Perhaps Charles Gibson was trying to vent on behalf of Americans paying higher prices at the pump. In an interview about record oil company profits August 13 on “World News,” Gibson pressed ExxonMobil CEO Rex Tillerson on issues of conscience rather than good business.
Gibson suggested Exxon’s record profits were “obscene,” and asked Tillerson to “justify” the company’s success.
“As we said earlier, Rex Tillerson – who is the board chair and CEO of ExxonMobil, doesn’t talk often to the press,” Gibson said. “His company has reported remarkable profits in the first half of this year. The high price of gas brought ExxonMobil close to $22 billion in profit – in profit – for the first half of this year. I asked him how he justifies that amount, that some see as obscene.”
But Tillerson explained to Gibson it was the nature of a large business that performs an incredible amount of transactions.
“Everything we do, the numbers are very large,” Tillerson replied. “I saw someone characterize our profits the other day, in terms of $1,400 in profit per second. Well, they also need to understand we paid $4,000 a second in taxes. And we spent $15,000 a second in costs. We spend $1 billion a day just running our business. So, this is a business where large numbers are just characteristic of it.”
As a report posted on American Petroleum Institute’s Web site on July 25 explained, Exxon (NYSE: XOM) and other oil companies’ profits reflect the size of the companies and the industry and aren’t necessarily a good reflection of financial performance in terms of what they are charging at the pump. In other words, the profits are high because of volume, not profit margins.
“It may seem surprising that oil and natural gas earnings are typically in line with the average of other major
But rather than seizing the opportunity to dispel media myths about oil companies, Gibson quizzed Tillerson about the public’s attitude toward Exxon and others. He asked the CEO if he could empathize with consumers – as if he had any ability to alter market forces which have drove the price of oil to record highs, which have since receded.
“Do you understand and can you appreciate from your position, with the escalation of the price of a gallon of gas, why people are fed up, angry, indeed disgusted, with the oil companies?” Gibson asked.
Tillerson wouldn’t comment specifically on the public “anger,” but he did question if it was or wasn’t misguided.
“Well, I can understand why people are very upset and why they’re very worried and concerned about their ability to deal with these high prices,” Tillerson said. “In terms of where they should direct their anger, I don’t think it’s useful for me to comment on that. Although, it does bother that much of that is directed at us.”
Gibson acknowledged late in the interview that the price of oil is driven by market forces, but insisted Exxon should still take hits to lower the price of gasoline. “You and so many other people in the oil business have said, ‘Look, you’ve got to understand the markets drive the price,’” Gibson said. “But is there nothing that ExxonMobil can do to make gas more affordable for the average Joe?”
Tillerson said adding new supply, lowering demand by increasing energy efficiency, and pursuing alternatives, would ease the strain. “There is no one solution to this. There’s an integrated set of solutions and you have to undertake them all,” he said. “So when the whole debate focuses around we have to choose this one solution or that, people are missing the point.”
Attacking oil company profits has been a theme of the broadcast media as oil ascended to record highs, causing gas prices to go up. Television journalists have attacked oil industry for years over “mind-boggling” profits, according to a recent Business & Media Institute analysis of the coverage of oil companies.