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Gibson Hits Oil Chief from Left on Profits and "Windfall Tax" --5/9/2006


1. Gibson Hits Oil Chief from Left on Profits and "Windfall Tax"
On Monday's Good Morning America, ABC's Charlie Gibson hit ConocoPhillips Chairman and CEO James Mulva with a series of questions from the naive left which presumed the oil companies are out of line. Without ever pointing out how the company paid three-fourths as much in federal income tax and collected even more in taxes for the feds and the states, Gibson cited the company's "$3.3 billion in profit for the first quarter" and how "the six large U.S. companies will have a total of $135 billion in profits for the year 2006. Don't consumers have a right to be angry?" Gibson proposed: "The public looks at a total of $135 billion dollars over the year, that's larger than the gross domestic product of Israel, and says isn't that an obscene amount?...Isn't at some point enough, enough?" Displaying incredible naivete, Gibson cited how "the six major oil companies spent $71 billion on capital investment, but they spent $74 billion on share repurchases and dividends which sounds to me like you have a greater responsibility to shareholders than consumers to reinvest." Duh. Gibson also used supposed view of "the public" to assert that "the public looks at this and says what's unreasonable about a windfall profits tax?"

2. Read It Here First: Paul Harvey Picks Up MRC Oil Coverage Study
You read it here first. ABC Radio's Paul Harvey on Tuesday morning cited the MRC's May 4 Media Reality Check: "The Media Research Center has been watching television and keeping score -- NBC, ABC and CBS -- and their records show that the mainline networks emphasize bad news about the Bush White House, and often ignore good news. The three networks in late April, for example, aired 183 stories about the horrors of high gasoline prices, but only four stories about a record number of American workers working."

3. "Top Ten Questions George W. Bush Asked the New CIA Director"
Letterman's "Top Ten Questions George W. Bush Asked the New CIA Director."


Gibson Hits Oil Chief from Left on Profits
and "Windfall Tax"

On Monday's Good Morning America, ABC's Charlie Gibson hit ConocoPhillips Chairman and CEO James Mulva with a series of questions from the naive left which presumed the oil companies are out of line. Without ever pointing out how the company paid three-fourths as much in federal income tax and collected even more in taxes for the feds and the states, Gibson cited the company's "$3.3 billion in profit for the first quarter" and how "the six large U.S. companies will have a total of $135 billion in profits for the year 2006. Don't consumers have a right to be angry?" Gibson proposed: "The public looks at a total of $135 billion dollars over the year, that's larger than the gross domestic product of Israel, and says isn't that an obscene amount?...Isn't at some point enough, enough?" Displaying incredible naivete, Gibson cited how "the six major oil companies spent $71 billion on capital investment, but they spent $74 billion on share repurchases and dividends which sounds to me like you have a greater responsibility to shareholders than consumers to reinvest." Duh. Gibson also used supposed view of "the public" to assert that "the public looks at this and says what's unreasonable about a windfall profits tax?"

While ConocoPhillips did report nearly $3.3 billion in first quarter profits, the company's press statement noted that "the company's tax provision for the first quarter of 2006 was $2.5 billion, resulting in an effective tax rate of 43.2 percent." See: www.conocophillips.com

The April 28 CyberAlert recounted how "the broadcast network evening newscasts on Thursday night hyperventilated over 'record' $8.4 billion first quarter profits for ExxonMobil, but failed to point out how government taxes exceed oil company earnings." See: www.mediaresearch.org

And: www.mediaresearch.org

Gibson teased the May 8 GMA: "Pain at the pump: 70 percent of Americans say they're feeling the sting. Is Big Oil to blame? Should they do more to ease your pain? The CEO of one of America's largest oil companies, ConocoPhillips, joins us live."

Gibson set up the 7am half hour segment: "We're going to turn next to the oil business. A gallon of gas is now averaging $2.95 a gallon, up four cents in the past two weeks. And a new poll finds that nearly three-quarters of Americans say those high prices are causing them financial problems.
"In a moment we're going to talk to James Mulva. He's the chairman and CEO of ConocoPhillips, the country's third largest oil company, about those high prices and high profits. But first, Dan Harris with the latest on how Americans are feeling the squeeze at the pump."

