the
Iranian Revolution, the Gulf War, the Iraq war, and on and on.
So long as we remain dependent on oil to meet our huge
domestic needs, countries like Russia and Saudi Arabia are
going to continue to have leverage over us and our allies. We
have to transition to cleaner energy here at home and away from
our reliance on fossil fuels.
General McMaster, could you speak to the importance of
ending U.S. reliance on fossil fuels, particularly foreign oil
imports, as a matter of national energy security?
Mr. McMaster. Congresswoman Rice, thank you so much for the
opportunity to be with all of you.
And to answer that question, of course I think it's
immensely important to reduce the course of power of hostile
regimes over us in the area of fossil fuels, but also in
connection with all energy sources. One of my concerns is that
in our race to renewables, which we have to do with
undiminished vigor, we risk actually transitioning from
dependence on oil in the Middle East in the 1970's or on
Russian oil, as we're seeing today, on supply chains that are
captured by the Chinese in connection with renewables.
So when we put into place a sensible energy policy, I think
it involves increasing U.S. production, increasing U.S.
exports, and then also making our supply chains much more
resilient, especially those in connection with wind and solar
and all of the upstream components and minerals that go into
that
Miss Rice [continuing]. General McMaster, and in fact, the
Department of Defense, just for example, has recognized the
security implications of relying so much on petroleum and has
invested heavily, as you know, in biofuels and renewables for
military purposes, military purposes.
Can you explain why--and I say you because of your past
experience. Can you explain why the U.S. military has looked
for ways to reduce its reliance on products derived from crude
oil and increase the potential for alternative fuel sources?
Mr. McMaster. Well, I think the military criteria has to
always be military effectiveness and so what's important, I
think, is to ensure that as you can see with the failed Russian
offensive, that logistically, you can sustain forces, and
what's critical for energy for the military is to ensure
freedom of movement and action at the end of extended and
contested supply lines in obscure environments, and so that
should be a range of energy capabilities, including, I should
say----
Miss Rice. But do you agree with the Department of
Defense----
Mr. McMaster [continuing]. Batteries, which, of course, is
another vulnerable supply chain, Congresswoman.
Miss Rice. Yes, but you agree with the Department of
Defense going in that direction, don't you?
Mr. McMaster. If it increases freedom of movement and
action. It shouldn't be done----
Miss Rice. OK. So in your----
Mr. McMaster [continuing]. It shouldn't be done for any
other purpose, I don't think, than military effectiveness.
Miss Rice. I--well, I would agree with you and I thank you
for pointing that out.
In your testimony, you talk about the need to develop our
domestic manufacturing capacity for renewable energy hardware
and equipment, as you were just talking about. You State that
it is vital to act on the Biden Administration's 100-day supply
chain review report and onshore renewables manufacturing. I
agree with you and that's why I supported the bipartisan
infrastructure law and that is why President Biden invoked the
Defense Production Act, to encourage domestic production of
battery materials.
Thanks to the Biden Administration, we'll also soon break
ground on wind farms off the coast of Long Island, and you
mentioned that before. That will power as many as two million
homes.
Can you expand on the importance of onshoring renewables
manufacturing so projects like these can be built with American
technology and labor?
Mr. McMaster. Congresswoman, it's--it is so important to do
this because China is in a race to get a lock on these critical
supply chains. Everything from the rare earths and other
minerals that go into the manufacturing process, as well as the
separation from ore and the refinement of those materials.
We don't have the capacity anymore in the United States.
The one U.S. mining company for rare earths is 10 percent owned
by the Chinese. How can that make any sense? So we are really
very far behind in securing the upstream components to
renewable energy, as well as the manufacturing, as you've
mentioned, and that's going to take, I think, an element of
economic statecraft, significant investment because, as I
mentioned in my statement for the record, we've just been
complacent for too long and we risk again trading energy
dependence on one form for energy dependence of a new form and
doing it to the Chinese Communist Party.
Miss Rice. General, thank you so much, and thank you to all
the witnesses and I yield back.
Ms. DeGette. I thank the gentlelady.
Chair now recognizes Mr. McKinley for 5 minutes.
Mr. McKinley. Thank you, Madam Chairman.
Surely this committee recognizes that the gas prices are
set at the global market and are markedly influenced by
domestic regulations. So let's just take a step back.
According to the Energy Information Administration, gas
prices historically tend to increase dramatically under
democrat presidents imposing more regulations and have even
decreased under republican presidents. Gas prices have--
actually dropped 52 percent under President Reagan.
So since our goal is to lower gas prices at the pump for
Americans, we must stop overregulating. Listen to what the
panelists have been saying to us all day today. To reduce
prices, we must allow increased to production and supply.
So, Madam Chairman, high gas prices seem to be responding
to the increased regulations that have been imposed. The
Administration--this Administration has already been waging its
own war on fossil fuels by issuing a Federal leasing
moratorium, slowing down the permitting process. Companies have
sought 22,000 permits for drilling, but only 9,000 have been
approved.
They're weaponizing the Federal Reserve and the SEC and
they're canceling the Keystone Pipeline and threatening others,
like Line 5, the Atlantic Coast Pipeline, Dakota Access
Pipeline, the Mountain Valley Pipeline. No wonder the market is
nervous and prices have increased.
Remember, our goal is to lower gas prices at the pump for
Americans. Increasing regulations will have--will produce the
opposite effect.
So, Mr. McMaster, yesterday, The Wall Street Journal
reported that the Biden Administration is seeking to increase
oil imports from Canada. Really? Didn't he just cancel the
permit for the Keystone Pipeline that imported 830,000 barrels
of crude oil per day from Canada? And Canada's network of
pipeline are already running at full capacity. So we'll have to
import by rail, which, according to analysts, is more
expensive.
So my question to you, Mr. McMaster, will energy prices go
down if we rely on rail to transport crude oil?
Mr. McMaster. Congressman, I'm not an economist. I'm a
washed up general, you know, but I would say that I think that
they would go up, you know, of course, and what--I think this
is just one example of the irrationality of energy policy and
this is what I mean by the need to integrate energy policy with
national security policy and with climate policy.
Of course it is much more ecologically friendly to
transport that oil and gas through a pipeline rather than
through rail and trucks and so forth. So this is just one of
many, many examples in which energy policies and decisions run
counter to what our overall goals and objectives are.
Mr. McKinley. General, if I could ask--I've got two more
quick questions to you.
One is the Atlantic Coast and the Mountain Valley Pipelines
were--if they had been completed, would that have made energy
costs in America more likely to have decreased?
Mr. McMaster. Yes, to--and also--and also just----
Mr. McKinley. Thank you.
Mr. McMaster [continuing]. And made the supply much more
secure and accessible.
Mr. McKinley. OK. And then the third question, in your
testimony, you said that it makes no sense to cancel the
Keystone XL while greenlighting Nord Stream 2.
Could you explain a little bit more on that?
Mr. McMaster. Well, what happened is, you know, we denied
Canada access to our market and of course, what's Canada going
to do? They're going to have to sell oil elsewhere, maybe to
China, for example, which would give China maybe more power
over Canada's economy.
And then, of course, we enabled the coercive power of the
Kremlin over Germany, which is, you know, importing 51 percent
of its gas and 41 percent of its oil from Russia. This is why
the European Union will not impose a hydrocarbon embargo on
Russia, even as they're committing mass murder of innocent
people in Ukraine.
So it was an extremely poor decision that ran counter to
our national security interests, and again, this is why energy
security and national security policies must be integrated and
compatible with one another.
Mr. McKinley. Thank you, Madam Chair. I think it was an
excellent panel and I think we've got quite a bit of good
information to work with. So thank you.
I yield back.
Ms. DeGette. I thank the gentleman.
Chair now recognizes Ms. Schakowsky for 5 minutes.
Ms. Schakowsky. Thank you, Madam Chair.
You know, the vast number of American people believe that
the main reason for their increase in prices at the pump, not
the only reason, but the main reason is, in fact, price
gouging. You know, during World War II, Congress held war
profiteers accountable, and I want to tell you, the recent
poll, three weeks ago, that there is overwhelming support, 80
percent of Americans, for a windfall profits tax.
And I want to tell you that I am planning to upgrade my
COVID Price Gouging Prevention Act to make sure that it extends
beyond the COVID crisis because we cannot tolerate, in any
industry, price gouging.
I wanted to ask you, Mr.--or just to mention, Mr.--to you,
Mr. Lawler, that your global CEO, Bernard Looney, recently
stated, and I quote, that, ``BP is literally,'' he says,
``literally a cash machine when oil prices are at this level.''
And so I do want to ask you this, Mr. Lawler. Do you think
that BP should be receiving any tax payments from the American
people as long as the company is making such great profits
right now? I know that you are projecting that there is going
to be a big profit in the first quarter.
Mr. Lawler. Thank you. Yes, appreciate the question.
I think if you look at the whole context of those comments,
what we were really focused on with those comments is that at
these prices, it will be very helpful for the energy
transition. So as we've talked about, it is very expensive to
not only bring on resilient hydrocarbons, but the massive
investment that's going to be needed to effectuate the energy
transition cannot be understated, and I'll just give you a
couple of quick examples.
So in the Gulf of Mexico, I had mentioned in my opening
statement, we're installing this platform called Argos. That
costs $9 billion and it's been in motion for years----
Ms. Schakowsky. No, I appreciate--I appreciate that. I have
a short time, but some of the tax breaks that you get are
uniquely to help you to do oil exploration and I don't think
that taxpayers ought to continue to pay that, especially as
much as 96 percent of subsidies for new oil wells go toward
profits when the prices are so high.
I wanted to ask Mr. Wood (sic) reports indicate that your
company, Exxon--that Exxon could see a first quarter profit of
about $9 billion. Do you think that it makes sense for your
company to receive Federal subsidies while you are seeing such
high profits?
Mr. Woods. So I would put our first quarter profit in the
context of a much longer time horizon, which is the time
horizon that we make investments over, and if you look across
the industry as a whole, in our company specifically, across
that time horizon, the return that we generate for the--that we
have to invest is fairly average versus the rest of industry.
We have the cycle highs and the cycle lows and it's important
to look across those.
As I mentioned, in 2020, our company lost $22 billion, and
so we rode through that, continuing to make investments. In
that year we lost $22 billion, we made $20 billion of capital
investments to make sure that----
Ms. Schakowsky. If I could just because I have such a short
time, you know, lots of companies, especially during the
pandemic, lost money, but we do, as American taxpayers, pay
subsidies to the oil and gas industry and in some cases, the
kinds of tax breaks that really are not available to other
corporations.
Do you think that you should be treated separately and get
the kind of tax breaks that you're getting now even when the
profits are high?
Mr. Woods. I think and what we advocate for is a level
playing field. We're a global industry, a global business that
competes globally, and having a tax regime that is competitive
with international competitors is important, but a level
playing field is our approach and what we advocate for. We
don't look for special carveouts, a level playing field.
Ms. Schakowsky. OK. But you get special carveouts.
And I'll yield back.
Ms. DeGette. Chair now recognizes Mr. Long for 5 minutes.
Mr. Long. Thank you, Madam Chair.
And I have a question for the Chairwoman, a question. Were
the--I know the other day we had a--had witnesses here at the
table for another hearing in here and then one of my colleagues
said that we don't do things that way anymore. Were the
witnesses invited today or told to stay away?
Ms. DeGette. So, in fact----
Mr. Long. Was that their decision to not be here or was
that our decision?
Ms. DeGette [continuing]. In fact, Mr. Long, I encouraged
the witnesses to come in person. I wanted them here in person.
They opted--the witnesses opted themselves to testify remotely.
That was their decision.
Mr. Long. Was that a group--I mean, did each one of them
decide individually not to be here?
Ms. DeGette. That is my understanding. I wanted them here--
--
Mr. Long. OK. If any of you disagree with that, let me
know, but I would----
Ms. DeGette. Well, you know what, you can ask the
witnesses.
Mr. Long. That's what--I am. I'm trying to. Yes, I'm sorry.
Ms. DeGette. Ask them.
Mr. Long. Yes, but--yes, if you want to----
Ms. DeGette. Because I wish they would have been right
here.
Mr. Long [continuing]. Chime in on that, why you are not
here because, you know, an empty--I always like to look people
in the eye. I mean, it's kind of tough to do it through a
computer or screen or whatever we call that thing up there on
the wall.
So--but, anyway, Mr. Sheffield, am I given to understand
that the oil markets move in anticipation of future events, not
events today, but anticipation of future events?
Mr. Sheffield. Yes. It's all based on the world's supply,
demand, and also predictions of what may happen in the future.
That's correct.
Mr. Long. Because--OK. Thank you. Because I remember very
well that President Biden campaigned on the fact that he was
going to pretty much decimate energy production in this country
and this committee right here that we're in today, Energy and
Commerce, a few years ago, I was on the Energy Subcommittee and
we worked long and hard to get LNG to where we could export
LNG. We had to change the law to be able to do that and we did
that very successfully for a while.
So it goes back to the old saying who are you kidding when
you're kidding yourself. When you're sitting here talking about
price gouging and things like that and we have a President of
the United States that campaigned on the fact that he was going
to do everything he could to decimate energy production in this
country. It--I'm from Missouri. You got to show me, and this
hearing today doesn't make a lot of sense to me.
Mr. Sheffield, I'll go with another question for you. I'm
mindful of the impact that higher gas prices have on Americans.
Policies that hinder growth in the energy industry certainly
impact prices. Americans pay for that energy to run everything,
small businesses, heat their homes, fill their gas tanks, and
that means less money to pay for groceries and other
essentials, which, oh by the way, are up quite a bit. Tires are
up 30 to 40 percent, if you need a set of tires today.
Under the Biden Administration, inflation has hit the
highest point in 40 years. Unfortunately, experts suggest it's
only going to get worse, no matter how much President Biden
tries to pass the blame. A key component of the Consumer Price
Index is gas prices, which have been rising since day one of
the Biden Administration, and actually, that's not true. They
started rising on November 3d of 4th, the day--I think November
3 was the day he got elected and in anticipation, like I
mentioned earlier, of future events, knowing he was going to be
President, knowing he'd campaigned on killing energy production
in this country, they went up the next day and the next week,
they were up, like, if I remember right, like 20 percent on
crude.
A key component of Consumer Price Index is gas prices,
which have risen since day one of the Biden Administration,
like I said. I read that twice in case you didn't get it the
first time.
Oil is priced on future markets and future for American oil
and gas development. It doesn't look so bright under the Biden
energy agenda.
Can you elaborate on how inflation affects your industry,
Mr. Sheffield?
Mr. Sheffield. Yes. We are seeing severe inflation,
primarily due to the pandemic. We're seeing severe supply
constraints, and I testified already in my testimony that we're
lacking a lot of equipment, and the reasons why we can't grow
faster is we're lacking rigs. We're lacking fracking fleets.
When you go through three downturns, we can't bring people
back to the Permian Basin. Who wants to come back and work
in the oil and gas industry? We just can't get people back.
So we are seeing severe inflation. It's up significantly
and we'll continue to see severe inflation over the next
several years.
Mr. Long. OK. And I got a quick question for General
McMaster. What steps should we be taking to increase energy
production here in the United States to lower energy costs and
make us once again energy independent, as we were on January
20th until 11:59 in the morning of 2021?
Mr. McMaster. I think streamlining the permitting process
and then--and removing bureaucratic obstacles. I think that is
the No. 1 impediment, and I'd like to hear from the other
members, I think, who could speak more authoritatively about
this, but I am aware of a number of actions, for example, that
are just sitting at the Department of Energy with all of the
environmental impact work done and are just awaiting
signatures.
So I think it's important to remove rather put more
obstacles in place, which has been the tendency, to be able to
tap into the tremendous power associated with American energy.
Mr. Long. OK. Thank you. And thank you all for not being
here today, I think. I think that's what I mean.
I yield back.
Ms. DeGette. Thank you. Mr. Long, just for your
information, in the interim, I checked with staff and, in fact,
all of the witnesses for today were invited to appear in
person, but they all opted--it was their decision not to come
in person today----
Mr. Long. Thank you for inviting them and I'm very, very
sorry they made that decision.
Ms. DeGette. I am too.
Mr. Tonko, you're now recognized for 5 minutes.
Mr. Tonko. Thank you, Madam Chair.
Before you start my clock, I just want to correct something
that my friend and colleague, Ranking Member Rodgers, said.
Here are the facts. According to the non-partisan Energy
Information Administration, domestic oil production was only
9.8 billion barrels per day during President Biden's first full
month in office. Since then, production has grown to 11.4
billion barrels per day. That means oil production has gone up
almost two billion barrels per day since President Biden took
office.
So it is patently false to say that oil production has
decreased under President Biden.
The oil industry has a notorious track record of investing
in countries run by petro-dictators, including Russia.
According to recent reporting, Shell, Exxon, and BP are among
nine American and European companies that have paid more than
$15.8 billion in taxes and fees to Russia after, after it
annexed Crimea in 2014.
Those projects have helped to fund Putin's war chest and
provide Russia with the operational and technical energy
expertise that gives it leverage on the global stage, all the
while, we watch in horror as the media alerts to the tragedies
in Ukraine. Each of you has since announced either pause on or
exits from your Russian businesses.
Mr. Woods, Exxon recently announced that it would begin the
process of exiting its Sakhalin 1 venture in Russia and would
not make further investments in Russia.
Briefly, can you explain when Exxon will be completely
divested from Russia?
Mr. Woods. We're working through that process now. It's
rather complex because we are the operator of offshore rigs in
deep water and environmentally sensitive areas. So we're
working our way through that as expeditiously as possible.
Mr. Tonko. Thank you. Mr. Woods, Exxon's former CEO, Lee
Raymond, famously said that he doesn't make decisions based on
what's good for the United States. Another Exxon CEO and
President Trump's first Secretary of State received the Order
of Friendship Award from Putin after, after Russia had already
invaded Georgia.
Do you agree that Exxon should not make decisions based on
what is in the best interest of the United States? And what
actions is Exxon taking to ensure that it no longer invests in
governments run by violent adversaries of global peace?
Mr. Woods. Well, we're a company that operates on a global
scale across the world and obviously making decisions about
where we choose to operate, a number of factors are inputted
into that, including the Administration's view and
recommendation on engaging----
Mr. Tonko. Is it for the best interest of the United
States? That's what I asked.
Mr. Woods. I would tell you in our business in Russia, for
both democratic and republican administrations have
encouraged----
Mr. Tonko. OK.
Mr. Woods [continuing]. Our investments there as a way to
bring western values into Russia and benefit the Russian----
Mr. Tonko. OK.
Mr. Woods [continuing]. People.
Mr. Tonko. Thank you, sir. Thank you.
Mr. Wirth, I listened as you committed to, and I quote you,
``Maintaining American leadership,'' but Chevron's website
indicates that it has marketing and retail operations in Russia
and that it supplies Russian oil companies with lubricants and
other materials. According to your website, Chevron is merely
pausing all transactions in Russia.
Question. Will you make a commitment that Chevron will not
simply suspend but terminate all operations in Russia and that
it will no longer supply Russian oil companies with the
lubricants and materials that help Russia fill its coffers? Yes
or no.
Mr. Wirth. Congressman, we've halted all those sales and
for the foreseeable future, there's no way that those will
resume.
Mr. Tonko. Mr. Watkins, I would like to take the
opportunity--or Ms. Watkins, excuse me, I would like to take
the opportunity to share how shocked I was by Shell's decision
to purchase new Russian oil cargos. I think it justifies the
concerns of many who believe that the major oil companies will
always prioritize their own profits, even when basic moral
values are at stake.
Having said that, I'm glad that Shell too has now decided
to exit its operations in Russia and it's withdrawing from
purchases of Russian petroleum products.
Briefly, can you explain when Shell will be completely
divested from Russia?
Ms. Watkins. We are in the process of working through that.
We have ceased buying all spot crude and all spot LNG at this
point in time. We have walked away from our investments that we
have--we are in the process of figuring out how to do that. It
is not completely clear. We will need to be in compliance with
all laws and sanctions and we are doing it as fast we possibly
can.
Mr. Tonko. And, Mr. Lawler, BP has also recently announced
that it is exiting its 19.75 percent stake in Rosneft, an--run
operation that helps Putin project power in Europe.
Since Russia's invasion of Crimea, reporting indicates that
BP has paid approximately $817 million in taxes to the Kremlin,
in addition to $353 billion in taxes, fees, royalties, and
profits remitted to the Kremlin by Rosneft itself.
What specific actions is BP taking to exit its Russian
operations and when will BP be completely divested from Russia?
Mr. Lawler. Now, thank you for the question. What I can say
is that BP was horrified with the military action and the war
against Ukraine. Within 96 hours, we announced our intention to
exit our position with Rosneft in Russia. That means up to a
$25 billion write down. So the company's actually quite serious
about our response.
And what I would say is we're looking at all options. It's
still early, but we will--when that process is complete. It is
underway and----
Mr. Tonko. Well, I would hope that it would--I hope it
would be done with great urgency. It's troubling that you place
profits over people and profits over our planet.
With that, I yield back.
Mr. Lawler. Well, we did write down $25 billion.
Ms. DeGette. I thank the gentleman. I thank the gentleman.
Gentleman's time is expired.
Mr. Palmer, you're now recognized for 5 minutes.
Mr. Palmer. I thank the Chairman and I thank the witnesses
for being willing to be here today considering all that you've
been through and all that my democrat colleagues have put you
through over the last few months.
And I appreciate the fact that there are multiple factors
that impact the price of oil and natural gas and the most
fundamental obviously is supply versus demand, but obviously
when demand is high and supply is limited, prices go up. But
that's not the only consideration when it comes to oil and
natural gas. Uncertainty created by government policies that
impact investment decisions and the availability of capital
also impact prices.
Would all of you agree with that? And I'd appreciate if all
of you answered at once yes or no.
(Chorus of yeses)
Mr. Palmer. What is happening here today and what happened
last fall when your companies were attacked by democrat
colleagues on the Oversight Committee will continue to impact
oil and gas industry decisions and prices because it creates
more uncertainty in terms of capital investment.
The hearing before the Oversight Committee last fall
attacked your companies. Now, this is what gets me is here we
are attacking you because supply--price is high because supply
is low and they opened up the Strategic Petroleum Reserve to
increase supply, but they attacked you last fall for producing
too much oil, and one democrat even used jars of M&Ms and bags
of rice to illustrate the point.
