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THE US Congress summoned the chief executive Officers (CEOs) of the American oil giants. They were subjected to tough questioning. The oil company bosses were asked to explain some recent mergers and record profits they made. There has been public outrage over the rising price of oil and the companies' making huge profits.
This was the second appearance of the oil executives in four months before the Senate. The first meeting only produced sharp rebukes from the Senators but no legislation. The Chief Executives from Exxon-Mobil, Chevron, BP America and Conoco-Phillips were present at the meeting.
The rising price of oil and fuel has started to pinch the consumers.
President Bush in his last State of the Union address spoke about America's addiction to imported oil. The oil executives made their explanation under oath which they had wanted to avoid.
The oil price has risen by sixty per cent in last five years. The Senators are contemplating to bring legislation that would tighten scrutiny of mergers and reconsider $14.5 million tax incentives given to the oil companies. Exxon-Mobil received a good pasting. Exxon the number one and Mobil the number two merged in 1999. The company earned a net profit of $36.1 billion.
The oil companies say that they have been unnecessarily singled out as making huge windfall profits. The oil companies say that pharmaceutical firms, banks and real estate companies do make more money. The global demand for energy will increase by 50 per cent by 2030. The International Energy Agency (IEA) estimates that to meet the increased demand an investment of more than $6.0 trillion will be required.
The US energy industries have invested more than $1.0 trillion between 1992 and 2005. Investments have been made for exploration, expanding production, increasing refining capacity and applying new technology.
These figures have been made public by America's Oil and Natural Gas Industry.
In another development, the White House is contemplating making changes in the foreign investment reviews. After Dubai Ports World stayed its operations in six American harbours in the wake of fierce opposition by the lawmakers from both sides of political aisle. Threat to internal security led lawmakers from both sides to give priority to national security. National security should be the primary concern but this should not stop the flow of foreign investments in America., the US treasury secretary said.
On its part, China is making the most profitable use of the rising trend of protectionism in Europe and America. America and Europe will set aside few areas where foreign investment will not be allowed, thus turning their face against globalization. Airbus, the European manufacturer of civilian aircraft and a arch rival of American Boeing company will build an assembly plant in China. Aircraft technology has long raised security concerns in the US. Airbus has put China at the centre of its expansion plans, aiming to capture half of the market that it thinks could nearly double to 1790 aircraft by 2020. Airbus has 344 planes in China, Hong Kong and Macao. China has placed an order for 150 A320's with a price tag of $10 billion.
Boeing has no plans to set up a assembly plant in China but it has order for 150 of its 737 aircraft, the New York Times (NYT) reported. Foreign Venture capital firms are fuelling an investment frenzy in China, the Wall Street Journal said. Over the past decade, foreigners have pumped half a trillion dollars of foreign direct investment in China.
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