Big Oil defends profits before irate senators

WASHINGTON - On a day oil prices leaped to unheard-of highs, senators lined up Big Oil's biggest executives and pummeled them with complaints that they're pretending to be "hapless victims" while raking in record profits.

"Where is the corporate conscience?" Sen. Dick Durbin, D-Ill., asked the top executives of the five largest U.S. oil companies.

It's all about economics, came the reply. Supply and demand. The company leaders tried to shift attention from motorists' anger over $4-a-gallon gasoline to a debate over new areas for drilling.

But senators at the Judiciary Committee hearing weren't having any of that. They wanted to press the executives about public anguish over paying $60 or more to fill up a car's gas tank.

"People we represent are hurting, the companies you represent are profiting," Sen. Patrick Leahy, D-Vt., told the executives. He said there's a "disconnect" between legitimate supply issues and the oil and gasoline prices motorists are seeing.

The executives, sitting shoulder to shoulder in the hearing room, said they understood people were hurting, but they tried to blunt the emotion with economic analysis.

Profits have been huge "in absolute terms," conceded J. Stephen Simon, executive vice president of Exxon Mobil Corp., but they "must be viewed in the context of the massive scale of our industry." And high earnings "in the current up cycle" are needed for investments in the long term, including when profits will be down.

"'Current up cycle,' that's a nice term when people can't afford to go to work" because gasoline is costing so much, replied Leahy with sarcasm.

"The fundamental laws of supply and demand are at work," said John Hofmeister, chairman of Shell Oil Co., acknowledging it is something the oil industry has been saying for some time and that the explanation may sound "repetitive and uninteresting."

Hofmeister was joined by executives of Exxon Mobil Corp., Chevron Corp., BP America Inc. and ConocoPhilips Co. Together the five companies earned $36 billion during the first three months of this year.

As the executives sought to explain their profits and why prices are so high, the global oil markets were moving into new, uncharted highs, touching $133 a barrel for the first time. The national average price of a gallon of gasoline hit $3.80, with $4 showing up in more places. Crude prices increased even more in late electronic trading Wednesday hitting $134 for the first time.

It was the second time this year the executives had been summoned to testify before Congress. When they came in early April oil cost about $98 a barrel.

This time the exchanges got personal.

Simon was asked what his total compensation was at Exxon, a company that made $40.6 billion last year. Simon replied it was $12.5 million.

John Lowe, executive vice president of ConocoPhillips Co., said he didn't recall his total compensations. So did Peter Robertson, vice chairman of Chevron Corp. Hofmeister said his was "about $2.2 million" but was not among the top five salaries at his company's international parent. Robert Malone, chairman of BP America Inc., put his "in excess of $2 million."

Sen. Arlen Specter, R-Pa., noting that Exxon's profits had nearly quadrupled from $11.5 billion in 2002, said he had heard nothing from the oilmen that would explain "why profits have gone up so high when the consumer is suffering so much."

The executives, appearing under oath, cited tight global supplies with scant spare production capacity and the fact that large areas of land and offshore waters remain offlimits to drilling. And they said they're worried Congress was talking of requiring the five companies to pay more taxes.

"I urge you to resist these punitive policies," said Hofmeister.

It was not what many senators wanted to hear.

You have "just a litany of complaints that you're all just hapless victims of a system," Sen. Dianne Feinstein, D-Calif., told the executives. "Yet you rack up record profits ... quarter after quarter after quarter."

One senator after another cited the pain that high energy prices are causing farmers, small businesses and people trying to find a way to afford a vacation trip this summer.

"Is there anybody here that has any concerns about what you're doing to this country with the prices that you're charging and the profits that you're taking?" Durbin asked.

The titans of America's oil industry sat quietly for a moment.

"Senator," replied Exxon's Simon, "We have a lot of concern about that. And we're doing all we can to put downward pressure on prices."

Scientists discover "frogamander" fossil

CHICAGO (Reuters) - The discovery of a "frogamander," a 290 million-year-old fossil that links modern frogs and salamanders, may resolve a longstanding debate about amphibian ancestry, Canadian scientists said on Wednesday.

Modern amphibians -- frogs, salamanders and earthworm-like caecilians -- have been a bit slippery about divulging their evolutionary ancestry. Gaps in the fossil record showing the transformation of one form into another have led to a lot of scientific debate.

The fossil Gerobatrachus hottoni or elderly frog, described in the journal Nature, may help set the record straight.

"It's a missing link that falls right between where the fossil record of the extinct form and the fossil record for the modern form begins," said Jason Anderson of the University of Calgary, who led the study.

"It's a perfect little frogamander," he said.

Gerobatrachus has a mixture of frog and salamander features, with fused ankle bones as seen only in salamanders, a wide, frog-like skull, and a backbone that resembles a mix of the two.

The fossil suggests that modern amphibians may have come from two groups, with frogs and salamanders related to an ancient amphibian known as a temnospondyl, and worm-like caecilians more closely related to the lepospondyls, another group of ancient amphibians.

"Frogs and salamanders share a common ancestor that is fairly removed from the origin of caecilians," Anderson said.

Gerobatrachus hottoni was discovered in Texas in 1995 by a group from the Smithsonian Institution that included the late Nicholas Hotton, for whom the fossil is named.

Anderson's team painstakingly removed layers of rock to reveal the anatomy of the skeleton.

"The fossil itself is almost perfectly complete," Anderson said.

"It died on its back. Its legs and arms were curled up on its belly and it's that part that weathered away."

While scientific opinion moves slowly, Anderson thinks the find will confirm the prevailing opinion that frogs and salamanders share a more modern ancestor.

"I think they (scientists) will be very happy with this as a resolution," he said.