Another democrat on the committee called one of you a liar
and compared your industry to tobacco companies. There was
another democrat said that they want to have Big Oil hearings
like they had Big Tobacco hearings. That--I kind of think
that's what we're doing today, setting this all up. It was part
of a strategy that was developed at a meeting in La Jolla,
California in 2012, where left-wing activists mapped out a
strategy to take down the fossil fuel industry.
Are you aware that your industry is being set up? Are you
aware that these hearings are likely part of a strategy to
destroy public confidence in your industry that was laid out,
like I said, in 2012, where these activists mapped out this
strategy?
The American people should be aware of what is taking place
here because it's going to impact them enormously. I think you
should trust the judgment of the American people more than you
do the judgment of the Biden Administration or my democrat
colleagues in terms of their choices for providing energy for
their homes, the matter--and choices in their decisions on the
transportation that they decide they want to utilize in the
conduct of your business and base it on that.
And I realize that it's going to be very difficult for you
to do that as long as the Biden Administration and the
democrats in Congress work to undermine the domestic energy
production, but it's not just the price of energy that should
be of concern to every one of us--every American. It's also a
national security issue.
By shutting down our domestic energy production, not only
have we made Eastern--made Europe, all of Europe, more
vulnerable to the influence of Russia, we've undermined our own
national security, and I'd like, General McMaster, if you'd
comment on that.
Mr. McMaster. Well, I think, as we've said, Congressman,
you know, energy security is national security. We can see that
just quite dramatically with the invasion of Ukraine, but
that's always been the case, and I do think that there have
been constraints put on our ability to take full advantage of,
you know, the great--you know, the resources we have in this
country to not only satisfy the global market in a way that's
cleaner, but also in a way that breaks the grip of these
authoritarian regimes.
And I would like to see maybe now put into place an energy
policy that is connected to our national security strategy and
I think it's past time to do that, Congressman.
Thank you.
Mr. Palmer. I appreciate that. One of my colleagues pointed
out that in previous administrations, we've seen substantial
price impacts. I hearken back to the last time we saw price
increase like this maybe to the presidency of Jimmy Carter,
when the price of gasoline almost doubled by the end of his
Administration. God help us if that happens in this
Administration.
I just want to point out again to the American people, I
hope that are paying attention to this, the inconsistency and
the hypocrisy of these hearings. What's happening here today is
going to impact every American family. It's going to impact
jobs, not only in your industry, but other jobs. And it is
going to undermine the prosperity and economic future of this
country.
And, Madam Chairman, I yield back.
Ms. DeGette. I thank the gentleman.
Now I'm pleased to recognize Mr. Ruiz for 5 minutes.
Mr. Ruiz. Thank you, Chair, for holding this hearing on a
critical issue on the top of my mind and my constituents' mind.
In my district last week, I saw prices between $5.49 and
$6.40 a gallon. These prices are outrageous and my constituents
are struggling at the pump and struggling to make ends meet. I
hear from constituents who tell me how the outrageous gas
prices are putting everything out of reach. They tell me that
they're struggling to afford the gas just to go to work.
I'm curious, on your salaries, do any of you have trouble
affording the gas to get your job? I didn't think so. And as
this graph behind me based on research shows, while American
families are struggling with high gas prices, you and your Big
Oil corporations are making record profits, choosing to keep
supply low instead of investing oil in production in the 9,000
unused permits. You choose to make more profits for
shareholders.
During this Russian war, you are ripping the American
people off and it must end. Gas prices need to go down, and
while the rest of America is trying to make this happen, you
all are trying to increase your record profits. And gas prices
cannot continue to be dependent on the whims of autocrats like
Putin, who can weaponize oil against us.
The solution for now and in the future is transitioning to
a clean energy future where we aren't dependent on oil. We must
expand our use of affordable electric vehicles with batteries
that are made in America with American materials. Right now,
we're sitting on the fifth largest lithium deposit in the
world, big enough to power a clean energy future and meet our
battery manufacturing needs right here at home in Southern
California, in my district, underneath the Salton Sea.
What you unique is that this lithium is extracted from the
brine from geothermal energy production. A clean energy future
will break us free from our dependence on oil. It'll ensure we
won't have to worry about outrageous gas prices like we're
seeing now, and if we do it right, it'll create sustainable
manufacturing here at home.
So I'd like to hear from the companies here today what are
you doing to move us toward that clean energy future?
Mr. Lawler, can you briefly discuss what BP is doing to
move us toward a clean energy future with more electric
vehicles?
Mr. Lawler. Absolutely, Congressman. Thank you for the
question.
So I might start by saying I grew up in Denver, Colorado in
the 1970's, and my dad printed the Denver Post each night and
was a member of the union. And I remember clearly as a child
the pain that the cost of gasoline imposed on our family, and
so while today----
Mr. Ruiz. So what are you doing to honor that memory and
moving toward the clean energy future?
Mr. Lawler. Well, no, I appreciate that opportunity. So
what we're doing at BP is we're working flat out. Our
refineries are running flat out. We are brining 140,000 barrels
of crude oil to the market this year in the second half of this
year.
We've also invested----
Mr. Ruiz. That doesn't sound too clean to me. What are you
doing to----
Mr. Lawler. Well, we're----
Mr. Ruiz [continuing]. Expand the clean energy future with
batteries, electric vehicles, something that will help clean
our air and help us not be dependent on oil?
Mr. Lawler. No, absolutely. So, again, we're making the
transition investments that are needed. As I mentioned, we're
going to install 4.5 gigawatts of power offshore Massachusetts
and New York. We'll be rapidly expanding the number of EV
charging stations in the States. We do have a 50/50 partnership
with Lightsource BP that's putting in numerous large solar
farms across the United States in many, many places.
And we just bought a company called 7X and we'll be
installing a significant number of solar fields in the
Midcontinent region in the United States. And we will be
spending $5 billion a year by the end of the decade.
So BP is in action. We have real things that are happening
now.
Mr. Ruiz. Thank you for that. Thank you for that.
I want to ask Ms. Watkins the same question. What
investments is Shell making to develop and improve on lithium
battery and electric vehicle technology to transition us to a
cleaner future?
Ms. Watkins. Yes. Shell's making a lot of investments to
advance to a cleaner future. In fact, our whole strategy is
premised on working very closely with our customers in order to
increase the demand for low and no carbon fuels, including
electric vehicles, as you mentioned.
We have a company within our company called Greenlots that
actually is working to install electric vehicle charging and
back office software systems. We're working with cities,
governments, universities, other companies in order to
decarbonize their fleets. So we have a very specific focus
there, as well as on wind and solar.
I mentioned we've just recently bought Offshore New York, a
50 percent interest for almost $400 million. That's just the
lease for the Offshore space to install offshore wind. And so
we're investing billions of dollars a year and as we move
through time, that will only increase as--again, as our
customers work--as we work with our customers to increase their
demand for low and no carbon fuels.
Ms. DeGette. Gentleman's time has expired.
Chair now recognizes Mr. Dunn for 5 minutes.
Mr. Dunn. Thank you, Madam Chair. I appreciate the
opportunity to discuss rising gas prices and how poor
Administration policy contributed to this.
When President Biden took office, he wasted no time
targeting American energy production and you can guess what
happened next. The markets responded. So gas prices were
already rising well before Putin's attack on Russia.
What's worse, we had the chance to prepare to unleash
American energy prior to the Russian invasion, with full
foreknowledge that that invasion was coming. Instead, largely
due to administrative failure, we forced the United States and
our allies to increase our dependence on Russian energy. The
gap left by less American energy exports directly funds
Russia's invasion of Ukraine. That's shameful.
We could talk about administrative malpractice for hours.
Unfortunately, I only have 5 minutes, so let's move into some
questions.
General McMaster, nearly one year ago, Russia was amassing
troops at strategic points all along the Ukraine border, the
largest presence of Russian troops since the invasion of Crimea
during the Obama-Biden Administration. Despite this, the Biden
Administration continued to push policies that attacked our
energy supply and our exports to Europe.
General McMaster, do you believe those actions, such as
canceling the Keystone Pipeline, emboldened Vladimir Putin?
Mr. McMaster. Congressman, I do believe this was an element
of Putin's calculus. He believes that we're weak, right? He's
looked at our internal divisions. He's looked at policies and
actions like the surrender to a Jihadist terrorist organization
and our disastrous withdrawal from Afghanistan. And I think he
also looked at our energy policies and believed, hey, I have
coercive of power, especially over Europe's economy and
there'll be a muted response that he thought would be kind of
similar to the weak response after he first invaded Ukraine in
2013.
Mr. Dunn. I'm going to move on to Mr. Sheffield just for a
moment. You mentioned in your testimony, Mr. Sheffield, the oil
and natural gas we produce proved a geopolitical asset for the
United States.
Can you list just a few of the Federal and State regulatory
obstacles that are restricting your production and
transportation of oil and gas, American oil and gas?
Mr. Sheffield. Yes. We need more pipelines, both oil and
gas. For instance, use Keystone, for instance. If Keystone
would've been built six, seven years ago, we--probably Canadian
production would be up another million barrels a day going to
the Gulf Coast refineries. That's an example.
You have to make long-term decisions to help the industry,
but there's not enough oil and gas pipelines. There's not
enough LNG plants. We need LNG plants in the Northeast. We have
the largest gas field in the world in the Northeast. It's too
expensive to get the gas down to the Gulf Coast. We need to
build LNG facilities in the Northeast.
Those are examples----
Mr. Dunn. Well, I thank you for your clarity on that, Mr.
Sheffield. I really do. And I appreciate--will take that home.
Back to General McMaster, General, while the Biden
Administration continues to push the industry toward developing
and adopting renewable energy technology, the United States is
highly reliant on imports of the minerals and the production of
the materials that are used in renewable energy technologies.
So with the vast majority of those coming from China, I cannot
fathom why we want to become more dependent on China for
energy.
General, doesn't this play directly into China's goal of
world hegemony?
Mr. McMaster. It does. What Xi Jinping wants to do,
Chairman Xi wants to create a dual circulation economy in which
he is insulated from any kind of financial or economic
ramifications for his aggression against his own people and
internationally, and he fosters dependence on him, especially
in the emerging data-driven global economy and on energy in
particular.
If you think it's bad for oil and gas infrastructure in the
U.S., hey, try to get a mining permit for some of the minerals
that are essential to generating, you know, the batteries and
the magnets and the renewable energy hardware and equipment. So
it's vastly important--16 to 20 years about to get a mining
permit in the United States.
So we have a lot of work to do, Congressman, in removing
regulatory barriers to become more competitive and to ensure
that we don't trade one dependency for another in the form of
renewable energy.
Mr. Dunn. Well, I thank you very much for that clarity,
especially as it applies to the mining of all the essential
minerals and commodities that we need to go to renewable
technology. That was an outstanding point in your testimony as
well. Thank you very much to all the witnesses.
And I yield back, Madam Chair.
Ms. DeGette. Chair now recognizes the vice chair of the
subcommittee, Mr. Peters, for 5 minutes.
Mr. Peters. Thank you, Madam Chair.
If Mr. Putin loves American division, he probably loves
that republicans are blaming President Biden for low production
that happened before he took office or the inability to get
workers in American oil and gas fields, but one thing we should
agree on is that the war in Ukraine is exposing the
interconnections between our energy security, environment, and
our economy, and we should be doing everything we can to
alleviate price shocks and support the people of Ukraine
against Russian aggression.
As we transition to a clean energy economy, we should focus
on bolstering our energy security, which the Congressional
Budget Office defines as the ability of households, businesses,
and government to accommodate disruptions in supply and energy
markets. The increase in gas prices across the United States
clearly reflects a nation that lacks energy security. One
nation, Russia in this case, can cause significant economic
pain to Americans due to our dependence on oil.
In San Diego, the average price of gasoline reached nearly
$6.00 a gallon in late March and the most vulnerable San
Diegans feel these price increases the hardest. We have to
respond with real solutions to provide them relief. I'm
grateful for the Biden Administration's actions to reduce
prices, including releasing oil from the Strategic Petroleum
Reserve and working with U.S. companies to replace Russian oil
and gas with American energy.
And I'm open to ideas to reduce prices in the short term;
however, we know that the long-term solution to energy security
is diversification and clean energy, more electric vehicles,
more hydrogen vehicles, more renewables, and more biofuels.
And we can't ignore the climate science, whatever we do in
the short term. Earlier this week, the International Panel on
Climate Change--Intergovernmental Panel on Climate Change, the
IPCC, said that we need to rapidly transition to a clean energy
economy and notably they warned that we have 20 fewer years to
cut methane pollution than we previously thought. Instead of by
2050, we now need to cut global methane pollution by 33 percent
by 2030.
Mr. Woods, Exxon refers to itself as energy leader in
addressing methane pollution, and you have committed to working
with the U.S., European, and other governments to implement the
global methane pledge, and as mentioned in my remarks, we have
to accelerate emission reductions by 20 years to avoid
dangerous warming. In light of the IPCC's findings, should
Exxon and other companies testifying today set more aggressive
commitments to reducing methane emissions to align with the new
scientific findings?
Mr. Woods. Well, Congressman, I think you touched on a very
important part that the industry is very focused on, our work
to reduce methane. I know across all the companies that I
engage with, we're focused on it. Our company specifically has
committed to, by 2030, reducing methane emissions by 70 to 80
percent, and as we work toward that goal, we're trying to
improve upon that number and I think----
Mr. Peters. So what are some of the specific steps that
Exxon should take to accelerate methane emission reductions?
Mr. Woods. So there's a process of changing out equipment,
making sure that the process--the operations that we use are
sensitive to events that release methane, making sure the
equipment is of the right vintage. There's a lot of maintenance
and replacement of equipment that drives that.
Mr. Peters. Don't you think U.S. oil and gas companies
should be leading the world in reducing methane pollution?
After all, our customers, your customers are going to be
looking for clean gas.
Mr. Woods. I think the oil and gas industry has an
obligation to lead in this space and I would make the point
that I think we are doing that. In fact, I think many of the
panel members here today are taking that position, to lead in
reducing methane emissions.
Mr. Peters. Well, I hope you'll be willing to work with the
committee and Congress to accelerate that commitment.
And, Mr. Wirth, Chevron and other companies today have set
climate targets and committed to the Paris Agreement. At the
same time, they've argued that cost remains a barrier to
stopping routine flaring, which is a significant contributor to
climate change.
Will you commit to using your increased profits to further
reduce methane pollution and routine flaring?
Mr. Wirth. Congressman, we absolutely share that commitment
and you've put your finger on a very important issue, and I
would echo the comments of Mr. Woods, that I think the
companies in this industry, particularly the American companies
and some of the international companies represented on this
panel, are absolutely committed to reducing methane emissions
and eliminating routine flaring.
Mr. Peters. Thank you. I appreciate the witnesses being
with us today, and I want to just call out for my republican
colleagues that these folks in this industry that you guard so
closely see it as a priority to reduce methane pollution. I
need my colleagues on the republican side of the aisle to
commit to that as well and that we can get this done.
Madam Chair, I yield back.
Ms. DeGette. I thank the gentleman.
Mr. Joyce, you're now recognized for 5 minutes.
Mr. Joyce. First, I'd like to thank Chair DeGette and
Ranking Member Griffith for having this hearing today.
Chair, I'd like to quickly respond to Mr. Tonko to correct
the record. My good friend repeated a claim that the Biden
Administration has made, but it's very misleading--they're
claiming that oil production under President Biden is up, but
they are only comparing it to the first year of the Trump
presidency.
Here's the truth. According to EIA data, U.S. oil
production has declined by over 1.5 million barrels per day
from the peak production of 13 million barrels per day in 2020.
President Biden also imposed a mortarium on fossil energy
development on Federal lands and waters, and he stifled U.S.
energy production through bureaucratic delays.
Clearly, the Biden Administration is creating a regulatory
environment that is hurting Americans' ability to produce oil
and gas domestically. What we've seen in the last several
months has been an energy crisis, unfortunately of our own
making. We have finally learned what many of my colleagues and
I have been saying repeatedly in this committee, that the only
way to guarantee reliable and affordable energy for the
American people is to utilize the resources under the feet of
my constituents.
Instead, the Biden Administration has given into
environmental groups and left our country beholden to foreign
autocrats and oil cartels. This is not what America needs.
In my home State of Pennsylvania, we have the resources
required to power our Nation and get back to energy dominance,
but for now, that potential is locked under ground and my
constituents are left paying higher and higher prices to fill
their gas tanks. We need to stop talking about how to attack
the energy industry and we need to start focusing on how to
stimulate domestic production.
We need a positive energy policy instead of a punitive
energy policy. Many of these companies before us have invested
billions in research and development that have directly
benefited American consumers. Several have made large
investments in Pennsylvania that have not only spurred domestic
production, but provide thousands of family sustaining jobs in
the communities that I represent.
This is the answer on how we bring gas prices down. The
solution to our energy crisis cannot be found in Saudi Arabia,
but rather in Somerset County, Pennsylvania, in Bedford County,
Pennsylvania, in Cambria County, Pennsylvania. Enabling
production here at home is the only way to give Americans the
economic future that they deserve.
My first question, a great example in my home State of a
type of long-term development that we need is the Shell
Pennsylvania Petrochemicals Complex. It has brought thousands
of construction jobs and hundreds of permanent jobs to the
region. I've been to this plant. I stood with the pipefitters,
the electricians, and the plumbers, working Pennsylvanians.
Ms. Watkins, can you give us some of the impacts of Shell's
investments in Pennsylvania?
Ms. Watkins. Yes. Thank you, Congressman.
This is a huge infrastructure project that we've been
investing in for the last few years. In fact, it's the biggest
infrastructure project in the country. At its peak, it employed
7,500 construction workers, and we're in the process of
commissioning this plant this year. We'll have 600 permanent
jobs in Beaver County, Pennsylvania, just outside of
Pittsburgh.
It's a polyethylene plant that's built on the site of an
old zinc smelter, and so we're actually very proud community
members and proud that we've been able to go back into a
community that industry had left and actually really
revitalized that by creating jobs and creating products that
will be vital to the energy transition. This will enable us----
Mr. Joyce. My time is limited and I thank you for that
vitality----
Ms. Watkins. Thank you.
Mr. Joyce [continuing]. That you're infusing into
Pennsylvania.
Mr. Woods, ExxonMobil is another company that has invested
in the shale gas fields of Pennsylvania. At present, a lack of
pipeline and LNG capacity is hampering our ability to respond
to global energy price spikes and support our friends/our
allies in Europe.
How can the Federal Government work with this energy sector
to ensure the necessary energy infrastructure is there to
facilitate the growth that we need?
Mr. Woods. Thank you, Congressman. You've touched on a
really important part of the equation with respect to building
out the U.S. oil and gas business, which is infrastructure and
the ability to take the--what we produce and get it to market
efficiently and effectively.
And one of the big challenges we face today is the
permitting process for pipelines, and then beyond that, the
legal challenges that come from a number of interest groups.
And so both of those need to be addressed if we're going to
effectively and effectively build pipelines that connect
resources with demand.
Mr. Joyce. Madam Chair, my time has expired. I yield.
Ms. DeGette. I thank the gentleman. Gentleman's time has
expired.
Ms. Schrier, you're now recognized for 5 minutes.
Ms. Schrier. Thank you, Madam Chair, and thank you to the
executives for participating in today's hearing.
I got to tell you, my constituents are hurting. They are
worn down by two years of this pandemic and now, just as they
are getting back on their feet, they're being hit with
skyrocketing prices at the pump and at the grocery store. Over
$100 to fill up a truck, $75 to fill my car's gas tank, and
here's the thing. Prices don't have to be this high. You all
can make decisions today that will help our constituents
tomorrow.
Increasing production will demand and bring down prices.
Frankly, given your profits, you could drop prices without even
increasing production. Pre-pandemic, the U.S. produced about 13
million barrels per day. Now we're at 11, and we need you to
step up now.
And I'll tell you, when I tell my constituents and they
learn that at the same time they're paying these skyrocketing
prices at the pump, $5 in my area, your companies are making
record profits, they're mad and they should be. Let me just lay
out some numbers, in case you think this is hyperbole,
comparing 2021 profits with 2019, the last typical year. Exxon,
2019, $14.3 billion, 2021, $23 billion. Chevron, $2.9, up to
$15.6 billion. BP, $10 billion, up to $12.8 billion. Shell,
$16.5 to $20.1.
I think most of us would agree that this just doesn't feel
fair. It feels like gouging. It even feels like profiteering.
And right now, we all have a role to play, a patriotic duty,
really, when--that when there is war in Europe and gas prices
are high and the American people are hurting, that oil
companies should not be sending profits to shareholders and you
all are some of the biggest shareholders.
I have introduced a bill to suspend the Federal gas tax for
the rest of the year, and right now, in the short term, most
people think you should be using the money you have to extract
more oil, meet demand, and bring down prices to give us, all of
us, some relief. And with oil at over $100 a barrel, you're
going to make a profit regardless.
So I'm asking you in just 20 seconds each, can you tell me
what is the one most important thing that it will take to ramp
up oil production to pre-pandemic production levels?
Ms. Watkins, you can start. What will it take?
Ms. Watkins. Yes. We're in the process of bringing on oil
every day. We brought on new oil in the Gulf of Mexico last
week, some more announced today, some more by the end of the
year. Some things that would enable that to happen even more is
the approval of some permits that we have outstanding right
now. Those permits are out there. Approvals tomorrow would
enable us to drill wells that would likely bring on or----
Ms. Schrier. OK. Sounds like----
Ms. Watkins [continuing]. Next year.
Ms. Schrier [continuing]. Permitting is for you.
Mr. Lawler, what would it take for you?
Mr. Lawler. Thank you for the question. So we're increasing
our capital budget in the onshore by 15 percent and we're also
bringing on a massive offshore platform, 140,000 barrels of oil
a day, and we're operating our refineries at absolute safe
maximum capacity.
Ms. Schrier. OK. That didn't really answer the question.
Mr. Wirth, what would it take for you to further increase
production?
Mr. Wirth. Congresswoman, I appreciate your concern on this
issue. It's a very important one.
Our production in 2021 was higher than our pre-pandemic
production. As I mentioned earlier, we're investing 60 percent
more capital this year than we did just last year. We intend to
grow production on the Permian Basin by ten percent this year.
Our company is growing production and investing in that.