Dan Harris relayed complaints from people on the streets of Manhattan, so they may not even have cars:
"In the face of rising gas prices, commuters are scrambling to find alternative ways to get to work and lawmakers in Washington are scrambling for political advantage. Democrats want to cut tax breaks for Big Oil, Republicans did want to hand out $100 checks to American consumers but that fell flat. A new poll [AP/Ipsos] says the number of Americans who expect gas prices to cause them financial problems in the coming months is up from 51 percent to 70 percent."
Woman: "People are paying over $3 a gallon for gas. When you make $6 an hour, I mean, how are you suppose to pay that?"
Second woman: "It's really getting out of hand, really ridiculous."
Harris: "Two-thirds of Americans say they've cut back on driving, one half say they've cut back vacation plans. With more Americans now saying they're feeling the pain from rising gas prices, we found some drivers with hard questions for the people who run big oil companies."
Man: "How can we get our gas prices back down?"
Third woman: "Why are we paying these prices? There's no reason for it."
Second man: "Everybody wants to know whether they're charging excessive profits. They're entitled to make a profit, the question is how much?"
Third man: "Is there any sacrifice they can make that might help the situation?"
Harris: "While energy analysts say it's not Big Oil, but instead global supply and demand that's to blame, many drivers don't see it that way. For Good Morning America, Dan Harris, ABC News, New York."

Gibson then sat with Mulva, as tracked by the MRC's Brian Boyd: "And we are joined this morning by ConocoPhillips Chairman and CEO James Mulva. As we mentioned, ConocoPhillips, the nation's third largest oil company. They have 12,000 gas stations around the country and this is Mr. Mulva's first network television interview and I welcome you, it's nice to have you hear."
James Mulva: "Good morning, great to be with you."
Gibson: "We've looked at these first quarter profit figures. Profit for ConocoPhillips: $3.3 billion in profit for the first quarter, $8.4 billion for ExxonMobil and the estimates are that the six large U.S. companies will have a total of $135 billion in profits for the year 2006. Don't consumers have a right to be angry?"
Mulva: "Well, with respect to gasoline prices at, let's say, $3 at the pump at this point in time, if you look at the cost of buying crude oil, which is about $70-75 dollars a barrel, the cost of running our refineries, the taxes that are paid on a gallon of gasoline, the earnings per gallon of gasoline for the oil companies is about 10 cents a gallon. So, the question really is: Why is gasoline price at the pump $3 a gallon? I think there's really two reasons. One, oil prices being at $70 to $75 a barrel and the second is the utilization of refining capacity, specifically in the United States. So the real question is what about oil prices: Will they remain at $70 to $75 and how are we utilizing our refinery capacity so that we convert oil into gasoline. To the extent that we do that really well, we add supplies and moderate the impact on the price of gasoline."
Gibson: "And those in your positions in various oil companies say: Look, we're making ten cents a gallon. That seem reasonable. The public looks at a total of $135 billion dollars over the year, that's larger than the gross domestic product of Israel, and says isn't that an obscene amount? What, as one of those people said in the public, said isn't at some point enough, enough?"
Mulva: "Well, with respect to profits, without any doubt the oil companies are very large enterprises. Some of the very largest companies, not only in the United States, but in the world. And if you look at reinvestment over the last ten years our industry has essentially reinvested all of its earnings back into adding to oil and gas production as well as refining capacity. In case of our own company, in the first quarter of this year, we earned $3.3 billion, but we reinvested $4.6 billion into adding to production and capacity of our refineries."
Gibson: "But isn't that a cost of doing business, the money that you reinvest? Overall, the big oil companies last year-"
Mulva: "Absolutely, with the earnings reinvestment our obligation and responsibility to the consumer is to continue to provide energy. So we certainly do need to make very substantial reinvestment."
Gibson: "Overall, last year the six major oil companies spent $71 billion on capital investment, but they spent $74 billion on share repurchases and dividends which sounds to me like you have a greater responsibility to shareholders than consumers to reinvest."
Mulva: "Well, we certainly do have a responsibility to our shareholders, but our over-reaching obligation that we have done for many, many decades is and will continue to invest to provide energy to the consumer. It takes substantial investments, as I said, in the case of our own company we reinvest more than 100 percent to add to capacity and refining capacity."
Gibson: "One of those people that Dan talked to in the public said is there any sacrifice that Big Oil can make? People, the public looks at this and says what's unreasonable about a windfall profits tax?"
Mulva: "Well, with respect to windfall profits tax or price controls, we've tried that in the past, the country's tried that in the past. Doesn't work. Put in price controls, it holds down the price but increases consumption, which is not good. Windfall profits tax takes away from the ability of the companies to reinvest to grow and add to capacity."
Gibson: "One of the things that the public gets upset about is as you know, CEO compensation. We just had the CEO of ExxonMobil retire and he had a $400 million package. Your compensation is $13 million a year with extraordinary amounts of stock options that can eventually be exercised. When the public talks about sacrifice, yes it might be a token sacrifice but should there be a cap on those kinds of compensations?"
Mulva: "Well, with respect to CEO compensation, obviously these are very, very large numbers. But on the other hand, if you look at the oil companies, the international oil companies, there's huge responsibilities with respect to asset bases in hundreds of billions of dollars. We have tens of thousands of employees. So there are a great deal of responsibilities. Obviously, CEO compensation is tied to performance of the company. In the case of our own company, all of my compensation is directly reported to the Securities Exchange Commission, complete transparency. In my own situation, more than 90 percent of everything that I have is tied up in the company's stock. So, I'm certainly very aligned with respect to the shareholders. Company must perform. If the company does not perform, why I would not have my job."
Gibson: "Some quick questions. Is $3 a gallon a base now? Are we ever going to get down below that?"
Mulva: "I think to get below $3 gasoline price will require a lower oil price. Oil price represents 60 percent cost of gasoline."
Gibson: "And do you see any chance of a lower oil per barrel price?"
Mulva: "I think there's opportunity for a lower oil price because of geo-political considerations. We think there's $10 or $20 per barrel in the oil price. So, if we can moderate geo-political, can impact the oil price."

