Amid rising anger over high gas prices, the CEO of ConocoPhillips spoke out today on "Good Morning America," saying high oil prices are to blame, not companies' greed.
In his first network television interview, James Mulva said oil companies were really only making about 10 cents a gallon because it costs them $70 to $75 to buy a barrel of crude oil and even more to run refineries and pay taxes.
He warned that the only way to get below $3 a gallon for gas was to reduce the cost of oil.
"The real question is what about oil prices -- will they remain at $70 to $75?" he said.
"How are we utilizing our refining capacity so we convert oil into gasoline? To the extent we do that really well, we add supplies and moderate the impact on the price of gasoline."
Some lawmakers -- including Sen. Charles Schumer, D-N.Y., who called on Sunday for some "old-fashioned trust busting" during an interview with "This Week With George Stephanopoulos" -- have called for government action against Big Oil.
Mulva insisted, however, that placing price controls on gasoline would hurt the economy.
"You put in price controls it holds down the price but increases consumption, which is not good," Mulva said. "Windfall profits tax takes away from the ability of the companies to reinvest to grow and add to capacity."
Is $16 Million a Year a Fair Salary?
ConocoPhillips is the third-largest oil company in the United States. Forbes Magazine reported Mulva was paid $16 million last year and was given about $190 million in stock options if he leaves the company.
Mulva said his salary and compensation reflected the size of the company and the nature of the job.
"Obviously these are very, very large numbers, but on the other hand, if you look at the oil companies, the international oil companies there are huge responsibilities with respect to asset bases and hundreds of billions of dollars," Mulva said.
"In the case of our own company, all of my compensation is directly reported to the Securities and Exchange Commission and complete transparency. In my own situation more than 90 percent of everything I have is tied up in the company stock so I'm certainly very aligned with respect to the shareholders."
Last month, the president said the government would investigate oil companies to make sure they were not unfairly jacking up prices. The House overwhelmingly passed a bill last week that would hit oil companies convicted of price gouging with steep new penalties.
Also last week, the Senate Judiciary Committee passed a bill seeking to promote competition by preventing companies from withholding oil in an effort to raise prices, and through stricter anti-trust regulation. It is estimated that the six largest U.S. oil companies will have $135 billion for 2006 -- larger than Israel's gross domestic product.
"We'll make sure that the energy companies are pricing their product fairly. If we catch them gouging, if we catch them -- unfair trade practices, we'll deal with them at the federal government," Bush said.
ConocoPhillips owns the 76, Conoco, and Phillips 66 brands, and sells petroleum at 11,800 outlets in the United States. It is the second largest refinery in America. It holds $160 billion in worldwide assets, and the company's profits went up 13 percent in the last quarter, raking in $50 billion in revenues, and $3.3 billion in profits.
Mulva said most of those profits were reinvested to increase capacity and production.
"If you look at reinvestment over the last 10 years, our industry has essentially reinvested all of its earnings back into adding to oil and gas production as well as refining capacity," he said. "In the case of our own company in the first quarter of this year we earned $3.3 billion but we reinvested $4.6 billion into adding to production and capacity of our refineries."