Congress has big ideas on gas prices

WASHINGTON — Amid rising public anger over the high cost of gasoline, Exxon Mobil reported $8.4 billion in first-quarter profit Thursday, even as members of Congress hastened to propose measures that would boost taxes on oil companies, open new areas to drilling and provide rebates to taxpayers.

But those ideas would not necessarily alter prices at the pumps.

Republicans unveiled a sweeping — if politically impractical — package of measures to give consumers some relief, including the $100 taxpayer rebate.

Democrats derided the package as insincere, noting that it incorporates ideas already introduced by Democrats and contains provisions sure to torpedo Senate passage, including a measure to open the Arctic National Wildlife Refuge to drilling that has been voted down repeatedly.

Joining the rebate with the controversial drilling is not "a sincere effort," said Sen. Debbie Stabenow, D-Mich., author of an earlier proposal for a $500 taxpayer rebate. "I think that they understand that they are in trouble."

Meanwhile, President Bush sought to show that he was responding to calls for action in the face of rising gasoline prices. While visiting a gas station in Biloxi, Miss., Bush renewed his call for Congress to give him the authority to require better gas mileage for all passenger cars. White House officials later said, however, that they didn't know when or how the president would use that authority.

The high prices — above $3 a gallon in many regions of the country — are the result of a confluence of forces that have constricted supply, and experts say few of the measures under discussion on Capitol Hill would have much effect.

"Unfortunately, there's nothing, really, that can be done that's going to affect energy prices or gasoline prices in the very short run," Federal Reserve Chairman Ben Bernanke told lawmakers at a hearing Thursday.

But with emotions running high on both sides, Sen. Ron Wyden, D-Ore., staged a five-hour filibuster, refusing to leave the Senate floor in an effort to force oil companies to pay more in royalties to drill for oil on public lands.

"Government subsidies may be needed when the price is low, when we have to stimulate production," Wyden said. "But billions of dollars of royalty relief for oil companies are not needed at a time when prices are soaring to record-high levels."

By the end of the day, the two parties essentially played to a draw: Neither the rebate idea nor Democrats' proposals appear to have much chance of becoming law. But the political theatrics showed that in the face of rising prices at the pump, each party hopes to direct the public anger toward the opposition.

At an outdoor news conference with the Capitol dome as a backdrop, Republicans blamed the high prices on Democrats, who they said have blocked measures to increase oil production, including Arctic drilling.

"[Democrats] are the ones who have simply blocked every attempt for us to build transmission networks, whether it's electric transmission networks, or whether it's oil and gas networks, or whether it's energy generating, or whether it's oil and gas production," said Sen. Rick Santorum, R-Pa., chairman of a Republican task force on energy that drew up the proposal.

Democrats blamed the high prices on Republicans, whom they accused of being too cozy with large oil companies and too eager to pass out tax breaks to them.

Gas proposals


Rebate: GOP senators Thursday proposed $100 tax rebate. Democrats had earlier proposed $500.

Tax suspension: GOP wants 18.4-cent-per-gallon federal tax dropped for the summer. Democrats had previously proposed a 60-day suspension.

Arctic drilling: GOP proposed opening the Arctic National Wildlife Refuge to oil drilling, rejected several times by the Senate.

Los Angeles Times

"It is disappointing that neither skyrocketing gas prices nor obscene oil-company profits can break the bond between Bush Republicans and Big Oil," said Senate Minority Leader Harry Reid, D-Nev. "Americans are struggling to pay the rising cost of gas, and they are not interested in handouts to help oil companies make more money by letting them drill in wildlife refuges."

Exxon Mobil's first-quarter profit was lower than its record fourth quarter of 2005, when the world's largest oil company reported the highest profit ever for any publicly traded company.

Higher tax rates and litigation expenses weighed down the company's results for January through March.

The company last year earned $36.1 billion, the most ever for any corporation, including a record $10.7 billion in the fourth quarter.

The increasing public scrutiny of Exxon occurs less than a month after the news that the company handed its former chairman and chief executive officer, Lee Raymond, a $400 million retirement package, when all pension payoffs and stock options are included. The deal made headlines across the country and sparked calls in Washington to justify the huge compensation.

Exxon Mobil's massive profits may only increase in 2006 as it benefits from rising crude-oil prices and production, analysts say.

"This is only the beginning," said Fadel Gheit, analyst for Oppenheimer & Co. "Let me tell you, it gets better after that. Oil prices will add huge amounts to earnings, at least a billion dollars."

Exxon Mobil says it's trying to communicate its position better to lawmakers and the public.

Bush and congressional leaders from both parties have urged the industry to spend more of its profits on refining capacity and other infrastructure that would bring gas prices down.

Companies are enjoying fat margins on gas, but they attribute their fortunes to commodity markets outside their control that have fluctuated wildly over the years.

Wall Street analysts discounted the likelihood of congressional action against oil companies. "As someone in the industry for more than 25 years, I've seen it before," Gheit said. "Penalizing oil companies does not lower prices at the pump. If we have a windfall-profits tax, it will just create another moneybag for the government. It will not increase oil production by one barrel. It will not lower gasoline prices by one cent or alter our dependence on OPEC countries."

All of the proposals under discussion have been offered as amendments to an emergency spending bill to run operations in Iraq and post-hurricane Katrina relief efforts. However, it is not clear if any of the proposals will go forward because Senate rules permit any senator to block "non-germane" amendments.

Debate on the war-spending bill is expected to continue through next week.

Compiled from The Washington Post, Los Angeles Times, The Christian Science Monitor, The Associated Press and Knight Ridder Newspapers