It's time for a reality check: Politics and business don't mix, and that is especially true if you are in the energy business today.

There are claims that energy industry executives "lied" when they testified before Congress last week, and that has Democrats smelling blood. The claim is that at least two companies, Exxon Mobil ( XOM) and ConocoPhillips ( COP), had officials participate in the now-infamous 2001 Cheney Energy Task Force. Both companies' executives testified before Congress last week that they were not involved in the proceedings.

And, moreover, Sen. Barbara Boxer (D., Calif.), claims that Shell Oil ( RDS.A) President John Hofmeister was not truthful about the company's decision to shutter its refinery in Bakersfield, Calif.

There is now chatter that the executives should be dragged back to Washington, shackled and forced to sit through another six hours of questions from senators who have only one item on their agenda: find a way to blame these executives for every worldly ill, all of which, of course, are the result of higher oil and gasoline prices.

Headline Risk

All that said, this site isn't about politics, it's about the markets and how to make money. But politics have now created substantial risk for Big Oil, so the twain must meet.

There is little chance that a major punitive tax on energy companies will work its way through Congress. And there's even a smaller chance that such a tax would be signed into law by a president who made much of his fortune in the oil patch. Still, the rhetoric is likely to continue, and likely at a higher decibel level, which doesn't bode well for the major oil companies.

Both Lee Raymond of Exxon Mobil and Jim Mulva of ConocoPhillips indicated their companies were not involved with the Cheney Task Force. While technically correct, an Exxon government affairs official did meet with the head of the task force. And while Jim Mulva would have no reason to know, former Conoco CEO Archie Dunham and other Conoco execs appear to have been involved in some way with the task force before Mulva's company, Phillips Petroleum, merged with Conoco.

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.

If Congress were to open up new exploration lands and allow integrated companies to develop more refining capacity in key regions, the outlook for integrated might change. However, today's political posturing combined with challenges to growth make Big Oil a difficult place to pump profits in the energy space.

It's the Market, Stupid

Most impressively, it doesn't seem to matter to Congress that there is no evidence anywhere that the oil markets are rigged. In fact, members of Congress should spend a little time reviewing recent history to see that two of the strongest hurricanes in recent history knocked Gulf of Mexico production and transportation completely off line; oil production from Saudi Arabia and other OPEC countries is peaking; and there hasn't been a meaningful new refining project developed on our shores for three decades.

Better yet, maybe Congress should go to China and hold a hearing as to why this burgeoning nation is all of a sudden using so much of the world's hydrocarbon supply. There may be a conspiracy among the Chinese people to drive U.S. gasoline higher.

Nonsense, you say. But it's almost as plausible as the thought that four or five major oil companies -- which are under the regulatory and market microscope every day -- got together after the hurricanes and decided it was the perfect chance to screw the U.S. consumer.

Not that the liberal take would concur, but maybe, just maybe, this was the markets at work, with price acting as a demand-rationing mechanism to make sure the market clears. With supply incredibly challenged after Katrina, there was a period of a week or more that the vast majority of BP ( BP) retail gasoline stations in Atlanta had no gasoline for sale. In other words, for them, price didn't matter because they had no gas to sell and, as a result, made no money. That profit opportunity was lost forever.

Why didn't they have gasoline? Because the major pipelines coming into Atlanta didn't have access to either product, or power to pressure the line to move the product through the line. Maybe Congress should investigate the pipeline and the power companies that lost power as a result of the storms. Better yet, maybe Congress should call in the weather forecasters who predicted the storms, or the big man who planned Katrina and Rita; they must be a part of the conspiracy as well.

Storms happen, unrest in the Middle East happens, Venezuela strikes happen, Russia supply challenges happen, and China and India happen. And, believe it or not, markets react. Amazingly, too, they are pretty efficient. As supply and pipeline capacity has returned, prices have moderated. Now, many parts of the country are paying less than $2 for gasoline.

Christopher S. Edmonds is partner and managing director of research at Pritchard Capital Partners, a New Orleans energy investment firm. He is based in Atlanta. At time of publication, neither Edmonds nor his firm held positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.

More from Opinion

12 Stocks That Our Writers and Their Sources Recommend You Buy Here

12 Stocks That Our Writers and Their Sources Recommend You Buy Here

Musk Goes on Unoriginal Media Tirade

Musk Goes on Unoriginal Media Tirade

What's Happening in Video Games This Week: On the Road to E3

What's Happening in Video Games This Week: On the Road to E3

Wednesday Wrap-Up: Let's Talk About General Electric

Wednesday Wrap-Up: Let's Talk About General Electric

Week of the Women From Finance to Fast Food

Week of the Women From Finance to Fast Food