Politics Roil Oil

While it is a good question to wonder what this has to do with skyrocketing energy prices, the fact the oil companies can be linked to the energy task force in some fashion and did not admit it in recent testimony, is enough to create new drama in Washington and headlines that cause indigestion for Big Oil investors.

That all makes it likely that a group of oil executives will reappear before Congress and that they will be questioned under oath and, potentially, under subpoena. It is just as likely that the hearing will be contentious, as members of Congress endeavor to look strong against corporate America, if for no other reason than to get good sound bites for campaign advertising.

In that scenario, Big Oil can't win. And while it isn't likely to have a long-term impact on the companies, and there still isn't likely to be a meaningful change in taxes, the perception will be that Big Oil is losing the battle. That creates plenty of headline risk for Big Oil investors, at least in the short term.

Growth at Bay

While the congressional inquiries are enough to put a lid on major integrated stock performance in the short term, growth prospects also will put pressure on many of these companies. While holding a position in the integrateds over the long term should provide stability and a dividend stream -- I have long-term positions in both Exxon Mobil and Conoco -- those companies are no longer the energy production growth engines of past years.

In fact, at a presentation this week, ConocoPhillips said 2005 production would be flat with last year, and next year's growth will be about 6% over 2005 levels. Certainly, that is nothing to get too excited about, especially when independent exploration companies are posting solid double-digit production growth.