Oil company profits came under the spotlight yesterday as Democrats on the Senate Judiciary Committee strove to ‘take on’ the record profits of oil companies. This from The New York Times:

Such showdowns between lawmakers and oil titans have become a familiar routine on Capitol Hill. But with gas prices nearing $4 a gallon, and lawmakers headed home for a weeklong Memorial Day recess where they expect to get an earful from angry constituents, there is added urgency for Congress to appear active.

But while momentum is building for several measures, including a bill that would allow the Organization of the Petroleum Exporting Countries to be sued in American courts under antitrust laws, there is little sign that any of the proposals would do much, if anything, to lower prices quickly.

The hearing on oil profits came as Capitol Hill struggled to be seen to be ‘doing something’ about the 15-day run of record gas prices.

This week, the House voted in the so-called “Nopec bill”, which targets the OPEC oil cartel as a monopoly in violation of the Sherman Antitrust Act. Senate Democrats are also targeting windfall profits by oil companies and speculators in the oil futures market that they blame for high oil prices.

The oil company execs hit back at yesterday, however, pointing out that the fundamental laws of economics — such as supply and demand — was responsible for high oil profits.

“As repetitive and uninteresting as it may sound, the fundamental laws of supply and demand are at work,” said John Hofmeister, the president of Shell Oil. “Oil exporting nations, as has been said, are managing their natural resource development and production to supply their local and global markets in their own self-interest.”

Commodities investing expert Doug Casey at CaseyResearch.com points out that in its weekly inventory report, “the Energy Information Administration said that crude stocks were down 5.4 million barrels for the week ended May 16. Analysts had been expecting a rise of about 900,000 barrels.”

Keith Fitz-Gerald of Money Morning says the US can’t refine or drill its way out of the oil crisis, either.

“For one thing, refiners are the ultimate middlemen and they’re pinched at these prices. They simply can’t make money as they try to refine an increasingly expensive product and sell it to users who are chaffing at $4 a gallon. That’s why stocks like Western Refining Inc. (WNR), Tesoro Corp. (TSO), and Valero Energy Corp. (VLO), for example, have fallen by nearly 30-40% in recent months. Their margins get worse with each up-tick in oil prices from here on out now that we’ve reached a point where high prices are beginning to dampen demand.”For another, drilling and refining our way out of this assumes we have oil to begin with… we don’t. And even if we turn the Alaskan Tundra into Swiss cheese, the demand reduction we’re seeing here in the United States is being dramatically offset by developing countries that are guzzling gasoline at unprecedented rates.

Read on here to find out why Keith says oil prices will reach $225 a barrel and how a simple three-step plan can bring down oil prices, without the kind of political showboating seen Washington yesterday.