I think broadly speaking for the industry, the issue of
permitting that has been raised multiple times is essential and
also an environment----
Ms. Schrier. Thank you.
Mr. Wirth [continuing]. That is supportive of investment in
this industry.
Ms. Schrier. It sounds--it sounds like permitting is the
main issue that I'm hearing. My understanding is that this
Administration is working with you on permitting. My
understanding is also that 90 percent of the drilling happens
on private lands, and so I just want to summarize that I think
you can do more and the American people need you to do more.
Long term, we need to wean ourselves off of this dependence
on fossil fuels, but in the short term, we need you to step up
for the people in my district and for the people across this
country who are feeling extreme pain at the pump right now.
I yield back.
Ms. DeGette. I thank the gentlelady.
Chair now recognizes Ms. Trahan for 5 minutes.
Ms. Trahan. Thank you, Madam Chair.
In late February, Russia launched its unprovoked and its
violent invasion of Ukraine and President Biden has organized
our allies to impose crippling sanctions on--has organized our
allies to impose sanctions on Russia. I recently returned from
visiting Eastern Europe, where I heard thanks for President
Biden's and America's leadership on these issues, but also
concerns about American oil and gas companies profiteering from
Russia's invasion.
You know, for the most part, oil companies have rightly
stayed away from trading Russian oil during this global crisis
and several of your companies are discontinuing investments
that have long fueled Putin's war machine, but among our
witnesses, as my colleague, Representative Tonko, pointed out,
there are has been one company that continued to purchase
Russian oil, even after Russia's invasion of Ukraine.
On March 1st, after the invasion began, Shell purchased
100,000 barrels of Russian oil. Shell got this oil at a deep
discount because no one else would touch it.
Ms. Watkins, I'm aware that your company has since
apologized, but what do you think it says about Shell's values
and credibility that you bought Russian oil while the Russian
military started carrying out its brutal attack on the people
of Ukraine?
Ms. Watkins. I think it says, you know, we--within a day or
two, we announced that we were walking away from $3 billion
worth of investments and I think that says a lot about how we
despise what is happening----
Ms. Trahan. Certainly, but I am aware of your recent
actions. But the reality is after the invasion, you know, you
put the profits ahead of the lives of innocent Ukrainians and
before our ability as a nation to hold Vladimir Putin
accountable. I mean, each of you have been crystal clear in
public statements in the past month that Putin's invasion has
been great for your bottom line.
Not only have each of you taken advantage of this war and
the crisis that it has produced to return even more profit to
shareholders, but it also appears that at least five top oil
executives have cashed out some $99 million worth of stock
personally since the invasion began. These include top
executives from Hess, Marathon, Continental Resources, and
represented here today, Pioneer.
Mr. Sheffield, you sold 22,247 shares worth of--$5.3
million on March 2d, a little over a week after Russian--Russia
invaded Ukraine. Was the value of Pioneer's stock when you sold
it after Russia's invasion higher, lower or the same as it was
prior to--on February 24th?
Mr. Sheffield. Yes, Madam, the stock is only up about 8 to
9 percent since the invasion and I still have over 90 percent
of my net worth in Pioneer stock. It was the first time I've
sold stock in several years.
Ms. Trahan. Well, thank you, Mr. Sheffield, but the
undeniable reality is that you did sell over 22,000 shares of
your company's stock and pocketed millions from Putin's attack
on Ukraine.
Look, today's witnesses, they've talked extensively about
industry externalities and the global nature of oil prices that
aren't in their control. Yet, at the same time, I hear how
these same executives and their companies are independently
deciding not to invest in new supply or produce more, which
would drive down gas prices for consumers in order to return
value to the shareholder.
You may not directly control price, but you do manipulate
supply to decrease the amount of product on the market and you
do that to create scarcity, which at the end of the day, drives
up costs for hardworking Americans. It's easy to make prices
skyrocket overnight and that's great for share prices and
stockholders. Mr. Sheffield has showed us that much, but it's
bad for working families in my district and in every
congressional district across our country.
Your companies made a combined $76.4 billion last year.
You're on track to make more this year. You're cashing
multimillion dollar paychecks and you're profiting personally
off your stock options, telling us that your hands are tied.
Meanwhile, there are millions of folks who are seriously
considering taking a second or third job just to make ends
meet.
So I'll close by asking you what any working parent who is
struggling with their home heating bill or their gas prices in
my district would, sitting here today, no evasion, no pivoting,
no slick lobbyist talking points, how do you plan to change
course today? Will you stop prioritizing obscene profitability,
buybacks and dividends over the livelihoods of working
Americans because after all, you represent American companies
and that used to mean something, especially when we've been
faced with threats abroad.
It's my hope that you'll take this opportunity to make it
mean something again.
And with the remaining time, if anybody wants to answer
that question, I'd be grateful.
Ms. DeGette. Unfortunately, the gentlelady has 15 seconds
left. So perhaps----
Ms. Trahan. Well, I'm hearing crickets anyway, so I'll
yield back.
Ms. DeGette. Thank you.
Mr. O'Halleran, you're now recognized for 5 minutes.
Mr. O'Halleran. Thank you, Madam Chair.
It's clear to me that no real solutions for lowering gas
prices have come out of this hearing today. People from--are
more focused on playing the blame game rather than identifying
actions to lower gas and energy prices for Americans.
We're in an unprecedented time. You've seen historic
inflation caused by multiyear pandemic and now a war in Europe.
I have no issues with energy companies making profits. What I
do have an issue with is the excess profits that you are making
at the expense of the American people.
Since the Industrial Revolution, oil and gas companies have
invested in technologies to help ensure Americans have access
to energy that we need to survive and thrive. However, in
America, the natural resources belong to the American people
and often sits on our lands and the ground in our country. This
is critical to remember.
I understand that oil and gas markets are complex. What I
don't understand is that when we are multiple--we have multiple
unprecedented crises occurring right now, oil and gas companies
are turning a blind eye, choosing their Wall Street friends
over their corporate responsibility to the American people.
They're partners in this whole process over time.
Thousands of Ukrainians have been slaughtered at the hands
of the Russian invaders. Parts of Arizona saw the highest rates
of inflation in the Nation over the past year, and Americans
are paying the highest gas prices that they've paid in decades.
Americans are hurting.
When the world shut down in 2020, Congress passed
bipartisan COVID relief bills that included critical support
for businesses of all sizes. Over the course of the pandemic,
behind--demand for oil fell sharply and oil prices were--
temporarily went negative, but oil and gas companies benefited
from over $8 billion in relief.
Oil and gas companies have long benefited from tax breaks
like the intangible drilling cost deduction and others that
American taxpayers pay billions for every year.
The companies on this panel alone made the $76.4 billion in
profits last year, but I know that oil and gas companies are
back to raking in profits. They've forgotten the American
taxpayer and their partners in the whole history of energy in
America. Where are oil and gas companies--where are they at now
when the American public needs help?
Multiple of the witnesses have testified today that they've
forecasted that returning money to investors is more important
than lowering prices. They've stated it time and time again
over the last months. This is--has real consequences for people
in my district.
High gas prices have a severe impact on rural America. It's
not uncommon for my constituents to rack up over 50 miles a day
commuting to work and school and running everyday errands. When
energy prices go up, everything becomes more expensive.
Families, farmers, ranchers, and rural Americans, everywhere
has to make up and make the hard decisions to cost costs
somewhere.
Congress is limited in how much it can affect oil prices
set by global markets, but we can do something. We can work
together for the American people, as we have done in the past,
to overcome this, but we can't let this crisis stop us from
taking steps to ensure our energy independent. We must invest
and you must invest in the future of energy in America, clean
energy in America and the world, but in every past crisis,
we've been told that increasing domestic production will solve
the issue. It hasn't.
The long-term solution is not limiting our dependence on
foreign oil, not just limiting it, but it is to transition from
the current dependence on foreign oil.
I have some other things I'd like to say, but I also want
to correct a couple of things here. We are in a different
landscape. It was mentioned earlier the pricing, how much it's
increased over the last year or so. There was a chart up here.
That different landscape, part of that didn't show that part of
the reason is we've had tens of millions of jobs come online.
That means more energy needs. That means more costs.
It wasn't just when the Russians attacked Ukraine. It was a
buildup to the Ukraine attack that caused a lot of that price
rise. Pre-invasion pricing was--just went up exponentially.
And finally, I've heard time and time again over the last
several weeks, but let alone today, that we are not doing the
job on LNG. We're the largest exporter in the world on LNG, and
pretty soon, we have the permits available and they have to be
invested on by your companies, to do 30 plus billion cubic feet
additional, over and above. We have two new facilities coming
online.
So with that, Madam Chair, I want to thank you for your
time and----
Ms. DeGette. I thank the gentleman.
At this time, all of the members of the Oversight
Subcommittee have questioned the witnesses, and at the request
of the witnesses, we are going to recess, and so the Chair will
announce the committee will stand in recess for ten minutes and
we're going to return promptly because we have many, many more
people to question and we're going to have votes on the floor.
So the committee's in recess for ten minutes.
[Recess.]
Ms. DeGette. Committee will come to order and the Chair is
now very pleased to recognize the distinguished chairman of the
Energy Subcommittee, Mr. Rush, for 5 minutes.
Mr. Rush. I want to thank you, Madam Chair, for this--
hearing. Madam Chair, the overall profits of the U.S. energy
companies are the greatest profits ever recorded in the history
of mankind or the human species. Let me be clear, these profits
are outrageous on its face.
Madam Chair, look at these profits. ExxonMobil in 2021, $23
billion in profit. Chevron, 2021 profit came in at $15.6
billion. And last, but not least, Shell, Shell company's
profit, $19.3 billion. These are outrageous profits.
In the weeks following the Russian invasion of Ukraine,
many western oil and gas companies loosened themselves from
Russia, including BP and Exxon.
Ms. Watkins, the same week that other companies announce
that they were taking a step back from Russia, your company was
buying cheap Russian crude oil. Shell brought home 700,000
barrels of Russian--crude oil for nearly $30 per barrel under
the international oil prices. It managed to convert that oil
into product that it sold at normal pricing. That single
purchase will represent over $20 million in profits.
These profits are nothing short of war profits, blood
money. So in the--of innocent Ukrainian citizens. Of course,
Shell has since apologized, but it seems to me like that that
is an insincere apology. Are they sorry they did it or are they
sorry they got caught while doing it?
Ms. Watkins, let's have some truth now, some true facts.
When was the decision made to purchase that cargo of oil?
Ms. Watkins. Congressman, I'm not sure when that decision
was made, but I can tell you that we have walked away----
Mr. Rush. Well, you're not sure who within Shell approved
the purchase?
Ms. Watkins. Well, our CEO, Ben van Beurden, came out and
said that he had approved that and he had made a mistake and he
has apologized for that. I can tell you the situation in Europe
at the time was such that attempting to fill refineries----
Mr. Rush. Did Shell's chairman of the board also approve
the purchase?
Ms. Watkins. Sir, I'm not aware of how the approvals
worked, to be honest.
Mr. Rush. But prior to the war, did Shell purchase Urals
crude?
Ms. Watkins. I'm sorry. I'm not--I didn't understand what--
--
Mr. Rush. Prior to the war, did Shell--purchase Urals crude
oil?
Ms. Watkins. Yes. Urals was--is a type of crude that we run
at our European refineries and at the time that that decision
was made, we were attempting to keep refineries running and
keep gasoline at the pump for our customers.
Mr. Rush. According to the S&P, net Russian crude oil was
supposed to arrive in--on March 25th. Has that crude oil
arrived? Has Shell taken possession of it? And has Shell
processed that oil through any of its refineries?
Ms. Watkins. Yes, sir, I believe we have, so that we can
supply diesel and gasoline to our customers in Europe. At this
point in time, we have ceased all spot purchases of crude and
we've ceased all spot purchases of LNG from Russia. We are
doing none of that at the time--at this time.
Mr. Rush. Madan Chair, I'm running out of--let me ask one
other--Madam Chairman, I ran out.
Ms. DeGette. I thank the gentleman.
Chair now recognizes Mr. Scalise for 5 minutes.
Mr. Scalise. Thank you, Madam Chair, for yielding and for
holding this hearing.
I have some questions for the witnesses, but first, before
we talk about why we're here, I think it's important to go back
and look how we got here. Americans are furious that gas prices
are so high, but they also know that President Biden walked in,
day one, with an agenda to kill American energy. And don't take
my word for it. Let's go back to candidate Joe Biden.
When Joe Biden was a candidate for President of the United
States, he was very clear what he wanted to do to shut down
American energy production, as a candidate, and here you see
him to the left, ironically, of Bernie Sanders. Joe Bide said,
quote, ``No more drilling on Federal lands. No more drilling
including offshore. No ability for the oil industry to continue
to drill, period,'` end.
That was Joe Biden as a candidate, said he wanted to kill
American energy, and I wish it ended there, but that's just
where it got started.
He then went on and issued a barrage of mountains of red
tape from every one of his Federal agencies to make it harder
to drill in America. Not in other countries, by the way, just
in America.
Look at all the agencies that President Biden used to go
after American energy producers, the Department of Energy, the
Depart--the Federal Energy Regulatory Commission, Securities
and Exchange Commission, the Department of Agriculture, the
Council on Environmental Quality, the Department of State, the
Environmental Protection Agency, the Department of Justice, the
Department of Interior. All of these Federal agencies putting
mountains of red tape on every American driller, making it
harder to drill in America.
Look at a few of them. Of course, we all know Keystone, day
one, coming from the State Department, killed the Keystone
Pipeline. He's not against all pipelines because he turned
around and gave a gift to Vladimir Putin and greenlighted Nord
Stream. So he made American energy less secure, but he said
it's OK for Russia to produce oil and send it to Europe, making
them addicted to Russian oil, helping fuel, by the way, Putin's
war against Ukraine.
Putin is getting--before the invasion, was getting over
$700 million a day selling his oil to America and to Europe
because President Biden issued this assault on American energy.
Now, again, go back to what Biden said. He did say that he
was going to do it. No more drilling, including offshore. So
what happens when you kill American energy through all these
Biden red tape policies? The price goes up. Just look at it. It
didn't start when Russia invaded Ukraine. The price was going
up from day one when Biden took office because he carried out
an assault on American energy.
So if you want to solve the problem, you don't need to
reinvent the wheel. How about you first get rid of this entire
assault from every Federal agency I just mentioned on producing
oil in America?
None of these rules and regulations, by the way, apply to
Russian oil. None of them apply to Iranian oil. None of them
apply to Venezuela, but yet that's who President Biden is
begging to produce more oil. Stop begging dictators to produce
our energy and turn to America, where, by the way, we do it
cleaner than anywhere in the world.
You get energy from Russia. They have a much higher carbon
footprint. I'd love to see the carbon footprint. Maybe we can
have a hearing on that, the carbon footprint of Joe Biden's
anti-American energy policy.
The good news is there is help on the way. Republicans have
filed more than 60 bills, by the way, 60 bills to reverse this
barrage and assault on American energy by President Biden, more
than 60 bills. Our ranking member, Cathy McMorris-Rodgers, has
a bill. There's bills to do all kind of things to actually
allow us to produce our resources, by the way, cleaner than
anybody else in the world. That's where we should be going with
this.
But I've got some questions for our witnesses, and I'll
start with Mr. Lawler. My question is does this whole mountain
of red tape by President Obama (sic) make it harder for you to
produce more energy in America? Yes or no.
Mr. Lawler?
Mr. Lawler. Well, in general, you know, regulations that
are supportive of the industry are helpful. Regulations that
help improve the energy transition are helpful. So we do----
Mr. Scalise. So are these supportive? Are these supportive
of the industry? You've seen them. You know these. You have to
comply with them. It's one of the reasons you can't produce.
And I talk to people that produce in all parts of the country
and they tell me it's these regulations that are stopping them.
Mr. Wirth with Chevron, do these regulations make it harder
for you to produce energy in America?
Mr. Wirth. Yes, they do. Yes, they do, Congressman.
Mr. Scalise. Mr. Sheffield?
Mr. Sheffield. Yes, they do, sir.
Mr. Scalise. Mr. Muncrief?
Mr. Muncrief. Yes, they do.
Mr. Scalise. Ms. Watkins?
Ms. Watkins. Congressman, certainly some regulations are
necessary for our business, but as I said before, we've got----
Mr. Scalise. Do these?
Ms. Watkins [continuing]. We've got outstanding permits
that would--if approved would be--enable us to bring even more
production on very soon.
Mr. Scalise. Well, let's open up America now.
Ms. DeGette. Gentleman's time has expired.
Mr. Scalise. Let us stop the assault on American energy----
Ms. DeGette. The Chair now is very pleased to----
Mr. Scalise [continuing]. And lower gas prices.
Ms. DeGette. Excuse me.
Mr. Scalise. I yield back the balance of my time.
Ms. DeGette. Chair's now pleased to recognize the Chair of
Health subcommittee, Ms. Eshoo, for 5 minutes.
Ms. Eshoo. Thank you, Madam Chairwoman, for holding this
very important hearing today and for extending the legislative
courtesy to me to participate.
In response to Russia's invasion of Ukraine, over 50
American companies have pulled out of Russia, including BP
America, ExxonMobil, and Shell USA. And so to those that have,
I salute you for that.
Those that haven't that are with us today, do you plan to
do so?
No response? OK. One policy that Congress is considering to
address the soaring gas prices is suspending the Federal gas
tax, a tax holiday, so to speak, of 18.4 cents per gallon, and
there's a serious debate over whether gas prices would actually
fall by this amount in the not too distance future.
My question is if your companies can pull out of Russia,
can you also commit to passing on the full savings of a gas tax
holiday to consumers? So we'll go through with the panel and
it's a yes or no answer.
Are you refusing to say anything? It's a yes or no answer.
Mr. Wirth. Congresswoman, I'll start. This is Mike Wirth
with Chevron. I was waiting to see if somebody was going to go
through the list.
Ms. Eshoo. OK.
Mr. Wirth. We can certainly discontinue the collection of
that tax. Prices move each and every day in both directions and
so I can't guarantee you that the price will go up or down due
to a variety of other factors that influence prices, but we
collect the tax on behalf of the government and submit it to
the government. If that tax were suspended, we would no longer
collect it and pass it on to the government.
Ms. Eshoo. So it would go--the--it would go to the
government, but would the consumers that are buying the gas,
trying to fill their tanks, would they be the beneficiaries of
that, direct beneficiaries?
Mr. Wirth. Appreciate your question, Congresswoman. Let me
try to be more clear. The consumers would no longer pay that
tax. We would no longer collect that tax. That could be a
separate issue. The price of gasoline could go down more than
that or it could go the other direction depending on a variety
of other factors that are work in markets each and every day.
Ms. Eshoo. To the other gentleman and gentlewoman.
Mr. Lawler. Yes. So, Congresswoman, what I would share is a
similar comment in that it is a very complex market, that that
might precipitate increased demand, which could also increase
prices, and I would just tell you that it's a very complex
market-based decision.
Ms. Eshoo. I--can't you bring more clarity to this than
just saying that everything is so complex? You know, it--I know
that this is not pleasant, but the American people are really
not with you. They're angry. They're angry. And, you know,
when--I think every American company owes something to America,
to the American people. There's pain at the pump.
And really, what underlies my question is what can you do
to help alleviate that? You know, if you don't plan to do
anything or help to do something, then I think that becomes
absolutely apparent, but I think that it will just add to
another layer of a deep anger and resentment of the American
people.
So let me go through the rest of the individuals that are
testifying today on my original question.
Mr. Woods. Congresswoman, this is Darren Woods with
ExxonMobil.
I would just tell you I think the point that Mike made is a
function of the supply and the demand. If the price drops off
and demand picks up, supply would pick up. The way to
ultimately solve this problem is to increase the amount of
supply available to American consumers. That's been something
that----
Ms. Eshoo. Well, you're essentially saying no because if
there were to be a tax holiday, then at the consumer--at the
pump to fill up would not--would not get the benefit.
Mr. Woods. No. What I'm saying is that that tax holiday
doesn't change the amount of supply and the question is how
does supply and demand balance out, which would ultimately set
the price. And I think what you're seeing is nobody knows
exactly how that supply and demand balance would be struck, but
that is what would ultimately determine supply--the way to
influence price is to release supply.
Ms. DeGette. The gentlelady's time has expired.
Ms. Eshoo. I thank the gentlewoman and I yield back.
Ms. DeGette. Thank you. Thank you.
Chair now recognizes Mr. Latta for 5 minutes.
Mr. Latta. I want to thank the Chair for allowing me to--on
today's hearing and allow--thank our witnesses for testifying
before us today.
Today we are seeing the blame game played with maximum
effort by our democratic colleagues. We have heard the other
side of the aisle in the Biden Administration point their
fingers in every direction to seek a culprit for the rise in
energy prices. What the Administration should be doing is
pointing their fingers in the mirror.
Since day one of this Administration, President Biden has
pursued policies that would restrict the ability to produce oil
and natural gas in the United States. He canceled the Keystone
XL pipeline, issued a moratorium on leases for oil and gas
exploration on Federal lands, used the immense regulatory
powers of the administrative State to bog down the permitting
process for energy infrastructure projects and pushed his
financial regulators to squeeze investments in the fossil fuel
industry. Now he is trying to convince the American people that
this full court press of anti-American energy policies is not
contributing to the rise in gas prices.
Instead they say it is entirely the fault of greedy oil
companies and the war criminal Putin. I am glad we are holding
this hearing today so we can set the record straight and get
the answers for the American people as to why they are hurting
when they go to fill up their car at the pump.
General McMaster, if I could start my questions with you,
and first I want to thank you for your service to our Nation.
In light of the horrible crimes that were discovered other the
weekend in Ukraine perpetrated by the Russian Army, many
Western nations are now catching up to the United States in
recognizing the need to end the importation of Russian oil and
gas. Lithuania has become the model for this where that nation
went from being fully dependent on Russia for energy only a few
years ago to now having the ability to end any Russian imports.
General, what will be the result of this decisions by the
Western European countries to end Russian imports, and how will
that impact gas prices here and around the world?
Mr. McMaster. Congressman, the result in the near-term will
be to constrain the supply even further, but I think the key is
that we have to start racing now to catch up to be able to
displace Russian oil and gas in the market as well as to pursue
solid supply chains for the transition to renewables. I think
what is really important about what Europe is doing is to
followup now on infrastructure investment. So much of that
infrastructure was designed to keep Russia's coercive power
over those economies. Some big investments need to be made in
infrastructure on our side of the Atlantic as well as in
Europe.
