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Why the Senate is taking on big oil

Colo. Democrat Salazar talks with Scarborough about Wednesday's hearings
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On Tuesday, the 'Scarborough Country' campaign against out-of-control oil prices continued, focusing on five powerful oil companies that are being called to Capitol Hill on Wednesday for a grilling on how they are raking in record profits while Americans live in fear of their first home heating bill and next trip to the gas station. 

The night before the hearings, one of senators on the Senate Energy Committee, Democratic Senator Ken Salazar of Colorado, joined MSNBC's Joe Scarborough to discuss why the hearings are important.

To read an excerpt of their conversation, continue to the text below. To watch the video, click on the "Launch" button to the right.

JOE SCARBOROUGH: This is just one of those issues that really resonates with Americans.  They don't understand why they're paying more at the pump than ever before and why oil companies are making a bigger profit than ever before, -- $9 billion this quarter for one oil company. 

What's happening out there? 

SEN. KEN SALAZAR (D), COLORADO:  You know, that's just incredulous to me that the big oil companies are making these huge profits while all of America is hurting from the farmland to consumers in the cities.  We see more pain at the pump than we ever have before. 

What we're going to do (Wednesday) in the Energy Committee, with about 30 to 40 senators attending, is try to get to the root of the problem.  One of the things that's happening, I believe, is that there is price gouging that is going on and that we don't have effective national or state laws to deal with price gouging.

When you have companies that are making profits of over 100 percent from where they were a year ago, something has gone awry.  And I believe that what we need to do is have a price gouging law.  I think the people of America deserve better than what we're getting today. 

And I think part of it is just making sure that these big oil companies are being held accountable. 

SCARBOROUGH:  I certainly agree with you.  I mean, let me show you, Senator, how much money oil companies are making in profits.  Exxon Mobil leads the pack with $9.9 billion in the third quarter, up 75 percent over last year. 

Next is Shell Oil, with profits of $9 billion.  Then have you've got BP America coming in at $6.5 billion in just the third quarter.  Chevron jumped 12 percent or $3.6 billion, and ConocoPhillips with a whopping 89 percent increase over last year. 

Now, Senator, I know you.  A lot of people consider to you be a conservative Democrat.  You certainly, if you know anything about me, you know I like profits.  I want companies to make a lot of money. 

But in this case, there doesn't seem to be any market justification for it.  And every time I ask oil executives what's going on, they blame it on refinery costs or something else. 

It really does something smell like price gouging to you and a lot of other senators, doesn't it? 

SALAZAR:  You know, Joe, you were here on Capitol Hill, so you know the history of how some of these things go.  And people can sometimes make a statement that company's profits are way out of whack, but the fact is that, when you look at what was happening in August in the days before Katrina made landfall and what's happened since then, it seems to me that the enormity of these companies taking on this kind of a profit is unconscionable. 

And I think that the people of America deserve to know what is driving these costs on the part of big oil. 

Long-term, I think we can develop some strategies to get to energy independence, and I think that a goal is an imperative for the American people. 

But we have a short-term problem here today, with the high cost of heating oil, astronomical diesel and gas costs for everyone who is driving around America, so I hope that tomorrow's hearing gets us some answers as to why these companies are getting these astronomical prices and also, then, that we as a Senate and as a Congress can take some action to try to provide some kind of relief to the consumers who are being so affected by them. 

SCARBOROUGH:  You know, Senator, what scares me is you're right, I did serve in Congress and I know how powerful these oil companies are.  I mean, they wrote me campaign checks -- of course, after I got elected.  When I was a challenger, nobody would write me a check. 

But they wrote me checks.  I haven't seen your FEC report.  I'm sure they have written you and everybody else checks.

But unfortunately, there aren't enough people like you that step forward and stand up not only to these companies, but also to other massive corporations. 

Do you think -- and this is what scares me the most -- do you think (Wednesday) there are going to be enough senators on both side of the aisle that are going to stand up and have the guts to give the rest of us the answers we need to know about price gouging? 

SALAZAR:  Yes, I think there will be.  There is a great sense among the Democratic members of the Energy Committee that we really need to have some answers short-term -- because this is a problem for us this winter, it's a problem for us this month, not 10 years on down the road. 

And I've heard similar comments from well-meaning members of the Republican Party as well, that these profits that are the highest profits that we've seen in history for the oil companies are inexplicable and that we need to get answers as to why they have these high profits and figure out how we can bring some relief to the American people. 

We should be fighting for the American people.  That's what the American people deserve. 

SCARBOROUGH:  And, Senator, these prices are inexplicable if you look just at market forces that surrounded, like you said, the days in August and even before and into September, and these prices exploding. 

Now earlier today, our sister network, CNBC, caught up with Exxon Mobil Chairman Lee Raymond on the floor of the New York Stock Exchange.  And Raymond defended his company's huge profits. 

--Begin video clip-- LEE RAYMOND, CHAIRMAN, EXXON MOBIL:  We have ups and downs.  Back in 1998, when prices were below $10, our earnings were very low.  Now we're at the top of the cycle, they're high. But the way we manage the company is both through the highs and the lows.  --End video clip--

SCARBOROUGH:  Senator, again, I'm sure we agree on this point, too.  We both love free enterprise, we understand that stocks go up, stocks go down, earnings go up, earnings go down. 

But do you buy that argument that all of this just has to do with free market fluctuations? 

SALAZAR:  I do not.  You know, I believe in the free enterprise system.  I pride myself as being a pro-business Democrat.  But I think when you see humongous profits, it ought to send off alarm bells on the part of all of us in America about these kinds of profits going to these oil companies. 

Sure, they control the natural gas that's coming into our homes and the price of fuel that we're putting into our vehicles or the price of fuel we're putting into our tractors on the farms, but at the end of the day, while the rest of America suffers so deeply, they are having these companies making these astronomical profits.

And I think here's an inequity there.  I think it's unconscionable.  And I hope that we as the United States Senate (on Wednesday) take some action as we move forward on price gouging statutes that have been introduced by my colleagues.