May 8, 2006
Shocking News from NPR: No Oil Company GougingBy Noel Sheppard
For months, the media have blamed virtually anything but free market forces for the rise in oil and gas prices. NBC's Lisa Myers attributed these increases to greed on a recent Nightly News report stating almost disgustedly
Imagine the nerve of ExxonMobil actually making a profit. Oh the humanity.
A few days earlier, CBS's Russ Mitchell, clearly concerned about price gouging, asked one of his guests on the Evening News,
I bet you can't guess the response.
Yet, in the midst of all this hysteria, a highly unlikely source — National Public Radio's Internet website — published an article entitled 'Q&A: What's Behind High Gas Prices?' In it, author Scott Horsley adroitly cut through the hype, and shared with his readers the facts surrounding the recent explosion in energy prices — facts that most media refuse to share with the public.
First, Horsley did a breakdown of how various factors go into the actual retail price per gallon of gasoline. Top on the list was crude oil, which, according to Horsley,
Then, Horsley raised a cost that few media are willing to acknowledge:
Oil companies pay taxes? I thought none of Bush and Cheney's friends pay taxes.
Well, we'll get to that later. But, before we do, using Horsley's numbers, $2.79 out of the $2.90 that folks are currently paying for a gallon of gasoline are oil companies' costs.
That's certainly not the way most media are presenting these numbers, for on the same day Horsley's article was published, ABC's Elizabeth Vargas started her World News Tonight broadcast:
Rather than address all of the various expenses involved in producing gasoline in this segment, ABC chose to castigate ExxonMobil for not spending enough.
Leave it to a media member to see things in such a backwards fashion.
Correspondent Betsy Stark asserted:
Stark then had the gall to complain about what ExxonMobil did with its profits:
Are you kidding me? ExxonMobil actually shared some of its profits with the people that own the company? There oughta be a law!
Yet, apart from addressing any of ExxonMobil's almost $74 billion in expenses in the first quarter, ABC also chose not to report the $7 billion in income taxes — I promised we get back to this — the oil giant paid to the federal government. In fact, as the Media Research Center's Rich Noyes pointed out at NewsBusters.org that same day, ExxonMobil's total tax bill in the first quarter — when factoring in income taxes, excise taxes, and 'other taxes' — was $25 billion, or fully three times its profits.
We certainly wouldn't want to report that now, would we?
Finally, Stark chose not to inform the viewer that shareholders received a total of $2 billion in dividends — representing a paltry two percent yield based on the current share price, which is less than what one can make in a money market account or certificate of deposit — or less than one tenth what the government made from ExxonMobil in the quarter.
That's right — the government actually received more than ten times as much money from ExxonMobil as its shareholders. Capitalism at it's finest, wouldn't you agree?
Unlike NPR, Myers opted not to explain what happenend to the other 90.5 cents, or to address the tax issue. How convenient.
On the same day, the CBS Evening News began its newscast:
Anchor Bob Schieffer was only interested in discussing the $8.4 billion in profits made by America's largest oil company rather than informing his viewers of all the other expenses involved in producing and marketing a gallon of gasoline.
Of course, the greed of oil companies and their executives is only one cause of high energy prices according to the media. Another has been price gouging. A fine example occurred on the April 25 CBS Evening News. Sitting in for Bob Schieffer was Russ Mitchell who invited New York state attorney general Elliot Spitzer on to discuss this issue. Mitchell began by asking,
Spitzer was the perfect person to ask, and quickly answered, 'Very easy.'
Yet, NPR didn't agree. According to Horsley's article,
NPR also addressed what actually controls the price of oil:
Not surprisingly, this isn't how most media members see it. For instance, on April 30's Meet the Press, host Tim Russert actually argued with secretary of energy Samuel Bodman that oil companies were responsible for establishing the price of gas:
Not according to NPR:
Horsley offered a great analogy:
Instead, NPR accurately stated that prices are established by market forces in an expanding global economy:
Horsley also addressed other factors that add to the direction of prices:
Finally, Horsley accurately depicted why oil companies are making so much money today:
Obviously, with prices now above $70, these companies are doing very well:
Of course, this isn't a one—way street:
As a result, all this reward comes with a lot of risk, investment, and expense...something it seems that few in the media other than NPR realize.
Noel Sheppard is an economist, business owner, and contributing writer to the Free Market Project. He is also contributing editor for the Media Research Center's NewsBusters.org. Noel welcomes feedback.