And then also it is really important to recognize that we
need a rational approach to energy security and climate and
carbon emissions. Germany made a leap. They made a leap away
from nuclear and a leap toward renewables without investing in
hydrocarbon infrastructure, and as a result they leapt off a
cliff and can't keep the lights on. So it is very important for
us to recognize that as we pursue reductions in carbon
emissions that we have a sensible approach to energy security.
Mr. Latta. Thank you. Mr. Woods, there have been efforts to
shut down pipelines across the country including Line 5 which
serves Ohio and Michigan, and last year we saw how gas prices
were impacted with the shutdown of the Colonial Pipeline. Would
you speak to the consequences for gas prices if anti-pipeline
advocates got their way and more pipeline operations were shut
down?
Mr. Woods. Thank you for the question, Congressman.
Infrastructure plays an incredibly important role with respect
to energy supplies and keeping reliable and affordable energy
available for American people around the Nation. What you will
tend to find is sources of supply refining in the Gulf Coast is
feeding the demand in the East Coast, and so having those
pipelines available is absolutely critical.
As upstream production and new resources of natural gas are
found and developed that production needs to be connected to
markets which then have to move via pipelines which are the
most efficient, the most environmentally sound and the safest
modes of transportation. Stopping those lines of either natural
gas to consumers or crude into refineries or from refineries
into demand centers ends up putting a disruption into the
balance of the supply and demand and increases prices and
reduces security for people in accessing reliable and
affordable energy.
Mr. Latta. Thank you. Mr. Lawler, in my last 30 seconds,
what role can the United States play in delivering cleaner,
safer fossil fuels and displacing less responsibly produced oil
and natural gas from countries like Russia?
Mr. Lawler. Thank you for the question. I think the U.S. is
on track to be a leader, and I think BP is participating in
that. As I mentioned earlier we are spending $2-to $3 billion
this year. We will be spending $4 billion around the 2025
timeframe, and it is important that we keep our eye on both
topics right now. It is very important that we get near-term
supply up as we have all discussed, but it is also important
that we follow through on the clean energy environment that we
all want to live in in the future.
Ms. DeGette. Gentleman's time has expired. The----
Mr. Lawler. I yield back.
Ms. DeGette [continuing]. Now recognizes the Chair of the
Select Committee on Climate Change Crisis, Congresswoman Castor
from Florida for 5 minutes.
Ms. Castor. Well, thank you, Chair DeGette, for calling
this very important hearing on price gouging by the big oil
companies. It is truly outrageous, and we have seen since
Putin's attack on Ukraine a rise of at least 75 percent--or 75
cents, and this is--I really feel for the small business owners
and the parents trying to get their kids to school every day.
They have supported the ban on Russian oil imports to America,
so they are doing their patriotic duty. They are willing to
help the Ukrainian people, and now it is time for the big oil
corporations to do the same.
It is time for the big oil companies to lower prices rather
than pad your bottom line. It is time for you to end the
billions of dollars in American funded taxpayer subsidies that
are going to support your businesses. It is time to stop your
decades long obstruction of the transition to clean energy
which would provide lower costs for consumers for the cars and
trucks we drive, the way we heat our homes and cool our homes.
It is really scandalous to see this profiteering at a time when
the Ukrainian people and freedom are under attack, and it is
scandalous to watch year after year as you unleash your
lobbyist, the grand oil party, to block action to get to true
energy security.
And what can that look like? Because America is already the
No. 1 producer of oil and gas. Has that insulated us from the
volatility and the price spikes? It hasn't. Now I want to
remind everyone it was just a few years ago that the Congress
and the big oil companies pressed to allow the export of
petroleum products from the United States, something that many
of us opposed at the time. U.S. exports they said would allow
us to become even more independent. This would lower prices.
Has that happened? No. And more than a half a million barrels
of petroleum exports leave the United States for China every
day.
Going down the line I want to ask each of the CEOs how much
of your product produced in the United States does each of your
companies export to China largely being aligned with Putin
these days? Mr. Lawler?
Mr. Lawler. Thank you, Congressman. So I can't speak to the
exact volume. As you may know the world market is very
dynamic----
Ms. Castor. Just a quick number is all we need.
Mr. Wirth?
Mr. Wirth. Congresswoman, that is not a number that I have
at hand, but I would be happy to followup with your staff and
make sure we get that----
Mr. Lawler. Muncrief?
Mr. Wirth [continuing]. Information to you.
Mr. Lawler. Mr. Muncrief?
Mr. Muncrief. Yes. We export about ten percent of our
production predominantly to Europe.
Mr. Lawler. To China. I am just asking about China.
Mr. Muncrief. Oh, I don't think hardly any to China.
Mr. Lawler. All right. Mr. Woods?
Mr. Woods. I am not aware of that number. I think it is a
very small number, but we can followup with you and give that
to you.
Mr. Lawler. Mr. Sheffield?
Mr. Sheffield. A very small number.
Mr. Lawler. Ms. Watkins?
Ms. Watkins. I don't have the number, but I can also
followup with you with it.
Mr. Lawler. Well, this is very important to know because we
are looking for solutions. So one of the solutions may be to
ban the export of our petroleum products to countries that are
a maligned influence in the world, but that is not the real
answer. The real answer, of course, is breaking this dependence
and addiction on oil and gas. Renewable energy right now is the
cheapest form of energy, and it is getting cheaper every year.
We have got to accelerate the transition to clean energy.
It is more stable. It is more affordable. It is generated here
at home. The House has passed legislation. It is being blocked
largely by lobbyists aligned with the fossil fuel companies
that would lower the cost of your gas bill, would lower your A/
C bills, would lower the cost of electric vehicles and would
provide--I mean, this is a time we have got to provide relief
to Americans and not double down on the same old wretched thing
where we are addicted to oil, and we can't get off.
This is a time we must pivot especially because the world's
top scientists early this week said we are facing a future
catastrophe and much higher costs than the pain we see at the
pump right now unless we make this break right away. Our time
is urgent, and we have a moral obligation to our kids and
future generations to give them a livable planet and a healthy
economy where everyone can thrive, and that is what we must do.
I yield back my time.
Ms. DeGette. I thank the gentlelady. Chair now recognizes
Mr. Guthrie for 5 minutes.
Mr. Guthrie. Thank you, Madam Chair. General McMaster, I
will have a couple questions for you. I have known you for 39
years now this summer. I followed your career the whole time
since we first met at West Point. And I know your intellect.
You are an academic. You are a straight shooter, and sometimes
your straight shooting has taken you to some lonely places. So
we should find your analysis and what you say to be very
thoughtful and something we should find very sobering.
And in your testimony you argue that energy security versus
saving the planet is not a false choice. Energy security,
including American independence, including fossil fuels is not
a false choice. In your book Battlegrounds, which I read when
it first came out, you talk a lot about climate change, and it
is important to address climate change. You absolutely do not
dismiss it. So would you expand upon the question that energy
security versus saving the planet is a false choice?
Mr. McMaster. Thank you, Congressman Guthrie, and thank you
for your service and those fond memories from many years ago at
West Point. I really believe it is a false choice. The problem
is, Congressman Guthrie, I think what we have been doing is
pursuing nonsolutions, and we can't afford to pursue
nonsolutions anymore. And what I mean is this idea that we can
have an energy transition that all of a sudden moves from
fossil fuels directly to renewables without a bridge in place.
And of course this is where the U.S. can play such an
important role by providing the bridge associated with natural
gas and the displacement of coal in particular. If we want to
save the planet, we have to get off of coal for energy
generation. That was the largest reduction in C02
emissions ever in the history of the world is what we did in
the United States associated with the opportunity presented by
cheap natural gas. It is extremely important to recognize that
whatever we come up with, whatever exquisite solution we come
up with to CO2 emissions and climate change it has to be
applicable in developing economies because they just won't do
it.
They are not going to compromise economic growth and moving
people out of poverty for some exquisite solution that isn't
consistent with what the market will bear. So affordable
renewables yes, huge part of it, but also a big part of it is
relatively inexpensive natural gas which we can get to with
increased production and export.
And then finally it is emerging capabilities like next
generation nuclear which can be combined with hydrogen to meet
so much of this demand and to do it as a zero emissions (audio
drop). It is a combination, Congressman, and what is sad about
it is we continue to pursue these nonsolutions and get the
opposite effect of what we desire, for example, with burning
coal exports going up, C02 emissions going up in
large measure because of our pursuit of these nonsolutions.
Mr. Guthrie. OK. I want to ask you another question.
Talking about you said in renewables we are still going to be
dependent on supply chains in foreign countries. It is
reportably that we left $3 trillion in critical minerals in
Afghanistan. We left them in the hands of the Taliban and their
new friends the Chinese. Would you comment on that?
Mr. McMaster. Congressman, the competition with China
occurs in places outside of the Indo-Pacific region, and in
this case you are pointing out how important South Asia is. But
I would say it cuts across the Middle East. It cuts across
Africa, and it is really important for us to recognize the
importance now of resilient supply chains especially those
associated with renewable energy and energy transition. Of
course, an electric car, I don't know how many magnets, I
forget, is in an electric car, but it is a lot. And then, of
course, battery manufacturing, magnet manufacturing, the whole
upstream supply associated with rare earth and other critical
minerals and the separation from ore, all of that has to be
resilient, and the only way we are going to get there is with
onshoring and nearshoring, and that really I think has to be a
major focus of this committee and the Congress as well as the
Biden administration.
Mr. Guthrie. OK. I will ask you one more thing. In your
written statement, you argue that OPEC isn't expanding their
production when President Biden puts out a request because of
their concern with his dealing with Iranian the Iran deal.
Would you comment on as well and also what is going on in
Yemen? Would you comment on that as well?
Mr. McMaster. Well, it is what I would characterize as a
nonsensical Mideast policy that has alienated what could be key
partners in the Gulf region, and this is foremost among them
Saudi Arabia and the United Arab Emirates. And what they are
upset about is a very weak--another weak Iran nuclear deal that
would, essentially, just give the theocratic dictatorships in
Iran cover for continuing their nuclear and their missile
programs which are a grave threat to all of them in the region
and, obviously, a great threat to Israel and then also our
failure to designate or taking off the designation from the
Houthis in Yemen as a terrorist organization even as they are
firing rockets into the Emirates and into Saudi Arabia.
So we ask them for cooperation, but of course, they are not
giving it to us because they are angry with us. And I think in
some cases, you know, rightfully so, because of an unwise
approach to the Middle East and to Iran.
Mr. Guthrie. Thank you. My time is expired. I yield back.
Look forward to seeing you again, soon.
Ms. DeGette. Thank you so much. Chair now recognizes Mr.
Sarbanes for 5 minutes.
Mr. Sarbanes. Thank you very much, Madam Chair.
I want to thank our witnesses for being here today. Let me
just say up front, I will put my cards on the table. I do not
trust you. I do not mean that in the sense that I question your
personal integrity. I do not. But I recognize your role. Your
role is to lead large for-profit corporations that are looking
to maximize the return to your shareholders. So when I say I do
not trust you, what I mean is I do not trust you not to take
advantage of this situation to try to meet that goal.
I think that there is clearly an opportunity to profit from
this crisis that has occurred in Ukraine from the disruption to
the global supply chain of oil and gas. And it is an
opportunity that you are seizing on. Again, I understand why
you want to satisfy your shareholders. I won't speak to what it
means for your executive compensation. But that is your
impulse.
And earlier we saw a pretty revealing chart that
Congresswoman DeGette laid out, where she conceded, obviously,
that the price of crude oil had spiked when the invasion
occurred, initially the disruption. And predictably the price
at the gas pump went up as well. But then she showed how the
price of crude is coming down but the prices at the pump have
not come down.
So I think what that reflects is this ability to kind of
manipulate the situation. Your industry can say, ``Well we
expected the crude oil price may go up,'' so you can anticipate
that by charging more to the retailers. And then if the price
comes down, you can say, ``Well it is coming down''--``Crude is
coming down, but it is going to take a few days before that can
be passed along. Or maybe we cannot pass it along yet because
we think the price may go up again.''
You have got a lot of latitude to manipulate and take
advantage of the situation in ways that will boost your
profits. And sometimes it is legitimate to use phrases like
there are variety of factors in the marketplace. Prices move up
and down every day. That is the industry, I understand that.
But sometimes that can just be a good way to cover up what is
an effort to--or an opportunity to price gouge.
The fact of the matter is that your customers, not just the
generic consumer at the pump. These are your customers. These
are your red-blooded, patriotic, American customers, many of
whom when interviewed are saying, ``We are willing to take a
hit. We are willing to pay a little bit more to try to address
this invasion.''
So they are stepping up. So if you realize savings, don't
you think it is the patriotic thing to do to pass that savings
along?
Let me start with you, Mr. Lawler. If BP America is
realizing savings because the price of crude is going down now,
so you are saving money on that end, isn't it the patriotic
thing to do to pass that savings along to your customers at the
pump?
Mr. Lawler. So Congressman, as I had shared before, we sell
our crude oil into a market, and it is a competitive market.
And we sell all of our refined products into a competitive
market, and we buy feedstocks for our refineries in a
competitive market. And it is not something that BP controls.
Mr. Sarbanes. Yes.
Mr. Wirth, I am going to see if I can get a better answer
from you. You have costs. The costs go up, costs go down. The
price of crude is going down. That represents a savings to your
operation, does it not? Yes or----
Mr. Wirth. As the price of crude goes down, that reduces
the cost of inputs to our refineries. That is correct,
Congressman.
Mr. Sarbanes. Savings. Is it the patriotic thing to do when
that happens, as it has happened, based on what Congresswoman
DeGette showed us earlier; is it the patriotic, corporately
responsible thing to do to pass those savings along to your
customers at the pump?
Mr. Wirth. Congressman, no single company controls prices
in these markets.
Mr. Sarbanes. I know. I got it. My time is out. There is a
lot of hocus pocus language you can throw up here. I think you
need to pass savings along when you realize them. You have done
that recently. That can benefit the consumer, again, your
loyal, devoted, customer at the pump.
Ms. DeGette. The gentleman's time has expired.
Mr. Sarbanes. And I yield back.
Ms. DeGette. Mr. Bilirakis, you are recognized for 5
minutes.
Mr. Bilirakis. Thank you. Thank you, Madam Chair.
Thank you again to the witnesses for coming to testify at
this very important hearing. Some of my democratic colleagues
have for weeks, and especially during this hearing, lambasted
American oil and gas companies for high prices at the pump and
attempted to deflect criticism from the President for his
rhetoric and policies that have clearly sought to defer a--to
deter and reduce domestic oil and gas production.
My Republican colleagues have talked about the negative
impact that has had--it has had domestically because of the
President's Green New Deal policies. And that is what they are.
I want to highlight the Biden administration that it is not--in
other words, is it jeopardizing the United States' energy and
dependency security? I think it is. It is actively intervening
to stop foreign fossil fuel projects that empower our allies
and reduce Europe's dependence on Russian energy.
And I will give you an example. I am talking about the
Biden administration's recent reversal of the EastMed Pipeline,
which would have delivered natural gas from Greece, Israel, and
Cyprus to the Southeast--to Southeastern Europe. Makes sense.
The parts of Europe most dependent on Russia. And I will add
that the President in 2014, when he was vice president,
approved of this project.
After establishment of U.S. support in 2019, for our
allies' energy and dependent energy projects, specifically
mentioning the pipeline, the Biden administration reversed
course. Why? Contradicting U.S. policy and not following the
law as outlined in a bill I co-lead, and most of us voted for,
that was signed into law: the Eastern Mediterranean Act of
2019.
We are seeing what happens when Europe is energy and secure
right now in Ukraine. Nobody can deny that. And even going back
to 2006, the extended effect that has had on our own national
security and that of our NATO allies.
Thank you for your service, General McMaster. And I have a
question for you. In your testimony you talked about Putin's
long history of trying to coerce its neighbors to extend
Russia's influence. Could you please briefly describe the
positive impact EastMed Pipeline could have on reducing the
energy dependence on Southeastern Europe countries--European
countries and hopefully preventing repeat--a repeat of what is
tragically happening in the Ukraine in countries like Romania,
Bulgaria, I could go on, Moldova, let alone the NATO allies. If
you can comment on that I would appreciate it, General. Thank
you.
Mr. McMaster. Congressman, what you are highlighting is a
tremendous opportunity. A tremendous opportunity for
international investment in infrastructure. The current
infrastructure that is giving Russia course of power has to be
circumvented. And it has to be circumvented in a number of ways
from--the Eastern Mediterranean is one tremendous possibility,
as well as the infrastructure you see in Southeastern Europe,
such as Kuril Island, for example, as an import terminal.
It is important to recognize that a lot of the
infrastructure that Russia is using is old Soviet
infrastructure for--so for example in Ukraine, where they are
concentrating the offensive now, in the Donbas, that is the
area in which about 90 percent of the energy infrastructure and
potential in Ukraine lies. And that is not a coincidence.
Ukraine is designed to export, right, energy, not receive
energy imports.
So these sorts of infrastructure investments are immensely
important and of course people argue, ``Well it is going to
take a long time.'' Well it takes a much longer time if you
never start. And so I think in every crisis, we should look for
an opportunity. One of the opportunities here is renewed
investment in energy infrastructure globally.
Mr. Bilirakis. Thank you, General. Common sense. That is
just talking about the pipeline from a national security
perspective as well.
From what I have been hearing, my colleagues across the
aisle and the President of the United States do not seem to
understand or willfully ignore that their actions not only
affect current prices, but heavily influences decisionmaking
focused in the future like investments, of course, oil futures
and oil price contracting. All which feed back to the--affect
the current--current and future prices as well.
So Mr. Wirth. I know that Chevron, especially after your
acquisition of Noble Energy have--you have a significant
presence and activity in Eastern Mediterranean. Could you
please describe the impact to the administration's reversal on
the EastMed Pipeline has, not only on other public and private
investments in natural gas projects in the region, but
specifically, the EastMed Pipeline, which is currently in the
stage of seeking investments and evaluating viability. If you
can answer that question, I would appreciate it. Quickly.
Mr. Wirth. Congressman, I appreciate you raising this
issue. It is an important one. The Eastern Mediterranean has
tremendous gas resources that currently serve only local and
regional markets. We are working on a number of options to try
to extend that gas into other markets, and Europe in
particular. The Eastern Med Pipeline is one alternative. It is
a complex costly alternative, but it is a real alternative. We
are looking at liquefield natural gas, floating liquified
natural gas as we welcome dialog with others that could help
mobilize on the capital and infrastructure to get that gas to
European allies.
Ms. DeGette. The gentleman's time is expired.
Mr. Bilirakis. I think it makes sense. Thank you.
Ms. DeGette. Chair now recognizes Mr. Welch for 5 minutes.
Mr. Welch. Thank you.
Gentlemen and women, we have--there is two issues here. One
is a debate about the long-term energy and how quickly, in my
view, we need to transition to renewables. But there is another
issue that is immediate. And that is the impact of the War in
Ukraine, that brutal invasion that blood thirsty Putin has
inflicted on the people of Ukraine and how that has caused such
disruption pain for consumers everywhere. From Eastern Europe
to the United States.
And the question that all of us have is what can we do to
support the people of Ukraine in their effort to survive, and
what can we do to help citizens--everyday citizens who are
living paycheck to paycheck to be able to pay the bills that
have escalated, particularly at the pump and for home heating
oil.
This is not for me a debate about the long-term policy. I
know we have disagreements here between me and my colleagues,
and perhaps me and some of you. I think we have got to get the
clean energy as quickly as we possibly can.
But here is what alarms me. On March 6, 2020, just before
we had the shutdown as a result of COVID, U.S. crude oil
production was 13.1 million--thousand barrels per day. Or a
million barrels per day. Yes, 3,000. Thank you. On January
2022, it has declined to 11.4.
So what we have seen in that time is production has gone
down, prices have gone up, and what we have seen particularly
since February in the invasion, is that profits have exploded,
dividends have been raised, executive compensation is up, and
shareholders' stock buybacks are up $41 billion.
So the question I have, and I will start with Mr. Wirth, is
in the boardrooms, there can be a decision about the allocation
of the resources of the company, putting it into production to
bring it up to pre-pandemic levels. Stock buybacks and
dividends, all of these have been increased. Has there ever
been any discussion about lowering the price at the pump to
help folks who are helping to bear the burden of the U.S. and
our European allies' support for the people of Ukraine?
Mr. Wirth. Congressman, I appreciate your concern. We share
that concern for Americans----
Mr. Welch. I am not asking about your concern. I know you
are concerned. I will grant that. I am asking specifically, is
there any discussion about, ``Hey, fellas, you know, maybe we
ought to lighten up on the stock buybacks, maybe we ought to
lighten up on the dividends, and maybe we ought to lower the
price at the pump? It will be tough. It will be less profit.
But you know what? That might help the cause here.'' Has there
been any discussion about that?
Mr. Wirth. Congressman, we have very lengthy discussions
about capital allocation. Our production in 2021 was the
highest in the history of our company, higher than it was pre-
pandemic. Our capital spending this year is up 60 percent
versus what it was just a year ago that is on American
production----
Mr. Welch. Do you dispute my figures about the U.S.
production is less now than it was before the pandemic?
Mr. Wirth. Congressman, we went through a tremendous
economic contraction during the pandemic. There was no need for
more supply, as supply was--there was----
Mr. Welch. That is right. You know, this is really pretty
simple, because you all have to make decisions, and it gets all
complicated, and you have got your economic models, you have
got your computer logarithms, whatever else you have.
But bottom line, you have a decision with the profit. You
put it into stock buybacks; that helps shareholders. You put it
into dividends; it helps shareholders. Or you put it into
production, and possibly, under these extreme circumstances,
with a war, with people dying in Ukraine, you say, you know
what? Maybe we will lighten up a little bit on the stock
buybacks, maybe we will lighten up a little bit on the
dividends, and maybe we will lighten up a little bit to help
folks in Vermont who are getting hammered with the price at the
pump. Is that a discussion?
Mr. Wirth. Congressman, it is a discussion. We are
investing more capital to grow production. We are--we can do
that and return value to shareholders. They are not mutually--
--
Mr. Welch. But you do----
Mr. Wirth. We are doing both of those.
