WASHINGTON – After being pummeled by senators over high oil and gasoline prices at a Senate hearing on Wednesday, the top executives of the nation's five largest oil companies were summoned before the House Judiciary Committee on Thursday.
In prepared testimony, the oil executives reiterated much of what they had told the senators: The primary cause for high oil prices is tight supplies and growing demand, and that their profits — $36 billion during the first three months of the year — are not excessive given the size of their companies and the need for reinvestment to find more oil.
Energy Secretary Samuel Bodman made a similar assessment, appearing at a separate hearing, down the hall from the oilmen.
Asked if he believed there was "rampant" speculation driving up oil prices, Bodman replied: "No. I don't."
The biggest problem, he said, is flat oil production and growing demand. Up to 2004, he said the world's producers pumped about 1 million barrels more oil each year, then production increased and so did demand. Demand continued to grow, but beginning in 2005 "there has been no change in global production" and "demand has outstripped supply."
"We have sopped up all the available spare [oil production] capacity in the system," Bodman said.
The world uses about 87 million barrels of oil a day, about a quarter of it in the United States.
Energy experts have acknowledged that most producers have little ability to pump more oil. The exception is Saudi Arabia, which is producing about 9.4 million barrels a day and has the ability to increase that by about 2 million barrels a day but have declined to do so.
Last week, the Saudis said they were boosting production by 300,000 barrels a day in June, but that was only to make up a decline in production by other OPEC countries.
Oil prices rose above $135 a barrel for the first time Thursday, with supply worries, global demand and an ever weakening U.S dollar driving crude futures up.
The world's top energy watchdog is preparing a sharp downward revision of its oil-supply forecast, according to a report in The Wall Street Journal.
Light, sweet crude for July delivery rose as high as $135.09 before falling back slightly. By midday in Europe, the contract stood at $134.37 a barrel in electronic trade on the New York Mercantile Exchange, up $1.20 on Wednesday's close of $133.17.
That settlement price, up $4.19 on Tuesday's close, marked NYMEX crude's largest one-day price advance since March 26.
Oil industry leaders are urging U.S. lawmakers to allow more domestic exploration.