WASHINGTON D.C. -- In a senate committee hearing Wednesday, top executives from five major oil companies -- Exxon Mobil Corp., Chevron, ConocoPhillips, BPAmerica and Shell Oil USA -- vigorously denied any price gouging at a time of record profits. Instead, they attributed their third-quarter profits to market conditions. Exxon Mobil, for example, earned nearly $10 billion in the third quarter. Together, U.S. oil companies earned more than $25 billion in profits in the quarter, despite production disruptions caused by hurricanes Katrina and Rita. In response to consumer complaints, Senate Majority Leader Bill Frist (R-Tenn.) ordered the hearing. When asked to explain the record profits at a time of higher prices at the pump, John Hofmeister, president of Shell Oil Co., cited the price of crude, higher tax payments, and the reinvestment of profits into the business. Shell earned $9 billion in the third quarter. Lee Raymond, chairman of Exxon Mobil Corp., said that industry earnings fluctuate from year to year, and that the industry's earnings per dollar this year are in line with those of other industries. James Mulva, CEO of ConocoPhillips, denied that recent profits represented a windfall because they've come "in the highest price environment our industry has experienced in 22 years, after adjusting for inflation." ConcoPhillips earned $3.8 billion in the third quarter -- an 89 percent increase over the previous year. Democrats had argued for requiring the executives to testify under oath. However, Republicans rejected that idea. A number of Democrats and a handful of Republicans have called for a windfall profits tax on oil companies, in light of the record profits. Critics of this proposal have argued that this tactic would discourage further investment in oil exploration and production.

Originally posted on Fleet Financials