Mr. Welch. You do have the--it is a world market, and you--
I agree with that. You don't have--even the mighty oil
companies don't have total control over what the price is. But
they do have control over how they allocate capital between
increasing production, between profits, between stock buybacks,
and between dividends.
I yield back.
Ms. DeGette. Chair now recognizes Mr. Johnson for 5
minutes.
Mr. Johnson. Thank you, Madam Chair.
First of all, I want to thank our panel, some of the
biggest names in oil and gas, for joining us today. And thank
you all for what you do to keep the lights on, to power
transportation and industry, to create thousands of consumer
products and millions of jobs, and, quite literally, to fuel
modern life as we know it in America. You deserve praise for
that. What you produce has lifted billions of people out of
poverty around the world.
But there is a problem. Many of you have big advertising
budgets. Why won't you tell that story? I am not going to name
names, but we have all seen the TV commercials from big oil
filled with solar panels, green climate messaging about how you
are diversifying your portfolio, and how you are embracing
liberal progressive values. What has been your return on
investment with that effort?
You have taken a shellacking today from the Democrats. Do
they seem impressed by your efforts to show your allegiance to
their anti-fossil-fuel agenda?
Do they give you any credit for your green overtures, your
ESG commitments, or your carbon-cutting plans? No, they do not.
For heaven's sakes, they are blaming you for high gas
prices, for inflation, for bad weather, and all the world's
problems that their failed policies are actually causing.
Your industry has a lot to be proud of, and Americans know
it. You just have to help us tell them. But if you continue
chasing these radical green, progressive values, these moving
goalposts, over the real value that you bring to our country
and the world, then the environmental left and the ESG
investors will crush you and the millions of Americans that
support--that need your support. So today I want to give you a
platform, ladies and gentlemen.
First, Mr. Sheffield, these are yes-or-no questions,
because I got a lot of them. Mr. Sheffield, Pioneer Resources,
are you and your employees still proud of the oil and gas that
you produce, knowing that it goes into so many essential
products and industries?
Mr. Sheffield. Yes, we are, sir.
Mr. Johnson. OK. Thank you very much.
Mr. Muncrief, Devon Energy--or Devon Energy, if I got that
right--are you proud of the great-paying jobs you provide in
America's oil and gas fields?
Mr. Muncrief. Yes. The answer is yes----
Mr. Johnson. OK, thank you very much. That is a big yes.
Mr. Woods, ExxonMobil, are you proud that your company, one
of the world's largest, provides resources that, quite
literally, lift billions of people out of poverty, globally?
Mr. Woods. Absolutely.
Mr. Johnson. OK. Mr. Wirth from Chevron, are you proud that
the jet fuel, diesel, and gasoline that you sell plays such a
vital role in Americans getting to their jobs, getting their
jobs done, taking care of their families, and keeping our
economy moving?
Mr. Wirth. I am absolutely proud of our people, our
products, and our values.
Mr. Johnson. OK, thank you.
Ms. Watkins from Shell, are you proud of your company's
investments to export more clean, abundant, American liquefied
natural gas?
And are you proud of the cracker plant at Monaca,
Pennsylvania that produces a raw material that goes into,
literally, thousands of products that are needed in everyday
life here in America?
Are you a proud--are you proud that the gas that you
produce that our European friends and allies need so much right
now--that they are literally dying for--are you proud that you
produce that product?
Ms. Watkins. Yes, Congressman, I am.
Mr. Johnson. Thank you very much.
Mr. Lawler from BP, estimates say oil markets are going to
be three million barrels a day short with Russian crude coming
off the market. But the world needs that three million barrels
that the Russian market is going to collapse. Would you be
willing to help make up that deficit, perhaps, from American
resources?
Mr. Lawler. Well, I can tell you, Congressman, we are
focused on that. Just this year----
Mr. Johnson. OK, that is a yes. I appreciate that.
Mr. Lawler. Well----
Mr. Johnson. Thank you very much.
Ladies and gentlemen, these are a few commercials that you
folks could run. You have got a good story to tell. Use these
ideas to tell the American people the truth about what you do,
so that they can quit being misled by the barrage of negative,
disingenuous, false advertisement that you see coming from my
Democratic colleagues today.
I am going to yield back a whole 18 seconds of my time,
Madam Chair.
Ms. DeGette. I thank the gentleman. Chair now recognizes
Mr. Cardenas for 5 minutes.
[Pause.]
Voice. We see him on online.
Ms. DeGette. OK, if Mr. Cardenas isn't here, the Chair now
recognizes Mrs. Dingell for 5 minutes.
Mrs. Dingell. Thank you, Madam Chair. Thanks for holding
this hearing.
Times are tough right now. Americans and my constituents
are really feeling it in their wallets. Gasoline prices in
Michigan have doubled to triple in the last couple of years.
This means families, as everybody has been talking about, are
forced to cut costs, while the--while they see the oil
companies making record profits. I had a UAW worker who at
Christmastime told me he couldn't go visit his family, because
he simply can't afford it anymore. Another worker who used to
visit her mother every Sunday said it is really hurting her.
So times like this have underscored the importance of
ramping up investments in domestic manufacturing, of clean
energy.
And I am going to say to my colleague, Mr. Johnson, look, I
am a car girl. I come from an industry that operates with the
internal combustion engine. And yet global climate change is
real. We are 30 percent responsible for carbon emissions, and
we are coming together to work together, the OEMs, the workers,
and the environmentalists to try to get to the next generation.
And that is what we are all talking about with this.
We need to make this transformational shift to electrifying
the transportation sector to reduce carbon emissions and our
dependance on foreign energy sources while we are creating
good-paying American jobs and strengthening clean energy supply
chains. The fact of the matter is this is an economic and
national security issue.
I have heard each of you today point to--thank you to our
witnesses, but I have heard each of you today point to the
complex global commodity market, or describe your company
simply as price takers. The way you talk about your business,
it is as if you have no control over anything, and that you are
just helpless participants in the global market. But I am not
sure that is true. Your decisions on whether to increase,
sustain, or decrease production affect the price per barrel.
But isn't it true that your product is the majority of the
price that someone is paying, that the customer is paying for
the cost of gasoline?
So if the price of your product, crude oil, is high, then
the price of gasoline at the pump is high. Correct? I will
quickly go down the line, just yes or no.
Mr. Lawler?
Mr. Lawler. Yes, the price of crude does impact the price
of gas.
Mrs. Dingell. Just a yes or no, please.
Mr. Wirth?
Mr. Wirth. Yes.
Mrs. Dingell. Mr. Muncrief?
Mr. Muncrief. Yes.
Mrs. Dingell. Mr. Woods?
Mr. Woods. Yes.
Mrs. Dingell. Mr. Sheffield?
Mr. Sheffield. Yes.
Mrs. Dingell. Ms. Watkins?
Ms. Watkins. Yes.
Mrs. Dingell. But looking back at this chart, the same
doesn't seem to apply on the downside. And that is why we want
to understand this better, because the consumer isn't seeing
the benefit at the pump. So what I want to understand is what
it is that your companies can and should do, and what Congress
can do to incentivize action so we can alleviate the pain at
the pump for our constituents.
Global demand has been rebounding for nearly a year, and is
projected to exceed 2019 levels by 200,000 barrels per day this
year. The demand is there, but we still haven't reached pre-
pandemic levels of production. And while I understand that you
simply cannot flip a switch or turn on a spigot, we must be
honest about the main reason that some companies are choosing
to ramp up production slowly.
A survey of oil company executives by the Dallas Federal
Reserve found that nearly 60 percent of oil companies are
restraining growth because of investor pressure. But that same
survey also found that, for large firms like the ones--like you
all sitting before us today, the price needed to turn a profit
on a new well is somewhere around $50 a barrel on average,
roughly half the current trading price per barrel.
Mr. Muncrief, let's start with you. You stated on a
December 21st, 2021 investor call that Devon can officially
sustain production at an ultra-low WTI break-even funding level
of about $30 a barrel. Is that still approximately your break-
even point?
Mr. Muncrief. Yes, it is. It is slightly higher than that,
with the inflation we have seen, but it is pretty close, yes.
Mrs. Dingell. Mr. Woods, on February 1st, 2022 you stated
on a call with investors that Exxon's break-even price for a
barrel of Brent crude is $41 per barrel, and is expected to
average $35 a barrel between now and 2027. Is that accurate?
Mr. Woods. For the projects that we are developing, that is
accurate.
Mrs. Dingell. Mr. Lawler, the guidance that you gave
investors for the second half of last year was that your break-
even price was around $45 per barrel for oil. Is that still
your break-even point?
Mr. Lawler. That sounds about correct, yes.
Mrs. Dingell. Mr. Wirth, your CFO told investors that your
break-even was around $50 per barrel to cover capital
expenditures and dividend. What is the break-even just to cover
your costs without the dividend?
Mr. Wirth. Our dividend, Congresswoman, is about $10
billion a year. That is--divide by our production of about
$1,000,000,000--so it would be about $10 less than that.
Mrs. Dingell. Ms. Watkins, your company's break-even is
around $30 per barrel, correct?
Ms. Watkins. Yes.
Mrs. Dingell. Mr. Sheffield, your break-even is around $30,
as well, correct?
Mr. Sheffield. Yes, that is correct.
Mrs. Dingell. So, my friends, the price of oil today was
$96.76 for WTI and $101.54 for Brent crude. Given those prices
and break-even costs, it is no surprise the oil and gas
industry is projected to collect a windfall of up to $126
billion in 2022 alone.
And while you break even at as low $30 per hour, and are
selling right now well above $100, the oil industry is also
taking billions of dollars of subsidies from the American
taxpayer. Subsidies are meant for struggling industries that
need taxpayer assistance to operate and remain afloat. With
margins like this, it is not clear to me why you all are
getting tax subsidies, and taxpayers are paying for it at the
pipe--pump.
So I will leave it with that, and yield back.
Ms. DeGette. I thank the gentlelady. Chair now recognizes
Mr. Bucshon for 5 minutes.
Mr. Bucshon. Thank you, Madam Chair.
I mean, I just want to say this. I mean, we are in a free
market economy with publicly held companies that millions and
millions of Americans have as part of their portfolio and their
retirement accounts. And so I think we need to remember that,
you know, this is a free market economy. And sometimes I think
some of my colleagues forget that.
Today my constituents are paying record-high gas prices. In
Evansville last month, regular unleaded gas reached $4.25 a
gallon, while diesel climbed over $5 a gallon. On average, gas
prices in Indiana are over 45 percent higher than they were at
this time last year. While Putin's invasion of the Ukraine has
undoubtedly had an impact on these prices, Republican members
of this committee have been sounding the alarm on rising fuel
and energy costs for months.
In fact, since January 2021, because that is when it really
took off. We have been sounding the alarm on rising fuel and
energy costs well before the invasion of Ukraine. Yet today my
colleagues on the other side of the aisle are calling on their
usual game play. When gas prices get too high it is price
gouging, let's get the FTC to investigate.
Let's be clear. In my view, this isn't remotely close to
the main culprit of why Hoosiers can't afford to fill up their
cars. It has been the hostile policies of the Biden
Administration toward American energy producers that has helped
to drive up prices during the past year. And instead of looking
into how we can reverse course on these policies, again we
revert back to the FTC, which has never shown that price
gouging is the main culprit for decades, every time it has been
approached to study this.
Not only are these misguided policies emptying out wallets
of my constituents, they are also threatening our national
security. As we should be learning from our European allies,
those misguided energy policies have given significant leverage
to Putin. And we must prioritize our energy security as a
matter of national security. And it just baffles me why the
Biden Administration continues to pursue policies that harm
domestic energy producers, weaken the position of our allies,
and ultimately plays into the hands of adversarial states
around the world who seek to weaponize access to energy.
We must get back to American energy dominance. General
McMaster, you mentioned your testimony that authoritarian
governments use their power over energy supplies to coerce
opponents. The Biden Administration, in my view, is playing
right into Russia and China's hands by pursuing restrictive
energy policies, and attempting to negotiate with dictators in
Iran and Venezuela for oil, rather than producing American
energy and getting our country back to pre-Biden Administration
energy dominance, where we were net exporters of energy.
And some of this may be ground that has been covered, but
General, could you explain what is at stake if the United
States were to continue down this road and become irreversibly
dependent on upon adversaries like China, Russia, and Iran to
meet our energy needs?
Mr. McMaster. Congressman, thank you. You know, we all live
and learn. So I am hoping that the Biden Administration, all of
us, will learn from Russia's use of energy for coercive
purposes that we should learn, obviously, our lesson in terms
of investing in our own production and export, which can help
satisfy global demand, and do so in a way that redounds to our
benefit in terms of security and prosperity, and prosperity in
the world broadly.
But also, as I think you are alluding to, the danger
associated with becoming over-reliant on supply chains that go
through China, especially those connected to renewables,
renewables associated with, you know, with solar and wind power
and the hardware and equipment, but also, you know, the--you
know, the manufacturing of electric cars, and the batteries
that go into them, and the magnets that go into them, as well
as the minerals and various materials.
So I think it is--and by the way, the oil that goes into
them in the form of plastics. I think every electric car is
about one-third made out of petroleum products.
So it is important for us, I think, to recognize that we
have an opportunity. And, you know, of course, I don't want to
lay blame on anybody at this stage. As long as we learn our
lesson, and we change the policies, we relax the regulations in
the permitting, and be able to take advantage of the great
promise of our tremendous natural resources here, and American
innovation and ingenuity.
Mr. Bucshon. Yes. I mean, I am particularly concerned about
China's situation, and their strong position in the renewables
market, as you just mentioned, especially as, you know, we have
a rush to green energy agenda while still discouraging mining
of critical minerals and energy production in the United
States.
So--I mean, I think you did touch on this--by pursuing this
rush to green without shoring up domestic mining and processing
capabilities, particularly for our battery situation, are we
simply going to create a dependency on China for renewables
that will echo our dependency on Middle Eastern oil in the
1970's?
Mr. McMaster. Congressman, I think that is exactly the
danger. There has been some good work done on this at the
Hudson Institute by Dr. Nadia Schadlow that I would recommend
that shows really how vulnerable we are, these supply chains
that are vulnerable because they are overly dependent on China.
Mr. Bucshon. Yes. And I am out of time, so I yield back.
Mr. McMaster. Thank you.
Ms. DeGette. I thank the gentleman. Chair now recognizes
Mr. Cardenas for 5 minutes.
Mr. Cardenas. Yes, thank you. It is interesting that some
people will say that we are rushing to green energy when it has
been talked about seriously from the president's level to
Congress and along all the analysts around the world for
decades now. So all of a sudden it is a rush to energy. I find
that quite interesting.
When it comes to clean energy, today the United States is
the world's leading producer of both oil and natural gas. And
this has undoubtedly brought our country numerous economic
benefits, including job creation, opportunities in trade,
greater global competitiveness. Nonetheless, Russia's invasion
of Ukraine has shed a light on how interconnected we are,
globally.
And I commend all the individuals in our country and
corporations and heads of corporations for removing their
operations and terminating their operations with Russia. And I
think it is really important that everybody understands, of
course, we stand with the Ukrainian people, and all peoples
around the world who have been invaded by other countries, and
who are being decimated, and atrocities occurring upon them.
Mr. Muncrief, prior to the crisis at the pump, how have you
worked to advance the transition to clean energy, domestically?
Mr. Muncrief. Thank you for that question. You know, our
fundamental business is producing crude oil and natural gas
production, and the best thing we can do is be a strong,
healthy company.
We continue to explore new ways in the energy transition.
We have actually made some investments along the lines of
venture capital to develop some real-time emissions monitoring,
things like that. So it is something we are continuing to look
at, look for opportunities.
The reality is, sir, that these are very low-return
projects, and we have to be mindful of that after a decade of
challenging investments.
Mr. Cardenas. Yes, thank you. And I understand that you
have a legal and fiduciary responsibility to your shareholders,
first and foremost, as a C-suite executive. I understand that.
And thank you for your frankness about talking about where
profits interject in your decisions on how much clean energy
investments your company is going to make. That is not a
criticism. That is just, I think, an honest observation.
Mr. Wirth, as we work toward meeting energy independence,
we can't ignore the ongoing crisis--that is, climate change--
which we know is a serious threat to our planet, to our
national security, economic prosperity, and the future of our
people.
On Monday, the United Nations Intergovernmental Planet--
Panel on Climate Change released a report on climate change
that indicates that global emissions have never been higher,
and that we are on a pathway to more than doubling the 1.5
degree limit that was agreed upon in 2015 in the Paris Climate
Agreement.
With the current emissions trajectory, scientists are
forecasting extreme climate change, unprecedented disaster, and
a world that is uninhabitable. As the U.S. shifts the increase
of energy independence, how is clean energy being prioritized,
and what steps are you each taking to prioritize the transition
to cleaner, more sustainable energy in order to address climate
change and reduce GHG emissions?
Mr. Wirth. Congressman, thank you for the question, and
thank you for your genuine appreciation for the contributions
that this industry makes to American competitiveness and our
economy, and the responsibilities the leaders of these
companies do have.
Our strategy is to decarbonize our existing business by
reducing the emissions intensity of the oil and gas that we
produce, and the world still consumes, and continuing to reduce
that C02 intensity over time while the world is
using traditional sources of energy, and then to invest in new
lower-carbon forms of energy at the same time. Our focus is in
three areas: renewable fuels, hydrogen, and carbon capture and
storage.
In fact, this year we will spend nearly $4 billion on
renewable fuels alone. And we have many, many projects that we
are working on developing in the areas of hydrogen and carbon
capture and storage and other technologies.
Mr. Cardenas. Thank you. My time is limited, and I would
like to also point out that, with all due respect, the $4
billion that you mentioned of the investment, that is good. But
yet, at the same time, it was mentioned earlier that some of
your earnings, quarterly earnings, are in upwards of $10
billion in one quarter. So again, it is all relative, as well.
And I heard earlier that it is about making sure that your
bottom dollar is met, as well. So maybe what we can see--to the
biggest country in the world, when it comes to producing oil
and fossil fuel production, maybe we can get a little bit more
aggressive, and maybe be a better competitor to China so that
those economic forecasts don't play out, that we are going to
end up at the behest of China in the future.
We all have a part to play. American industry is at the
pump every single day in front of our folks. Like in
California, prices have hit above $5.90 per gallon. And we all
have a role to play on making sure that we can do what we can
to give some relief to the American consumer, the American
families, and the American people.
So with that, my time is expired. I yield back, Madam
Chair.
Ms. DeGette. I thank the gentleman. Chair now recognizes
Mr. Walberg for 5 minutes.
Mr. Walberg. Thank you, Madam Chair. The title of this
hearing today attempts, I believe, to skirt blame away from
what I hope we all know, that, despite recent statements, the
Biden Administration's policies have always and will continue
to push us away from energy security in favor of unrealistic
climate goals.
On his first day in office, President Biden issued an
executive order revoking the cross-border permit for the
Keystone XL pipeline. My colleagues have pointed out the long
list of policies they have implemented since that time, whether
it be the unrealistic CAFE standards, the recent SEC rules, or
the ongoing threats to existing pipelines like Line 5 in
Michigan. They all create an inhospitable environment for
energy investment.
Meanwhile, our constituents are suffering. Recently, a
constituent wrote to me, not far from my personal home, saying
that someone had drilled overnight a hole in their truck's gas
tank and stole their gas. This is the environment that Biden
inflation and President Biden's energy policies have created.
It could get worse. Clearly, something needs to change.
And so, General McMaster, just a few months ago, sir, there
were reports that the Biden Administration was actively
exploring the possibility of terminating the Line 5 pipeline in
Michigan, a U.S.-Canada pipeline which brings light crude oil
and natural gas to Canada and our State and states across the
Midwest. Doing so would cost thousands of jobs and further
raise already record-high costs for energy for Michiganders.
General McMaster, what message does the Biden
Administration send, both at home and abroad, when they talk
about closing cross-border pipelines?
Mr. McMaster. Congressman, I think the message is that we
are continuing to pursue non-solutions. And I think this shows
a high degree of strategic incompetence.
It is important for us to reduce carbon emissions. It is
important for us to move rapidly toward renewables and zero-
emission sources of energy. But we have to also recognize the
global energy demand is going to go up 45 percent, you know, by
the middle of the century. So it is important for us to
undertake a range of actions to ensure our energy security, and
to ensure the prosperity for future generations.
And, you know, canceling pipelines, again, this is a non-
solution. It makes no sense, right? Because this is a way to
move energy in a way that is much safer. It is more
ecologically friendly. And again, I think that there is a
certain kind of ideology that drives a lot of this
decisionmaking, and it reveals that we are not displaying the
degree of competence necessary to address these interconnected
problems of energy security, national security, and carbon
emissions.
Mr. Walberg. It pushes back against OPEC and Russia's
control of the global energy market, as well, doesn't it?
Mr. McMaster. Yes, it does, especially if these pipelines
can lead to export terminals that allow us then to alleviate
the, you know, the supply constraints on the--in the global
energy market.
Mr. Walberg. Thank you.
Ms. Watkins, Mr. Woods, and Mr. Lawler, Line 5 services
some of your refineries, and I have been at some of those
refineries. Closing the pipeline, Line 5 pipeline, would mean
thousands of additional trucks on the road, rail cars, tankers
on the tracks going through our communities, creating safety
hazards, and more emissions, actually, rather than a pipeline.
Do you agree that pipelines are the safest and most
efficient way to transport fuel, Ms. Watkins?
Ms. Watkins. Yes, sir. I do believe that they are the
safest way to transport fuel.
Mr. Walberg. Mr. Woods?
Mr. Woods. Yes.
Mr. Walberg. Mr. Lawler?
Mr. Lawler. When properly maintained, absolutely.
Mr. Walberg. And that is key, properly maintained. And the
Line 5, in fact, it is more than properly maintained. They are
attempting to dig a tunnel underneath the Great Lakes to
totally encase it, keep it protected from any type of damage to
bring it across.
And so the fact that we can't--and it would be great to
have had our Energy Secretary here before we all talked today,
so we could ask those questions in the context of what it is
doing in your industry. I appreciate your answers.
And with that I yield back.
Ms. DeGette. Chair now recognizes Ms. Kelly for 5 minutes.
Ms. Kelly. Thank you, Madam Chair, for holding this
important hearing.