Read It Here First: Paul Harvey Picks
Up MRC Oil Coverage Study

You read it here first. ABC Radio's Paul Harvey on Tuesday morning cited the MRC's May 4 Media Reality Check: "The Media Research Center has been watching television and keeping score -- NBC, ABC and CBS -- and their records show that the mainline networks emphasize bad news about the Bush White House, and often ignore good news. The three networks in late April, for example, aired 183 stories about the horrors of high gasoline prices, but only four stories about a record number of American workers working."

On his noontime report today, Harvey ran a slightly longer version of the item.

Those findings appeared in the May 4 Media Reality Check by Rich Noyes, "Hyping High Gas Prices, Hiding Good News: In 21 Days, ABC, CBS and NBC Pump Out 183 Stories Bemoaning 'Skyrocketing' Oil and Gas Prices," which was distributed last Thursday afternoon as a CyberAlert Special.

To listen to Harvey's twice-a-day commentaries: paulharvey.com

For the May 4 MRC Media Reality Check: www.mediaresearch.org

"Top Ten Questions George W. Bush Asked
the New CIA Director"

From the May 8 Late Show with David Letterman, the "Top Ten Questions George W. Bush Asked the New CIA Director." Late Show home page: www.cbs.com

10. "How many national security threats can you ignore per minute?"

9. "Any chance the 'A' in 'CIA' stands for 'Anchovies'?"

8. "How many years experience do you have sitting on your ass doing nothing?"

7. "Do you prefer being called 'dude' or 'dawg'?"

6. "Can we speed this up? I wanna see 'RV'."

5. "Is Cialis right for you?"

4. "Can you explain to me what the hell is happening on 'Lost'?"

3. "So, do you speak Iraqian?"

2. "What would it take to make Letterman disappear?"

1. "Can you get me some surveillance photos of Jessica Alba sunbathing?"

-- Brent Baker