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.
Thatâ€™s just how the July 31 â€śNBC Nightly Newsâ€ť anchor Brian Williams suggested July 31 that ExxonMobilâ€™s record $11.68 billion quarterly profit might be â€śout of line.â€ť
CNBC correspondent and co-host of CNBCâ€™s â€śThe Callâ€ť Trish Regan called it â€śanother kick in the gas tankâ€ť and interviewed drivers who wondered why they have to suffer while oil companies make â€śso much money.â€ť
â€śItâ€™s a record,â€ť Regan said. â€śExxonâ€™s profits are exploding. The company earned nearly $12 billion in the last three months. Exxon earns nearly $90,000 a minute â€“ thatâ€™s 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€ť
On â€śTodayâ€ť August 1, host Meredith Vieira said Exxon is â€ślaughing all the way to the bankâ€ť while Americans pay an average of $3.90 per gallon for gasoline. She said Americans are â€śdrowning in debt, so many people, while the oil companies seem to be rolling dough.â€ť
But CNBCâ€™s 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. â€śExxonâ€™s profits have probably peaked this quarter,â€ť 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 APIâ€™s Web site on July 25 explains, Exxonâ€™s profits are a reflection of the size of the company and its industry and arenâ€™t necessarily a good reflection of financial performance â€“ in terms of what they are and arenâ€™t charging at the pump. In other words, the profits are high because of volume, not profit margins.
â€śIt may seem surprising that oil and natural gas earnings are typically in line with the average of other major
Reganâ€™s report included John Felmy of the American Petroleum Institute (API) to defend Exxonâ€™s profits, but also included rhetoric from Democratic presidential hopeful Sen. Barack Obama â€“ who blasted the government energy policy that â€śworks for the oil companies.â€ť
â€śSo whereâ€™s all this money going?â€ť Regan said. â€śTwo 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€ť
She didnâ€™t mention that Exxonâ€™s 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 companyâ€™s 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.