I want to start by thanking General McMaster for his
service to our country and for appearing as a witness today.
However, my questions are directed at the oil company
executives who are before us today because my constituents want
to know why they are paying outrageous prices to fill their
cars up.
They want to know why your companies, whose crude oil makes
up some 60 percent of the price of a gallon of gasoline, are
not doing anything while prices at the pump are going through
the roof.
Now, you all have talked extensively about your companies
and the global nature of oil prices that really are not in your
control. Certainly I understand how there are things that can
affect prices in ways that are out of your control.
One of the things seems to be OPEC and OPEC Plus.
Mr. Woods, can you or one of your colleagues explain how
OPEC impacts prices on global markets?
Mr. Woods. Well, as we have talked about today,
Congresswoman, the main driver of price is the imbalance
between supply and demand, and OPEC basically gets together and
decides on production and, therefore, supply in the
marketplace, which will then translate into that balance and
then pricing.
Ms. Kelly. Thank you.
So it sounds like OPEC sets targets for production that
have an impact on price. They restrict output and prices climb.
But I have also heard today how you and your companies are
independently deciding not to invest in new supply or produce
more in order to return value to the shareholder.
So you do not control price, but you do manage or
manipulate supply to restrict the amount of product on the
market relative to rising demand we are experiencing, and you
do that to create scarcity, which in turn drives up prices for
that product.
And, of course, that is what creates value to the
shareholder.
So I guess my question for anyone that wants to take this:
is that not exactly what OPEC and its affiliates have been
doing to the detriment of the American people and our economy
since the oil shock of the 1970's?
How is your behavior any different than that of OPEC, if
anyone wants to answer?
Mr. Woods. Congresswoman, I would say that you have
mischaracterized the approach that the industry takes in
general, and specifically the approach that ExxonMobil has
taken.
What I would tell you, from 2017 through 2021, we have been
extremely committed on improving our production, increasing
supply, and making sure that energy remains available and
affordable for people all around the world.
In fact, we did the hard things. When we were not making
money, we continued to invest to make sure that the projects
that were going to be needed for additional supply were
available and are now producing.
And as a result of that, the production that we are going
to have this year is 25 percent higher than it was last year
coming out of the permit, which is 25 percent higher than it
was before.
Our global liquids production, our oil production around
the world is at the highest it will have been this year for 15
years.
So I would tell you that the company, this company, has
been working to make sure that we are making the investments
and are thinking about the impact on people all around the
world, including the consumers here who are struggling with
high prices, to make sure that products are available to meet
their needs reliably.
Ms. Kelly. Well, I am glad to hear that you are trying to
do something, but again, more needs to be done.
And the other thing is if the price of oil set by global
markets, the American people want to know why we shall continue
to shower your incredibly profitable companies with special tax
breaks and subsidies when you are not working in the interest
of American consumers.
Oil companies, like some of those testifying today get
intangible drilling tax breaks, percentage depletion
allowances, tax deductions for tertiary injection expenses, tax
credits for producing oil and gas from marginal wells, passive
loss acceptance for working interests in oil and gas
properties, tax deductions for income attributable to domestic
production activities for oil and gas, and 7-year amortization
periods for geological and geophysical expenditures. And this
does not even complete the list.
These tax breaks are not being used to increase supply and
lower prices for American consumers. Then it is time to
reconsider whether tax dollars should just be padding your
company's profits.
Thank you, and I yield back.
Ms. DeGette. I thank the gentlelady.
Chair now recognizes Mr. Mullin for 5 minutes.
Mr. Mullin. Thank you, Madam Chair.
I appreciate all the witnesses being here today and
understand the difficulties that you face as a business. And so
I kind of want to start with Mr. Muncrief.
With the onset of the pandemic in March 2020, we saw the
global demand for oil drop and the price plummet, and we
finally are seeing the demand rise to pre-pandemic levels.
Can you explain the process of ramping up production to
meet these needs?
Mr. Muncrief. Yes. Thanks very much for that question,
Congressman.
The process of ramping up production is you need to go out
and secure services, and you need to make sure you have
manpower. You need to make sure you have infrastructure and all
the permits.
And that is something that here at Devon we have been
doing. So if you look at 2021, we averaged 14 rigs. As we sit
here today, we are at 19 rigs. So we have been ramping that up.
Additional ramping takes a lot of considerations, and quite
honestly, it is very challenging. You have heard some testimony
today about the shortage of manpower. We have a tight labor
market.
We also have tightness in rigs and services and supplies.
So it is something that we really have to think about.
But for our company, we not only increased the activity. We
are going to be bringing on 300 new wells this year, and that
will have a big implication as we go into not only the back
half of 2022, but 2023 as well.
Mr. Mullin. Thank you.
Following from day one, President Biden has been very vocal
about being anti-gas and anti-oil. What kind of signals does
that send to the industry when you are trying to plan your
future for your company?
Mr. Muncrief. Well, for us, you know, we really need to
have some dialog, and that is what we have been asking for, is
dialog.
For instance, Congressman, with our company, about 20
percent of our activity or our acreage--excuse me--is on
Federal lands. However, 50 percent of our activity and capital
budget is also on Federal lands, and the production is
corresponding.
So we are seeing some ramping of production primarily in
Southeast New Mexico in Leonetti County, which is the most
active two counties, I believe, in the entire Nation. And so we
are seeing some good response there.
But we really have to think about not just getting existing
permits or new permits for the drilling, but as we talked
about, we also need some additional permits.
And so you have to think about what it is you need for
infrastructure buildout, and you need to think about long-haul
pipes getting to the market.
Mr. Mullin. Thank you, sir.
General McMaster, many of our allies in Europe are relying
on energy from Russia. With Russia waging war on Ukraine, is it
evident now more than ever that Europe needs energy from the
United States?
Would you agree that American energy independence creates
global stabilization?
Mr. McMaster. Absolutely, Congressman. I do not know how
else to say it. I mean, yes, yes.
Mr. Mullin. Are there any geopolitical vulnerabilities for
importing oil from Venezuela, Iran, and Russia?
Mr. McMaster. Absolutely, because we know that it is the
ATM of oil exports that allows those oppressive regimes to stay
in power, to keep a criminalized patronage networks that make
people in those countries reliant to them.
In the case of Iran, in particular, it is the revenue from
oil exports that allows them to continue their four-decade long
proxy war against the Great Satan, us, their Arab neighbors,
and against Israel.
Mr. Mullin. Thank you.
And here inside the United States, the Biden Administration
is pushing us away from fossil fuels. Can you explain how this
plays into the hands of Communist China?
Mr. McMaster. Well, it plays in the hands of China because
we cannot meet global energy demands without the U.S. being
really a major player in the global energy market, in the area
of hydrocarbons, and I would say in natural gas in particular.
But then also, trying to jump ahead to renewables before
renewables are economically viable in terms of developing
economies puts China in a position of control, where China can
restrict access to renewable sources of energy and gain
coercive power over us that is reminiscent of U.S. dependency
on Middle Eastern oil in the 1970's.
Mr. Mullin. Which brings me back to my point that I like to
bring up all the time and something I said earlier, that
American energy independence brings global stabilization.
I said it on HPSI. I have an opportunity to visit with a
lot of our allies around the world, and they will tell you the
same thing. They would rather buy oil from a friendly country
like ours than to be dependent on buying oil from a country
they know would rather take them down than see them succeed.
So once again, global stabilization happens when we have
energy independence for America.
With that I will yield back.
Ms. DeGette. Chair now recognizes Mr. McEachin for 5
minutes.
Mr. McEachin. Thank you, Madam Chair.
I appreciate the opportunity to be with you today, and I
would like to start off by disabusing the American public of
some myths.
A lot has been said about the Keystone pipeline so far
today, but the reality is that the Keystone pipeline would not
be operational until at least next year. So the notion that
somehow that is adversely affecting the price of oil and the
price of gas at the pump is to me to be somewhat mystifying how
someone can look the American people in the eye and make that
argument.
And what is more, the Keystone XL was essentially a
Canadian export pipeline designed to take Canadian oil to
foreign markets. And Canadian officials have said just as much.
But let me get to another myth that I think is going around
the Capitol and perhaps through the American public, and that
is this notion that if we declare a Federal tax holiday,
somehow the American people are going to feel that in their
pocketbook.
And so I would like to ask each of the major producers
here, starting off with Mr. Lawler, if we decide we are going
to suspend the Federal gas tax, are you prepared to reduce the
wholesale price of gasoline by that 18.3 cents, sir?
Mr. Lawler. So I cannot commit to that today. Again it is--
--
Mr. McEachin. OK. I appreciate that. I appreciate that.
How about you, Mr. Wirth?
Mr. Wirth. Congressman, the way the market works, we
collect that tax on behalf of the government and remit it to
the government. So if that tax were suspended, we would no
longer collect it, and that would no longer be passed through
to the marketplace.
Mr. McEachin. So your wholesale price of gasoline would be
reduced by 18.3 cents?
Mr. Wirth. We add the tax onto our wholesale price of
gasoline. If the tax were suspended, we would no longer add
that on.
Mr. McEachin. All right. Thank you, sir.
How about Mr. Woods with Exxon?
Mr. Woods. The wholesale gasoline market is set by supply
and demand levels. We do not actually set a price on that. So,
as Mr. Wirth said, depending on how that market translated in
the supply demand balance, that would set the price.
Mr. McEachin. So you are saying that the 18.3 cents that we
charge per gallon does not affect the price?
Mr. Woods. Would not be in the price.
Mr. McEachin. That is not my question. If we declare a
Federal tax holiday, are your prices going to go down by 18.3
cents?
Mr. Woods. We do not set the price in a commodity wholesale
market for gasoline. That is set by supply and demand. We will
not collect the tax, but then the market will set the price for
the underlying fuel.
Mr. McEachin. All right. I appreciate that.
And let's see. Ms. Watkins, how about Shell? What will
Shell do if we declare a Federal tax holiday of 18.3 cents?
Ms. Watkins. Congressman, we are in a similar situation. We
will no longer collect the Federal tax. The price of gasoline
will be set in the marketplace, and it is based on supply and
demand.
Mr. McEachin. So let me see if I have got this right, and
either one of the four that just spoke can correct me please.
What you are saying is that supply and demand is setting
the price of wholesale gasoline, which obviously gets
translated to retail and ultimately to what my constituents pay
for gasoline. So the 18.3 cents that we charge for a Federal
tax holiday, really is not affecting anything other than, you
know, the government is collecting some revenue. It is not
affecting supply and demand. It is not affecting the price at
the pump.
Is that correct?
Mr. Wirth. Congressman, it is added to the price at which
the wholesale gasoline is sold on through the value chain. So
if it is suspended, that component leaves the equation.
The rest of the dynamics remain in the marketplace as they
do every day.
Mr. McEachin. So there is no promise then that the price is
going to go down by 18.3 cents, correct?
Mr. Wirth. Congressman, it is impossible to predict how
commodity markets will behave day to day. So----
Mr. McEachin. All right. I appreciate the candor. What I am
trying to do is disabuse the American public of this myth that
if we do something like declare a Federal tax holiday, that the
price of gasoline will go down.
We do not know what is going to happen to it is what you
all are saying because you are saying that the mysteries of
supply and demand and this and that could still have the
wholesale price go up or go sideways or go in just about any
direction.
Madam Chair, I appreciate this opportunity. Let me just say
this. I think our solution ultimately ought to be we just need
to give direct payments to the American people while we are in
this emergency so they have some extra money to pay for
gasoline.
That would be my solution. I have said as much on the
record. I have said as much to leadership. I look forward to
continuing the discussion.
And I yield back the balance of my time, and I appreciate
your letting me--on yours.
Ms. DeGette. I thank the gentleman.
And the chair is now pleased to recognize Mr. Carter for 5
minutes.
Mr. Carter. Thank you, Madam Chair, and thank you for
allowing me to waive onto this committee.
And thank all of the witnesses for being here.
Gentlemen, what I have behind me, ladies and gentlemen, is
a chart of receipts that I have asked constituents of my
district to send into us. What you will see here, first of all,
there is $80 to fill up the tank, a $80 receipt to fill up a
tank in Brunswick, Georgia.
A hundred and 35 dollars in Waycross, Georgia.
One constituent put it out that they spent $334 just last
month on gas.
And behind each of these receipts is a story. Sam from
Ellabell, he is having to cancel his Veterans Affairs
appointment because he cannot afford to get there.
Kayla from Ware County summarized the pressure facing
working class Americans by saying, and I quote, ``I cannot
afford to go to work, but I also cannot afford not to go to
work,'' unquote.
We are forcing our seniors, our single parents, and our
veterans to choose between groceries and gas, between a regular
paycheck and regular fuel. It all comes down to the Biden
Administration's refusal to recognize reality and instead wage
a war on fossil fuels.
I, for one, do not believe any of these assertions that
have been made here that it is Putin's fault or that it is the
big oil companies simply gouging the prices here. That is not
what it is.
This was happening before Vladimir Putin's unprovoked
invasion of Ukraine. It has happened since the policies of this
administration started taking place.
General McMaster, I want to ask you something. Ukraine in
the geographical area that they are in, they have the second
biggest known gas reserves, and they also have a lot of natural
gas.
In your written testimony, General McMaster, you said
Russian military incursions have focused on the ten percent of
Ukrainian territory that is home to 90 percent of their energy.
Look. Vladimir Putin is evil. He is the devil himself.
However, he ain't dumb. He knows what he is doing here.
General McMaster, I want to ask you. Can you elaborate more
on the notion that Russia is weaponizing energy against the
free world?
Mr. McMaster. Congressman, of course Putin has been engaged
in this behavior for quite some time. He has weaponized energy
against Moldova, against Bulgaria, against Romania, and of
course, we see it against Ukraine and now against Europe,
broadly, and Germany, in particular, to try to soften or weaken
our resolve in connection with the response to this brutal
invasion of Ukraine.
And he wants more of it. He wants to gain more and more
access to oil reserves. As you mentioned, in Eastern Ukraine
where he is focusing this offensive and what one Alice has
called ``the great Ukraine heist'' associated with what Russia
is trying to do in the Donbas region, in particular.
But he has done the same thing in Syria as well. You might
remember in February 2018, Russian mercenaries attacked U.S.-
supported Syrian Democratic Forces in the Euphrates River
Valley. They were going after the Conoco oil facility because
Putin knew he did not have the money he needed to help
reconstruct the country he hoped to rubble in Syria.
You see the same kind of adventurism in Eastern Libya, for
example, on the part of the Russians.
So he is still trying to gain more coercive power, not
less, over the global economy through his control of
hydrocarbon exports. And of course, it is in our interest to
make sure he cannot do that.
Mr. Carter. Let me ask you this, General McMaster, because
during the week of the invasion of Ukraine, I, along with two
other members of this committee, Representative Walberg and
Representative Curtis as members of the Conservative Climate
Caucus, we were in Brussels. We were in Europe when this
happened, and we were there to look at what Europe has been
doing in the way of clean energy.
And it became very obvious to us that Europe has jumped the
gun too much and that they have closed down, for instance, some
of their nuclear plants.
And it is an important lesson, I think, for us to learn
here in America. Would you say it is realistic to imagine that
Europe or the rest of the world could become energy independent
of Russia on renewables alone in the very near future?
Mr. McMaster. No, that is impossible, and especially if you
take nuclear out of the equation, which was what Germany did as
well.
I mean, sadly, my home State of California is about to do
the same thing, to shut down a nuclear plant that now generates
ten percent of the State's electricity. It makes no sense at
all to do that.
And so what we----
Mr. Carter. And, General, I am sorry. I am sorry. One final
thing.
The American oil industry, we could help with natural gas.
Is that not true? We could help Europe here.
Mr. McMaster. That is absolutely correct, and of course,
this is a solution that is important for energy security, but
also it is an important solution because everybody is burning
more coal as a result of the constraints on the gas market.
So we need to export more gas not only because it makes
sense in terms of economic sense and in terms of energy
security, but also it makes sense in terms of climate and
C02 reductions and getting off of coal and bridging
into cleaner forms of energy.
Mr. Carter. And, oh, by the way, natural gas here in
America is cleaner than the Russian gas, correct?
Mr. McMaster. Absolutely. Senator Cramer and I had a long
piece on this, a long essay on this and maybe a policy solution
that can help incentivize cleaner extraction and transport of
natural gas, consistent with the way we do it here in America.
Mr. Carter. Good. Thank you, General McMaster.
And I will yield back, Madam Chair. Thank you.
Ms. DeGette. I thank the gentleman.
Chair now recognizes Ms. Clarke for 5 minutes.
Ms. Clarke. I thank Chairwoman DeGette for convening this
very critical oversight hearing on big oil and the gouging at
the gas station.
It is very clear to most Americans that big oil's shameless
profiteering is taking place at the expense of the people and
of our planet.
At a time when democracy and democratic values are a threat
(sic), the people of Ukraine are being massacred, and the
American people are suffering due to an historic spike in gas
prices emerging from once in a century pandemic. Your companies
are making record profit.
Nobody is more impacted by your actions than the low-income
and working-class communities who spend the highest amount of
their income on transportation and basic goods just to get by.
These communities were suffering long before this current
crisis, and now they are crying out for our help.
And what is your response? You are enriching your investors
with stock buybacks and dividends and lining your own pockets
with millions after millions in additional executive
compensation.
Many of my Republican colleagues here in Congress, and I
believe your companies as well, are trying to take advantage of
this moment as an excuse to push for more oil and gas permits
and less environmental regulation.
This is not the first time that you have done this. You say
we need to drill our way out of this crisis. You say we need to
hurry and approve more gas leases and more drilling permits and
building more pipeline.
But in fact, the very opposite is true. We have been trying
to drill our way toward energy security for decades. We
currently have more drilling permits and leases than your
companies are even using, but no amount of drilling can change
the fact that oil is an unstable global commodity that is
completely out of our control.
Today it is Putin's illegal war that has shocked the market
and initially sent prices soaring. Tomorrow it will something
else, and no amount of drilling is going to change this basic
underlying reality that oil and gas are finite resources in the
marketplace that is largely controlled by dictators and
autocrats.
And let's also try to remember that the extraction and use
of this fossil fuel is pushing our planet to the very brink of
climate disaster, and it is already destroying the lives and
livelihood of people of color and Black and Brown communities
across the globe.
Now is not the time to drill more. Now is the time to
finally wake up to the reality that the only way out of this
crisis and all future oil crises is by investing in renewable
energy and a green energy workforce at the scale needed to
achieve a clean energy center by the year 2035.
Today we have the technology to combat the climate crisis,
create high paying jobs, and grow our economy all at once. The
only thing we are lacking is Federal action to seize this
moment and chart a new and bold path forward.
This is why I have introduced the American Renewable Energy
Act with my friend and colleague, Congressman Peter Welch, and
this is why we need to immediately renew negotiations for
climate centered Build Back Better Act that will unleash a wave
of green energy investment across our Nation.
Before my 5 minutes are up, I would like to ask you each,
each of our executives, a yes or no question. No. 1, do you
believe that we need a historic investment in renewable energy
to combat the climate crisis and end our Nation's reliance on
fossil fuels?
And do you believe that your company should play a key part
in this transition?
Do not all speak at once.
Mr. Lawler. So, Congressman, this is Dave Lawler with BP.
We do believe the transition is very important, and we have
moved forward. We have a new purpose.
Ms. Clarke. And so that is a yes. Are you saying that is a
yes, Mr. Lawler?
Mr. Lawler. Yes. We are supportive of----
Ms. Clarke. Very well. Mr. Wirth of Chevron.
Mr. Wirth. Congresswoman, I believe we could look to
technology innovation as----
Ms. Clarke. Is that a yes, sir, or is that a no?
Mr. Wirth. I believe technology innovation----
Ms. Clarke. Oh, so it is not a yes or a no. OK. I will take
that as a no.
Mr. Muncrief, is that a yes or a no?
Mr. Muncrief. Well, we have a lot of challenges. We will
address them.
Ms. Clarke. I have got it. I have got it. You are not ready
to say yes or no.
Ms. DeGette. Ms. Clarke, your time has expired, and we are
trying to get everybody to the floor to vote. Can we have the
rest pleae supplement----
Ms. Clarke. OK. Very well. Well, let me thank you once
again, Madam Chair, and I yield back.
Ms. DeGette. Thank you.
I apologize. Thank you.
Mr. Duncan, you are recognized for 5 minutes.
Mr. Duncan. Thank you, Madam Chair.
You know, Americans know that they are paying more, much
more for gasoline today than they were at the end of the Trump
Administration, and they know why, because of the policies of
the Biden Administration.
This hearing is a complete and total deflection by the
Democrats to distract from the energy crisis that President
Biden and congressional Democrats have created, and they are
trying to find someone else to blame.
Do not let them gaslight you. Record high gas prices do not
just lay at the feet of Vladimir Putin or of oil and gas
companies.
Just look at the dichotomy of their statements from the
fall of 2021 and their attempt to lay blame here today, and I
am going to ask this article to be submitted for the record.
But this is an article dated April 25th, 2022 (sic), and it
says that House Democrats were demanding these same oil and gas
companies produce less oil to reduce the global supply of
crude, and that was just last fall.
During the October 28th hearing, California Representative
Ro Khanna praised BP and Shell CEOs for pledging to reduce
their oil production. Then he asked U.S. oil execs why they
were not doing the same.
He goes on to say in his questioning, ``Do you commit to do
anything matching European counterparts to bring the actual
demand of oil production down?''
Democrats were wanting to bring oil production down, and
now they are trying to blame someone else.
Representative Khanna goes on to say that, ``No. Are you
committed to lowering the production as the Paris Accords say?
Yes or no?''
If progressives truly cared about climate, they would
support more U.S. oil and gas production which could replace
supply from countries with lower environmental standards and
higher emissions.
In fact, California Representative Katie Porter illuminated
this when she chided the CEOs for opposing Mr. Biden's halt on
new oil and gas leases on Federal land.
You cannot have it both ways, Democrats. You cannot come in
here and blame others for the rising prices of gasoline at the
pump when last fall you were also blaming or at least the
dichotomy of that, of trying to get the oil and gas companies
to produce less.
So the day before Putin invaded Ukraine, gas prices were
already up 55 percent from before the day Biden took office.
Why?
