NBC Slams Exxon's 'Out of Line' Profits
The media have made a habit of reporting record oil company profits with disdain rather than perspective; bitterness rather than accuracy.
Thatâs just how the July 31 âNBC Nightly Newsâ anchor Brian Williams suggested July 31 that ExxonMobilâs record $11.68 billion quarterly profit might be âout of line.â
CNBC correspondent and co-host of CNBCâs âThe Callâ Trish Regan called it âanother kick in the gas tankâ and interviewed drivers who wondered why they have to suffer while oil companies make âso much money.â
âItâs a record,â Regan said. âExxonâs profits are exploding. The company earned nearly $12 billion in the last three months. Exxon earns nearly $90,000 a minute â thatâs almost $1,500 every second. The reason profits have gone up so much: the price of oil has exploded on the world market, up 61 percent in the last year.â
On âTodayâ August 1, host Meredith Vieira said Exxon is âlaughing all the way to the bankâ while Americans pay an average of $3.90 per gallon for gasoline. She said Americans are âdrowning in debt, so many people, while the oil companies seem to be rolling dough.â
But CNBCâs Jim Cramer predicted that the decline in oil prices â closing at $124.08 July 31, down from the July 11 record high of $147.27 â would result in lower profits for Exxon. âExxonâs profits have probably peaked this quarter,â he told Vieira.
Both reports did mention that the company invests heavily in exploration -- $7 billion, a 38-percent increase â but neither mentioned that oil earnings are driven largely by volume, not profit margins.
As a report posted on APIâs Web site on July 25 explains, Exxonâs profits are a reflection of the size of the company and its industry and arenât necessarily a good reflection of financial performance â in terms of what they are and arenât charging at the pump. In other words, the profits are high because of volume, not profit margins.
âIt may seem surprising that oil and natural gas earnings are typically in line with the average of other major
Reganâs report included John Felmy of the American Petroleum Institute (API) to defend Exxonâs profits, but also included rhetoric from Democratic presidential hopeful Sen. Barack Obama â who blasted the government energy policy that âworks for the oil companies.â
âSo whereâs all this money going?â Regan said. âTwo places â exploration and shareholdersâ pockets. Exxon did spend $7 billion for exploration and the production of new energy sources â 38 percent more than it spent a year ago, but the company gave even more money â more than $10 billion â back to its shareholders through dividends and stock buybacks.â
She didnât mention that Exxonâs stock actually fell the day it reported record profits, off 4.68 percent because the company posted a lower-than-expected second quarter earnings of only $2.27 per share. The companyâs stock price -- $80.43 per share â is way off its $96.12 52-week high.
She also failed to note the huge amount of taxes paid by ExxonMobil and other oil companies. While it made $11.7 billion in profits, the company paid more than $32 billion in income, sales and other taxes.