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Top executives of the five largest oil companies tried to shift anger over high prices to a debate over supplies Wednesday, leading a senator to accuse them of acting like "hapless victims" while racking up record profits.
Patrick Leahy, (D-VT), told the executives there's "a disconnect" between normal supply and demand and the skyrocketing price of oil — surpassing $130 a barrel even as the oil leaders testified — that the industry has yet to explain.
The executives, appearing under oath before the Senate Judiciary Committee, said they know high prices are hurting people, but they said the cause is not company profits but global supply and demand. And they sought to use their appearance before Congress to argue against new taxes on their industry
Senate Democrats recently announced an energy package that would tax "windfall" profits of the five companies. That might have public appeal, John Lowe, executive vice president of ConocoPhillips [COP
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], told the senators, but oil companies should not be viewed as "a scapegoat" for high prices.
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Crude [US@CL.1
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] at these prices is a disaster for big oil, says Jeff Macke. It puts them under the microscope.
I think it’s embarrassing for these companies to go before Congress when they’re making such enormous profits, adds Karen Finerman. I expect them to increase Capex spending dramatically to get some of those profits off the balance sheet. Look for them to commit $15 billion or more to exploration, she says. If you need a trade look at the Oil Services HLDRS [OIH
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] with United States Oil Fund [USO
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] puts.
My trade is to get long the oil services stocks, counsels Guy Adami. Valuations look good to me. Or look at Fluor [FLR
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] and Jacobs Engineering [JEC
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]. I think you can own those stocks, even if crude drops.
I’d rather be in steel or coal, counters Pete Najarian.
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Trader disclosure: On May 21, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (INTC), (BTU), (AGU), (C), (GS), (MSFT), (NUE); Najarian Owns (AAPL), (ANR), (HPQ), (XLF); Najarian Owns (FTO) Calls; Macke Owns (MSFT), (WMT), (DIS); Finerman Owns (GS); Finerman's Firm Owns (MSFT), (TSO), (VCLK), (VLO); Finerman's Firm Owns SPX Index Puts; Finerman's Firm Owns (C) And (C) Leaps; Finerman's Firm Owns (YHOO) 1X2 Call Spreads; Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY)
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