One reason was displayed by Representative Scalise a minute
ago, the costly and burdensome regs. that drive the cost of
production up for oil and gas producers. In fact, he provided
these regs. that I would like to submit for the record, Madam
Chair, the regs. that are driving the cost of production up for
American producers.
We saw what candidate President Bidet said. I think Scalise
talked about that, but let's just look at his Fiscal Year 2022
budget.
In development of the budget, consideration was given to
advancing three key objectives, one of which was not funding
work that directly subsidizes fossil fuels, including work that
lowers the cost of production, lowers the cost of consumption--
that means lowers the price at the pump for American families--
or raises the revenues retained by producers of fossil fuels.
That was then Joe Biden's 2022 budget. You know, America is
blessed with abundant natural resources, but we are cursed with
liberal politicians who are causing these problems and causing
American families to pay more at the pump.
Prices were not created by Vladimir Putin. He is just
capitalizing on it. He is capitalizing on it because the Nord
Stream III project was greenlighted by President Biden in
January of last year.
That money that Vladimir Putin sells to Europe, the oil and
gas, to European countries and sells natural gas and oil to the
United States pads his pockets and helps pay for his
imperialistic aims in Ukraine and elsewhere. He is one of the
richest men in the world.
So I hope that we will just look at Germany. Germany should
serve as a warning signal in the United States. They sold out
to the radical environmental ideology and now face an energy
crisis. They simultaneously phased out nuclear power and coal
and now import more than half of their natural gas from Gazprom
and other Russian companies.
They shut down 14 of their 17 nuclear plants. Instead of
prioritizing clean-burning nuclear energy, Germany made a
policy decision to heavily subsidize volatile and intermittent
renewables.
Now they are going back and buying more coal and more coal
plants are coming online. So it is hypocrisy of pushing climate
change initiatives and being held out in the world as being a
leader of renewables, and all of sudden they say, ``Well, we
need power. So we are going to burn coal.''
If you truly were believers, which I do not think they are,
they have been at the mercy of Vladimir Putin turning the
spigot on and off.
You know, you just cannot have it both ways. You cannot
encourage lower production and then try to blame somebody when
the prices go up.
And I yield back.
Ms. DeGette. The gentleman's time has expired.
The gentlelady from Delaware, Ms. Blunt Rochester, is
recognized for 5 minutes.
Ms. Blunt Rochester. Thank you, Chair DeGette, for calling
this important hearing, and also to the witnesses for your
testimony today.
We have heard repeatedly Americans are paying for gasoline
prices higher than they ever have before, and it truly
underscores the imperative for our country to be energy
independent.
In my State, the average cost of a gallon of gasoline is
hovering above $4, which might not seem like a lot to some, but
it was $2.70 a year ago, and this spike is directly impacting
Delawareans.
I have heard from retirees on fixed incomes, veterans, and
parents who are struggling to pay soaring gas prices. One
constituent wrote me that the cost actually went up by 20
percent a gallon while he was standing at the pump.
We have seen President Biden take action. We have seen many
States, including Delaware State lawmakers and Governor Carney
working on legislation to alleviate some of this burden.
In Delaware, leaders are planning to give $300 in direct
payments to taxpayers to provide some economic relief, as
Delawareans continue to struggle with rising prices at the
pump.
Throughout the hearing, we have heard from Members of
Congress with solutions, but I want to talk to you about the
solutions that you are focused on and that we can tackle
together.
We know that gas prices are complex and that lingering
economic impacts of the pandemic, global markets, and Putin's
unprovoked war are all factors into the cost, but people are
hurting. They want to understand what is happening, why it is
happening, and how we are going to tackle it.
They are seeing oil companies rake in record profit and
want to understand where all the money is going and why with
these record profits they are paying so much at the pump.
Oil companies felt the pain of the COVID pandemic as they
saw their demand for gas evaporate, and then the CARES Act
provided generous bailouts to the oil and gas industry, and now
as prices continue to soar, it is time for the industry to step
up and help the American people.
We need to work together to create a more financially
secure future for all Americans.
We have heard a lot today about the sacrifices that
Americans are making, and I would like to hear about the
sacrifices your companies are making now, and I want to be
clear that I am asking this and I am going to just submit the
questions for the record in the interest of time because in
reading your testimoneys, many of you talk about the things
that you supported in the past and the things that you are
going to do in the future, but people are hurting right now,
and I would like to hear from each of you your commitment.
So I will submit that, Madam Chairwoman, for the record.
But specifically, Mr. Muncrief, in a recent interview you
highlighted your promise to be more disciplined, to get cash
back to shareholders with dividends, and you asked yourself the
question whether you are going to keep your promise or whether
you are going to be patriotic.
Mr. Muncrief, is your company willing to forego getting
cash back to shareholders in order to ease the burden Americans
are feeling at the pump?
Mr. Muncrief. Congresswoman, thank you for that question.
You know, over the last decade our company spent 110
percent of its cash-flow, operating cash-flow. We took on debt
and issued new shares.
That put us in a position to be where we are today, to be a
healthy company.
As I mentioned earlier, we are increasing our production.
We have added. We have gone from 14 rigs to 19 rigs. We are
going to have 300 new wells added this year.
So we are doing a lot, and we also are going to take care
of our shareholders, and those are the shareholders that have
stuck with us all these years and when we were not profitable,
and we are finally turning a profit, and so we are not going to
forget them.
As far as the patriotism, you would be hard-pressed to find
a more patriotic industry, I think, than the United States oil
and gas companies.
Ms. Blunt Rochester. As a followup, given Putin's tragic
invasion of Ukraine, do you still believe that returning cash
to shareholders is your top priority?
Mr. Muncrief. We have several priorities, and returning
cash to our shareholders is absolutely one of our top
priorities, yes.
Ms. Blunt Rochester. OK. You answered the question.
In your testimony you State that even with constraints,
Devon's net domestic oil production reached a new record high.
You also noted that both supply chain issues and the shortage
of workers are preventing you from additional drilling.
But your company has also stated that it works to maintain
a low investment ratio. Is this approach preventing you from
increasing production capacity?
Mr. Muncrief. No, I think the most important thing for us
as far as additional capacity----
Ms. Blunt Rochester. It is just a yes or no because I am
running out of time. I ran out of time.
Mr. Muncrief. Excuse me. Can you repeat the question the
way you had it phrased?
Ms. Blunt Rochester. We will submit it for the record.
Again, thank you, Madam Chair, for your leadership and I
thank you for the focus on our constituents as well as the
consumers.
I yield back.
Ms. DeGette. I thank the gentlelady.
The Chair will announce there are two votes on the floor at
this moment, and so we are going to be in recess but for ten
minutes.
[Recess.]
Ms. Barragan [presiding]. I would like to call this meeting
back to order.
And now I would like to recognize the gentlewoman from
Arizona, Mrs. Lesko, for her 5 minutes.
Mrs. Lesko. Thank you, Madam Chair, and thank you to the
people testifying today.
This chart--hopefully, we will wait for the camera to zoom
in a little bit--but on this chart it clearly shows how the
prices for gasoline have gone up ever since President Biden
took office and the Democrats took control of both the U.S.
House of Representatives and the Senate.
And, you know, in Arizona, prices are even higher than
this. Gasoline prices in Arizona are $4.65 a gallon on average.
In fact, Arizona has one of the highest or the highest
inflation rate in the entire country.
And so, General McMaster, I have a question for you.
Do you think it is a coincidence that gas prices started
down here after Trump left office and they have continually
gone up even through the strategic oil reserve, through the war
in Ukraine, and now they are way up here?
Do you think that is a coincidence or do you think it is
partially at least because of the Biden and Democrat policies
and their war against American oil and gas?
Mr. McMaster. Congresswoman, it is not a coincidence. As
you allude to, there are a number of factors at play, but it is
not a coincidence.
Mrs. Lesko. Well, I totally agree with you. And that is why
I call on President Biden and my Democratic colleagues to
increase production of American oil and gas.
I also think it is real interesting that Biden, when asked,
one of his answers to the high price of gas was, well, buy an
electric car. Buy an electric car.
Well, first of all, electric cars are very expensive, and
so not everybody can afford one, but electric cars and
renewable energy require a lot of critical minerals, and a lot
of those critical minerals are actually processed in China.
And so, for instance, wind, wind turbines, solar panels,
they all require critical materials. Electric cars require four
times the amount of copper than do a standard car.
Yes, President Biden has closed down mines. There is a mine
in Arizona called Resolution Copper Mine. Under the Trump
Administration, it was given the green light to go ahead and
continue mining.
When Biden was in office, after two months he closed it
down, could not mine. I went to visit there, and that mine
would produce 25 percent of all of the copper that is consumed
in the United States, including for electric vehicles.
So, I guess what I am trying to say is the policies that
President Biden and the Democrats have are hurting America, and
they are causing the prices to go up.
The other thing that I find very interesting is recently I
was able to speak to former Secretary of State Pompeo. He was
at a meeting, and he expressed how whenever he went to meetings
with foreign countries, he would use U.S. energy dominance and
U.S. energy as a negotiating tool when dealing with foreign
countries.
General McMaster, do you believe that the Biden and
Democrats' war against U.S. oil and gas and their war on U.S.
domestic mining hurts our national security?
Mr. McMaster. Congresswoman, we have to do everything we
can to increase energy security, and as you already mentioned,
to make up for the complacency in the area of mining and access
to minerals that are critical to the emerging global economy
and the energy transition.
So I agree with your broad point that we are behind and we
have to make up for lost ground, much of it self-inflicted.
Mrs. Lesko. And I totally agree with you, General McMaster.
And let's hope the American people will realize that the
Democrat policies are hurting America and they are hurting
America's pocketbook.
And with that I yield back.
Ms. DeGette [presiding]. Chair now recognizes Ms. Barragan.
Ms. Barragan. Thank you, Madam Chairwoman, for holding this
important hearing to hold the fossil fuel executives
accountable for taking advantage of a war to pad their profits
at the expense of the American people.
Mr. Wirth, public information shows that your compensation
went from $29 million in 2020 to $33 million in 2021. Is that
accurate? Does that sound accurate?
Mr. Wirth. The years are not accurate. The numbers are.
Ms. Barragan. OK. But you got an increase of about $4
million. Does that sound about right?
Mr. Wirth. No. My pay went down in 2021, ma'am.
Ms. Barragan. OK. Do you have any idea what that was?
Mr. Wirth. That will be released in our proxy statement.
Ms. Barragan. OK. So we have some information that is
publicly available that shows you made 29 million in 2020, 33
million in 2021.
Mr. Woods at Exxon, the public information that I have
shows that you went from $16 million in 2020 and $23.5 million
in 2021.
BP executive, it looks like your pay doubled in 2021, and
the Shell CEO made a 25 percent increase from 2020 to 2021.
Why is this important? Because the American people are not
getting a $4 million raise. They are not having their pay
doubled, and what is happening is they are feeling the pinch.
They are feeling the pressure at the gas pump, and they are
asking why is gas so high.
And that is what this hearing is about today. It is about
asking what is going on. Big oil is lining their pockets with
one hand and taking billions in taxpayer subsidies with the
other, while the American people are getting ripped off as
these companies choose to keep production low so their profits
can remain high.
And people are hurting, and that is what they want an
answer to.
Mr. Sheffield, on a yes or no, do higher oil prices mean
higher dividends for your shareholders?
Mr. Sheffield. Yes.
Ms. Barragan. Thank you.
Mr. Muncrief, is that also true for you?
Mr. Muncrief. Yes.
Ms. Barragan. Do you agree with that?
Mr. Muncrief. Yes.
Ms. Barragan. And do both of your companies offer variable
dividends?
For those watching, it means your payment to the
shareholder goes up when earnings are high and it goes down
when earnings are low.
Mr. Sheffield. That is correct.
Mr. Muncrief. Yes.
Ms. Barragan. OK. Thank you.
Madam Chair, I would like to enter into the record an
article on variable dividends from Barron's magazine, a
financial magazine titled ``Energy Dividend Trend Is Catching
On: Not Everyone Is Onboard.''
The article covers how oil companies use a variable
dividend to pay back more to their shareholders when oil prices
are high and less when they are low. This article goes on to
highlight the companies bragging about rapidly rising dividends
as profits come in from increased prices.
Now, a dividend of windfall profits to your investors tied
to the price of oil leaves a lot of room for exploitation.
Every company here is doing this in their own way: stock
buybacks, CEO raises, dividends. All of you are taking
advantage of an oil subsidy.
And you benefited in different ways from the CARES Act.
This was the first coronavirus relief bill passed to help
communities respond to the pandemic. For example, Devon Energy
received $105 million from the CARES Act tax benefit.
Fossil fuel companies received tens of billions of dollars
in subsidized loans and tax write-offs during the COVID relief
period.
And now that times are good for you, there is no return to
the taxpayer. Instead Americans are getting gouged at the pump.
We need a dividend for the American people.
That is why I support the windfall profit tax, big oil's
windfall profit tax, to send big oil's windfall directly back
to the American people through a quarterly dividend.
Congress took this step in 1980 in response to the OPEC oil
embargo. We should do it again to provide relief to the
American people.
What is happening to them is not right, and we need you to
do your part in making sure that we are helping the
American people.
And with that, Madam Chairwoman, I yield back.
Ms. DeGette. I thank the gentlelady.
Chair now recognizes Mr. Pence for 5 minutes.
Mr. Pence. Thank you, Madam Chairwoman DeGette and Ranking
Member Griffith, for allowing me to join this meeting today.
And thank you to the witnesses for being here.
Petroleum is the lifeblood of our economy. Let me say that
again. Petroleum is the lifeblood of our economy.
Today, this hearing is an attempt by the Biden
Administration and the Democrats to help the Chinese bleed us
out of energy independence.
With a background in the petroleum distribution business, I
can tell you firsthand that the misleading title of today's
hearing does not reflect the reality of the domestic oil
markets. As a national Director of Fuels for Circle K, I knew
what the price of petroleum products from wholesale to retail
were based on a variety of factors across the value chain, as
our witnesses have discussed today.
Wrongly accusing oil companies of price gouging is only
meant to cover up this administration's own anti-fossil fuel
agenda, as my peers on this side of the aisle have pointed out
numerous times today.
At every turn, the Biden administration and my friends
across the aisle want to make it harder to produce, distribute,
and use fossil fuel for their Chinese electrification agenda.
For the Hoosiers watching at home, that means higher gas
prices, higher utility bills, and less energy security.
The situation in Ukraine tragically has compounded the
President's energy crisis, but make no mistake. This problem
started long before March 2022.
House Democrats have been pushing a complex equation for a
green economy that is totally unattainable. Cannot get it done
when they want to get it done. That is why the Build Back
Better backed off.
This administration has been creating regulatory
uncertainty and investor pressures on financing fossil fuel
projects that have squeezed oil companies, fueling the volatile
energy markets we see today.
The President needs to reverse course and put our country
back on a path toward long-term, durable energy independence.
By accusing the oil companies of price gouging now, it will
only be a matter of time--listen up, America--until the
argument is pushed to thehealthcare industry, the manufacturing
sector, farmers, and the rest of the economy. They want
everybody to be accused of price gouging to cover up their
inflation.
Price gouging cannot be a catch-all response to inflation
in an overwhelmingly regulatory environment that just keeps
piling up every single day.
The only answer coming from this administration has been a
misguided use of our strategic petroleum reserve to lower gas
prices, and of course, this hearing.
But looking at the past two emergency strategic petroleum
reserve releases, we failed to see meaningful effects at the
pump for my Hoosiers in my district.
General McMasters, what is the purpose of this SPRO?
Mr. McMaster. Sorry. I needed to unmute.
The purpose of what, Congressman? I am sorry. The purpose
of what?
Mr. Pence. What is the purpose of the strategic petroleum
reserve?
Mr. McMaster. Well, it is obviously a reserve that is meant
mainly for wartime and to ensure that if there is an
interruption in supply, that we can compensate for that and
that it will not entail national security risk associated with
the supply constraint associated with petroleum.
Mr. Pence. Thank you, General.
You and I both know that the President's release was not
announced in response to a supply disruption or a war. Yet we
are going to go down to 40 percent of what is in there.
The average price was below $30, and now I guess they are
going to replace it around 100 bucks.
If we are serious about lowering prices at the pump, would
we be relying on the SPRO to stabilize energy markets and lower
prices?
Does that help releasing a million barrels a day?
Mr. McMaster. I would defer to the other witnesses on this,
but I would just say that it has a lot to do with obviously
supply and the ability to increase supply.
Mr. Pence. OK. Mr. Wirth----
Mr. McMaster. Thank you.
Mr. Pence. Mr. Wirth, can you comment on my question? Is
this going to affect lowering prices and stabilizing markets?
Mr. Wirth. Congressman, in the short term it can send a
signal that suggests there is more supply available. It is not
a long-term solution to the challenge.
Mr. Pence. Thank you, sir.
It does not seem to be doing that. Three weeks ago the
price was about the same as it is today.
So thank you, Madam Chair. I yield back.
Ms. DeGette. I thank the gentleman.
Chair now recognizes Mr. Soto for 5 minutes.
Mr. Soto. Thank you, Madam Chair.
The pandemic, the war in Ukraine, record oil profits, add
them all up and we see record prices at the pump for so many
Americans, but especially with record profits and record
prices, Americans are understandably angry.
Of course, our Republican colleagues talk a big game, but
fail to admit their role in this. The Republicans screwed up
the pandemic response. COVID ran rampant. The economy cratered,
and demand and production for oil nosedived, and it still has
not recovered.
Add in the cozy relationship of some House Republicans with
Russia, voting against military aid for Ukraine, voting against
sanctions, and the conclusion is clear. Our Republican
colleagues share plenty of blame here today.
But when oil prices were down because of COVID-19, the
Federal Government came to your aid with the CARES Act and
American Rescue Plan and tax relief and subsidies, many of
which were supported by bipartisan majorities here.
Now we get back to normal with the pandemic and supply
chains are improving, but slowly, and as to the war on Ukraine,
we stand steadfast with Ukrainians against this violent Russian
invasion.
This also may take some time. Yet in the face of these
challenges, in the time of our greatest need, what did our oil
companies do? Did they increase supply to keep prices
affordable? Did you step up for us, for your country, for the
American people?
No. You kept production nearly the same and watched record
profits roll in. I get it. You had a bad 2020, and you tried to
make it up in 2021.
We are in 2022. There should be no more excuses for record
profits that are made on the misery of our Nation. Record
profits for executive salaries, bonuses and fancy offices;
record profits for the sake of your investors.
You can see it right here in this chart. Meanwhile in
Central Florida families suffer. Let me make it clear. We stand
on the side of the American people. The irony is this greed may
be your undoing. Because of you, Americans get it. They
understand we need to transition to electric cars as soon as
possible.
They think about it every time they see a Tesla, an
electric F-150, or a Chevy Volt driving down I-4. They think,
``Why am I still paying for gas?''
This is why the Senate must pass the $500 billion climate
change investment that this house already passed earlier this
year.
But in the short term, turning back to oil itself, it is at
103 today in the U.S. per barrel. Back on March 1st, we saw
when oil prices were around 100 bucks, gas prices were $3.60
and $3.70 in Central Florida.
I had my staff check today. In Kissimmee, gas is at $4.11,
40 to 50 percent higher than it was when gas was around this
level just a few months ago.
During World War II, your companies stepped up. From 1940
to 1945, overall U.S. oil production increased by 30 percent.
President Biden has done his part by ordering a release of one
million barrels per day for the next 6 months.
So my question to all of you is: will you step up? Will you
increase production and commit to increasing production and for
how much during April?
So, first, Mr. Woods, thank you for being here.
Will you commit to increasing production during April and
for how much are you willing to commit?
Mr. Woods. We are increasing production. In fact, we
started that effort several years ago and continued our
investments through the pandemic when we were losing money, and
that investment is now beginning to pay off.
Confirming production----
Mr. Soto. Thank you, Mr. Woods.
Mr. Woods [continuing]. By 25 percent----
Mr. Soto. My time is limited. We appreciate you all
stepping up.
Ms. Watkins, does Shell USA also commit to stepping up
production in April to help meet this challenge our Nation
faces?
Ms. Watkins. As a matter of fact, we brought on Stream in
the Gulf of Mexico, a new field about a week or ten days ago,
which will produce about 20,000 barrels a day more, and this
morning we announced another new well coming onstream that will
produce about 10,000 barrels a day.
So we are in the process of bringing on new production this
month.
Mr. Soto. Thank you.
Mr. Wirth, will Chevron step up to help our Nation and
increase production over the course of April?
Mr. Wirth. Congressman, I note with irony that less than
six months ago I was asked to pledge to reduce production, and
I resisted that request and pledged to increase production.
And I reiterate that pledge today. We will increase our
production.
Mr. Soto. Thank you.
My time has expired.
Ms. DeGette. I thank the gentleman.
Chair recognizes Mr. Crenshaw for 5 minutes.
Mr. Crenshaw. Thank you, Madam Chair.
I certainly enjoyed watching my Democrat colleagues
convulse dramatically between two opposing stances: drill more,
drill less, drill more, drill less.
Mr. Wirth, you surely remember in October of last year when
you were asked repeatedly by Democrats to commit to less
drilling and less production.
You remember that, yes?
Mr. Wirth. Congressman, I remember it well.
Mr. Crenshaw. So today we have seen the same contradicting
messages as one would expect, and we wonder how on earth did we
get to this point where there is such a clear mismatch between
supply and demand and very clear underinvestment in oil and gas
production, and what a mystery this is. What could have
possibly caused this?
Stopping Federal leases? No.
Delaying or outright canceling pipeline permits? No,
impossible.
Or the President literally promising he would end the
industry, and we wonder why capital is not just sprinting
toward oil and gas exploration and production.
Analysts say we need an additional oil and gas investment
of $225 billion globally by 2030 if we are to avoid an energy
crisis. Let me remind you people die from lack of energy and in
large numbers.
I hope all of that green compassion I always hear about has
some answers for that.
And so the question is: how do we create the conditions so
that your investors change their minds and actually want to
spend this additional money?
None of your companies are on track right now to make up
that $225 billion. Why not? Many reasons, but I want to talk
about the cost of capital and the influence of ESG.
President Biden is hiking up the cost of capital,
weaponizing banking rules like reversing the fair access rule,
doubling down on guidance that would make it more costly to be
a bank that lends to fossil fuel industries.
Democrats over at Financial Services are helping them,
proposing to charge banks a surcharge for lending to companies
like yours.
Then you have the deliberate actions from Democrats that
help activists, ESG investors with SEC that puts its thumbs on
the scales to promote investments in unreliable green energy
instead of reliable oil and gas.
This is the same SEC of leading activist investors who want
to use the advisory process to force companies out of oil and
gas. Those over at Exxon know what that is all about.
So my question, and I want to start with Mr. Sheffield.
This weaponization of the financial industry has had and
will have an impact on investment in more oil production; is
that correct?
Mr. Sheffield. Yes, that is correct, in the past and in the
future.
Mr. Crenshaw. Mr. Lawler, same question.
Mr. Lawler. Yes. No, thank you for the question.
I think it is. From what I can gather from the markets at
this point, BP has not had any issues tracking capital and
maintaining the low cost of capital going forward.
Mr. Crenshaw. Mr. Wirth, same question.
Mr. Wirth. Congressman, there are no shortages of efforts
underway that appear to be intended to constrain access to
capital for this industry.
Mr. Crenshaw. I appreciate that.
And I want to make some other points here. Let's get some
facts straight because the future depends on us getting this
right.
We can continue down this renewables-only path and keep
watching our prices skyrocket while also failing to meet demand
and doing next to nothing to reduce emissions, or we can deal
with some hard facts.
And the facts are this. American oil and gas production is
clearer than OPEC's. It is cleaner than Russia's by a lot.
The fact is that global energy demand will increase by 50
percent by 2050, and oil and gas is still expected to make up
the lion's share of the production.
We cannot change these facts. The fact is that renewables
will never meet that demand, never. To meet the renewables-only
climate goals, you would have to mine lithium 2,000 percent
more. You would have to mine indium 8,000 percent more. Cobalt
production will need to grow 300 to 800 percent more.
For a wind farm to produce the same amount of energy as a
nuclear plant, you need 100 times more land. You need 30,000
tons of iron ore, 50,000 tons of concrete, and 900 tons of
plastic blades that cannot be recycled. It is not green, and by
the way, it also does not work when the wind stops blowing.
Here is the most important fact. If American natural gas
quadruples in the next decade in exports, which is entirely
possible according to industry experts, we would do something
amazing. We would displace coal around the world.
Here is another fact. About half of the global emissions
are from foreign coal. Displace that coal with cleaner gas, and
you could reduce emissions 50 percent.
And just like that you solve the energy crisis and, by the
way, reduce emissions far, far more than to the foolish $10
trillion Green New Deal ever could.
By the way, to all our witnesses, thank you for being here
taking abuse, but that is the argument you should be making
instead of behaving like you have Stockholm Syndrome, like your
civility to the radical environmentalists in Congress and this
administration will 1 day get them to like you. They will never
like you.
Please stand up for your work, your employees, and your
consumers. Speak the truth. Do not pander to what they want on
the Left because Americans need you and billions around the
world who want to rise out of poverty and live a life of
prosperity need you.
Thank you, and I yield back.
Ms. DeGette. I thank the gentleman.
The Chair now recognizes Ms. Craig for 5 minutes.
Ms. Craig. Thank you so much, Chairwoman DeGette and
Chairman Pallone, for this hearing today.
So let me get this straight. The six oil companies at
today's hearing collectively generated more than 76 billion in
profit in 2021, and first quarter numbers look even higher for
2022.
In the meantime, Minnesota families are paying near record
high prices at the pump, and my Republican colleagues are
howling about energy independence when your industry has 9,000
oil leases given to you by the government that you are not
currently using.
This is another dumbfounding day in Washington, truly.
I do not fault you for making money. You are a business,
but we have got a pandemic and we have got Putin, and you are
using these crises to gouge the American people. You are using
these crises to gouge my constituents.
Experts are predicting tens of billions of dollars in
profit yet again this year for all of you, and that is on the
backs of my constituents.
We all know that the price of crude oil has dropped in
recent weeks, and yet Minnesotans have seen very little relief
at the pump. In fact, one of the only forms of relief right now
from near record high gas prices that my constituents have seen
has come in the form of renewable biofuels.
Right now at fuel stations across my district, the blend of
ethanol and gasoline, known as E15 or unleaded 88, is saving my
constituents as much as 50 cents per gallon compared with
traditional gasoline. We could replace every barrel of oil from
Russia today with renewable fuels, which begs the question:
with those record profits and a history of touting your desire
to increase investments in renewable fuels, are you investing
in strategies to reduce cost for consumers, like efforts to
increase the availability of E15?
I would like to turn to Mr. Wirth first for my question.
Mr. Wirth, I would like to better understand company's
commitment to renewable fuels. Given your record profits, how
much is your company investing in biofuels research and
development and expanded deployment?
Mr. Wirth. Congresswoman, I do not have a research and
development number, but I can tell you in terms of deployment,
this year we will spend close to $4 billion. We are growing our
renewable natural gas business, renewable diesel, sustainable
aviation fuel, biodiesel, and are working with companies like
Bungee to integrate back into the agricultural feedstock chain
to grow our renewable fuels.
Ms. Craig. Thank you.
I will have my team followup to make sure we are aware of
all of those efforts and we can learn more about the percentage
of research you are putting into biofuels to drive down the
cost of fuel for Minnesotans.
So thank you, Mr. Wirth.
I want to now turn specifically to E15. It was recently
reported that BP began offering the 15 percent ethanol blends
at terminals in eight States, including Minnesota. This will
not only save consumers money, but it also will increase energy
security and reduce carbon emissions with a domestically
produced product.
Mr. Lawler, I appreciate this business decision from BP and
hope that others in the industry will follow suit.
Unfortunately, due to a court case brought by refiners,
consumers across the country will lose access to lower cost
from E15 without an emergency waiver from the Biden
Administration or immediate action.
So, Mr. Lawler, let's start with you. I will give you each
about ten seconds, but I want to ask you specifically. Do each
of you--and, please, yes or no--do you support an emergency
waiver for E15 year-round sales?
Do you support a permanent resolution to the E15 RVP issue
so that this lower cost, lower carbon, renewable fuel blend can
be available to consumers year-round?
So yes or no, Ms. Watkins?
Ms. Watkins. I would need to understand the specifics of
what you are talking about, but what I can tell you is that we
are investing actually quite a bit of money in biofuels, in
particular, renewable natural gas, biodiesel, biofuels----
Ms. Craig. Ms. Watkins, I appreciate that. That was a yes
or no answer.
Mr. Woods, do you support E15 year-round?
Mr. Woods. There are challenges with E15 going into the
entire car fleet. So that would have to be looked at very
carefully.
Ms. Craig. OK. Mr. Wirth, do you support E15 year-round?
Mr. Wirth. Subject to safety considerations with older
vehicles. We blend ethanol at the maximum allowable limits in
all of our fuel sales.
Ms. Craig. Mr. Muncrief, year-round?
Mr. Muncrief. I actually do not know enough about that
issue to really comment.
Ms. Craig. Oh, wow. Well, you are all investing in
biofuels. I can see that here today.
Mr. Sheffield?
Mr. Sheffield. We do not own retail.
Ms. Craig. All right. Well, thank you. My time is up.
So I will yield, and thank you for your time.
Ms. DeGette. I thank the gentlelady.
Chair now recognizes the ever-patient Mr. Armstrong, who
has been sitting here all day, for 5 minutes.
Mr. Armstrong. Thank you, Madam Chair.
Let's be clear what the title of this hearing should be. It
should be called ``Gaslighting Americans about Gas Prices.''
In July 2019, when asked if there would be a place for
fossil fuels in his administration, candidate Biden responded,
``No, we would make sure it is eliminated.''
In January 2020, when asked about stopping new pipeline
infrastructure, candidate Biden responded, ``Yes, yes.''
In February 2020, candidate Biden stated, ``We are going to
get rid of fossil fuels.''
In March 2020, candidate Biden said, ``No more drilling on
Federal lands. No more drilling, including offshore. No ability
for the oil industry to continue to drill, period, end.''
In October 2020, candidate Biden stated, ``It has to be
replaced by renewables over time.''
In October 2020, candidate Biden said, ``No fracking and/or
oil on Federal land.''
And in order to prove that his words were not just campaign
rhetoric, on the day of his inauguration, President Biden
killed the Keystone XL Pipeline and halted oil and gas leasing
on Federal land.
And February 2021, President Biden inflated the social cost
of carbon to justify more regulation of fossil fuel production.
On March 2d of 2021, Democrats, including some on this
committee, introduced a bill to increase the cost and time of
oil and gas production on Federal lands.
And on March 19th of 2021, Democrats introduced a bill to
place an excise tax on American energy companies to produce oil
and gas.
April 1st of 2021, Democrats proposed a national carbon tax
on oil, gas, and their byproducts.
And on June 1st, 2021, President Biden proposed a budget
that would increase taxes on U.S. energy producers by at least
$35 billion.
August 11th, 2021, President Biden asked foreign operators
in OPEC, not domestic producer, to increase supply to address
rising gas prices.
On October 29th of 2021, President Biden and congressional
Democrats, again, some on this very committee, proposed a
methane tax on U.S. oil and gas production.
November 17th, 2021, President Biden tried to redirect the
blame from rising gas prices by requesting that the FTC
investigate oil and gas companies on trumped up accusations of
illegal activity.
On February 17th of 2022, President Biden's FERC chairman
pushed through changes making it next to impossible to build or
upgrade pipeline infrastructure by requiring both upstream and
downstream carbon mitigation plans before permits would be
approved.
On March 12th of 2022, Democrats who seemingly missed the
President's memo requesting energy companies increase
production introduced a bill that would implement a massive new
tax destroying any incentive for U.S. producers to produce more
oil.
And on March 21st, 2022, the SEC, in an attempt to morph
into the Securities and Environment Commission, issued a
proposal that would target carbon energy companies and empower
activist shareholders.
March 28th of 2022, President Biden in the middle of an
energy crisis once again proposed a tax increase on domestic
oil and gas producers totaling nearly $45 billion.
And just last week in the middle of all of this, asking for
more investment in this industry, the FDIC chairman proclaimed
that carbon emitting sources of energy present risks to the
safety of the financial system, further starving off capital to
domestic energy production that is needed.
In short, this administration and Democrats in Congress
have done everything they can to disrupt, delay, and defeat
domestic energy production and then gaslight the American
public by blaming producers for not immediately investing
billions of dollars into the industry in which you are trying
to destroy.
So I have a couple questions for Mr. McMaster and then I
will end.
Mr. McMaster, do you think our allies in Europe would like
cheap, affordable American energy during what is going on right
now?
Mr. McMaster. Absolutely.
Mr. Armstrong. Do you know of any way to export renewable
energy?
Mr. McMaster. Yes. I mean, the actual--and of course, you
guys know that I am advisor to Sempra Energy, which is has LNG
export capacity.
But I mean really it is LNG exports that allows us to
escape the dilemma of energy security forced energy reductions
and allows us to make up, you know, for the gaps in energy
supply that Russia is using for coercive purposes.
Mr. Armstrong. I agree with you on LNG. Let me be more
clear.
Do you know of any way to export either wind or solar
energy?
Mr. McMaster. No, not on wind or solar, but you know, the
question is going to be battery capacity, the ability to store
it, and there are some, you know, advanced ideas out there
about using cables that could go across the oceans and so
forth. But those are very far into the future.
Mr. Armstrong. Thank you.
Ms. DeGette. I thank the gentleman.
Chair now recognizes Mrs. Fletcher for 5 minutes.
Mrs. Fletcher. Thank you, Chairwoman DeGette and Chairman
Pallone, for allowing me to waive on and participate in today's
hearing.
We are nearing the end of a very long day, and I want to
thank our witnesses for your time and your insights during
today's hearing.
As the chairwoman noted, this is an investigatory and
oversight hearing, not a legislative hearing, and we are here
today because people across the country are feeling pain at the
pump, and we want to help, right?
We are looking for ways to help to ease the pain that
inflation at the pump and elsewhere is causing for the people
we represent.
These are serious challenges for our people, for our
economy, and for our policymaking, and that is why I am so
disappointed that so much of the questioning we have heard
today has centered around foreign political points and blaming
others rather than taking a serious look at the challenges we
face and their drivers, as well as how we can actually address
them.
Our energy ecosystem in this country and around the world
is complex, as are the challenges that are presented in this
moment. How we find our energy sources, extract them, move
them, refine them into fuels and petrochemicals, and deliver
them to consumers at home and around the world is vast, varied,
and complicated.
And in my district in Houston, we are involved in every
single aspect of that work, and we are proud to do it. We
supply energy to the world.
For us that means working collaboratively to partner with
the people who produce energy, including our witnesses today,
and with policymakers everywhere in charting a path for our
energy future that understands the very real challenges of
today, from supply issues driving up prices to climate change
threatening our communities, to create a lower carbon future.
I hope everyone here heard that from our witnesses today.
In the 5-minutes I have I cannot possibly respond to
everything that has been said here today that I disagree with,
but there are things worth remembering as we move forward.
Less than three years ago, at the end of 2019, the United
States had a new domestic production peak, just under 13
million barrels a day. More than 800 rigs were operating here
in the United States.
When the pandemic hit, demand for oil and gas collapsed
under unprecedented demand destruction, and I cannot overState
the shock that we felt at home seeing oil trade for less than
zero dollars a barrel.
By the summer of 2020, only about 200 drilling rigs were
active. Production dropped nearly three million barrels a day,
and the U.S., more than 120,000 people, many of them in Texas,
lost their job.
Contrary to what we have heard from our friends on the
other side of the aisle, our current rig count is not simply
the result of some policy change from the Biden Administration
and Democrats. The rig count in the U.S. today is up to 673.
That is up 243 from this time last year.
Likewise my colleagues know that I have been unequivocal in
my support of the importance of new pipeline construction for
energy infrastructure, but the claims many have made here today
that President Biden caused these high prices by revoking the
permit for the Keystone Pipeline are simply not true.
The current crisis has its roots in the lack of upstream
inventory, not a lack of transportation from inadequate
pipeline infrastructure and bottlenecks getting to refiners.
The oil that Keystone would have transported is still
making its way into the market through other transportation
methods.
My colleagues know that I have not always agreed with the
administration's policy decisions in this area, but when it
comes to upstream production, the Biden Administration has
approved 34 percent more Federal drilling permits in its first
year than the Trump Administration did, 900 more permits to
drill than the Trump Administration over the same period.
And the Department of the Interior approved 97 percent of
all applications to drill submitted to the Bureau of Land
Management in Fiscal Year 2021.
On another note, there is not a meaningful connection
between leasing sales and prices at the pump today. We heard as
much from industry reps. in a recent hearing before the Senate
Committee on Energy and Natural Resources.
And finally, we have heard a lot today about the record $76
billion in profits that these companies have made in the last
year. The record loss of $77 billion that these companies
posted the year before in 2020, which some of the witnesses
mentioned, should not be discounted as some of my colleagues
have suggested, nor should the more than 100 oil and gas
companies, both E&P and oil field services providers, that
declared bankruptcy in 2020.
It was not just 2020. It was 2014 and 2015 and 1982. In
Houston, we have lived through it all, the boom and the bust.
That is why we know that we need sound, forward looking,
durable energy policy that will help make more stable and
predictable for businesses and consumers alike.
We have heard today global demand for crude is up to 100
million barrels a day. Questions about how we are going to meet
this moment have caused the price to skyrocket. Recovery from
the pandemic is not the only driver, nor is this only a
domestic issue. As we know, other factors influence supply,
including the decision to ban Russian crude oil after Russia's
unprovoked and unjustified war in Ukraine.
In this moment, President Biden and the administration are
using the levers we have to confront the crisis head on. The
release from the SPR of 180 million barrels will help close the
inventory gap. The Federal Government should be using every
tool we have to address this crisis, and we should do it all
the time.
It is worth noting that in 2020, I introduced a bill with
Mr. Armstrong to purchase oil for the SPR when it was under $40
a barrel. Senator Schumer bragged about keeping it out of the
CARES Act, calling it a bailout. But if we had these reserves
today our country would be in a much better position.
As policymakers, we need to take energy policy seriously
and stop using it as a political weapon. The stakes are simply
too high.
Ms. DeGette. The gentlelady's time has expired.
Mrs. Fletcher. Thank you, Madam Chairwoman. I yield back.
Ms. DeGette. Thank you.
Well, we are coming into the homestretch now, people will
be pleased to hear. I would like to recognize the ranking
member if he has any final questions or thoughts.
Mr. Griffith. The words and deeds of the White House have
exposed a fundamental misunderstanding of the operations of an
industry it seeks to dissolve.
After Russia's invasion of Ukraine, President Biden
stressed the short-term need to increase oil and natural gas
output and expedite LNG project development. The oil and gas
industry does not operate well on short-term proposals.
Due to the nature of the industry, companies like the ones
before us today need long-term certainty. A temporary green
light to produce oil from the Biden Administration will not
undo the layers of red tape and aggressive anti-fossil fuel
policies driving gas prices to new highs.
While President Biden should have been working to encourage
domestic energy production, he went to OPEC to ask for more
oil. Since that failed, the administration is reportedly
considering lifting sanctions so the anti-American regimes in
Iran and Venezuela can increase production.
It has become painfully clear that President Biden's anti-
American energy policies emboldened Putin.
President Biden's rush to the green agenda involved a whole
of government approach that advises multiple Federal agencies
to play some part in making it more difficult for oil and gas
production. For example, the administration has pressured
companies to halt investments in fossil fuels.
There is no denying the fact that the Biden Administration
has promoted an increasingly complex and challenging regulatory
environment for energy companies.
Mr. Sheffield, your company is the largest oil producer in
Texas. You only operate on private land. You do not refine and
you do not retail your products. But from your observations,
what policies should the U.S. consider to truly unleash
domestic oil and gas production?
Mr. Sheffield. Congressman, as I said at the end of my
testimony, I wish both parties would come together in a
bipartisan effort to look at alternative energy, nuclear, and
more pipelines, more LNG plans. We need a combination of all
the above. They are all long-term solutions. They are not
short-term solutions.
Mr. Griffith. General, what are your thoughts? What do we
need to do to get this ball rolling to truly unleash domestic
oil and gas production in the United States?
Mr. McMaster. Well, I think it was some of the fellow
witnesses in the beginning just talked about an all-of-the-
above approach, right?
There is no silver bullet solution to energy security and
the interconnected problems that we have been talking about.
The critical aspect of this is to do all of the above, invest
in renewables and so forth, but also to unleash the tremendous
power that we have here to meet our own demands, but also to
help meet the global demand and reduce the course of power of
authoritarian regimes.
Mr. Griffith. I appreciate that.
Madam Chair, we heard from Mr. Crenshaw earlier when he
went through all the different things that would have to be
mined around the world to continue to produce and continue to
go in the direction of green energy.
We need to do more with green energy, but we need to do it
in the United States, and to do that both for oil, gas, coal,
nuclear, and for renewables, we need to make sure that if we
are going to have a product to be able to do it in the United
States, we need a better, a certain regulatory scheme that lets
companies know they can invest here in the United States for
all of the above energy.
And I yield back.
Ms. DeGette. I thank the gentleman.
And I really do want to thank all of the witnesses for
appearing today. Next time we hope we will see you in person.
I think that the ranking member's comments and, Mr.
Sheffield, what you said and, General, it kind of shows what
has been going on in this really because we had a robust
discussion about the different views of Members of Congress,
Democrats and Republicans, about long-term energy policy.
OK. Clearly, we need a long-term energy policy. In fact,
for some years Mr. McKinley and I introduced legislation to
come up with a long-term energy policy.
From my perspective, what we need--and I think actually
most of our witnesses would agree with this--we need a long-
term energy policy that moves toward clean energy that will
keep us independent from foreign oil, and that is what we need
to do.
But do you know something? When my constituents went to get
gas in their cars today, they paid $3.95 a gallon, and
nationally, they are paying $4.16 a gallon.
So we can have all of the discussion we want about should
we have increased leases, should we have more pipelines, should
we eliminate regulations, those doggone regulations, but do you
know something? As all of our witnesses said today in their
written testimony and some of them verbally, all those things
are not going to solve the problem that my constituents are
paying $3.95 a gallon.
And so what we are seeing today in a snapshot, while we
debate the esoterics of long-term energy policy, we are seeing
production at existing wells going down even though demand has
gone up since the pandemic receded.
We have seen profits exploding. We have seen shareholder
buybacks up by 41 percent. Mr. Welch asked the question did any
of you, any of your companies talk about reducing these
buybacks by even a little bit to reduce the price at the pump.
Nobody had a response.
And we heard Mrs. Fletcher talk about the fact that we
could increase output right now without all of these issues
about wells and regulations and pipelines. We have the capacity
right now. The reason why your companies are not doing it, as
you freely and honestly admitted, is because you are looking at
your shareholder profits.
BP in 2021, 12.8 billion. Chevron in 2021, 15.6 billion.
Exxon, 23 billion. Shell, 20.1 billion. Devon, 2.8 billion. And
Pioneer, 2.1 billion.
So at the very beginning, in my questions, I told everybody
I was going to ask the question what can your company do to
help my constituents, Mr. Griffith's constituents, and all of
our constituents be able to have the price of gas at the pump
go down.
And none of you could answer that question. Now, I said I
was going to ask that question again, but I realize it is just
going to be the same thing. None of you actually want to commit
to going back to your boards and your shareholders and saying,
``You know, along with everybody else, along with many other
major corporations, we are going to take a hit to our profits
for now to help reduce the price of gas at the pump.''
So I am going to ask all of you do that. Go back and have
that conversation. Do it tonight or tomorrow because in the
meantime, everybody else is making sacrifices, but your profits
continue to skyrocket.
And so I want to remind members that pursuant to committee
rules, they have ten business days to submit additional
questions for the record to be answered by witnesses who have
appeared before the subcommittee.
I ask that the witnesses agree to respond promptly to the
questions if you receive them, including the questions I just
asked.
There are several documents that we would like to put in
the record, and with unanimous consent, I would request it.
Mr. Duncan requested a number of regulations and agency
actions related to American Energy.
And Ms. Barragan requested an article from Barron's
regarding variable dividends, published November 3d, 2021.
And without objection, the documents will be entered.
[Material submitted for inclusion in the record follows:]
Ms. DeGette. And with that, the subcommittee is adjourned.
[Whereupon, at 4:33 p.m., the subcommittee was adjourned.]
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