CNN: Don’t Ask, Don’t Tell

I just finished listening to a piece on CNN (Wolf Blitzer filling in on AC360) which claimed to “tell the truth” about whether record profits by oil companies have an effect on the price of gasoline. Guess what? They never answered that simple question. This was their presentation:

1. They had a counter on the TV screen showing second by second how much profit Exxon is making.

2. They “interviewed” a Democratic politician who claimed that oil companies are spending their profits by increasing their dividends and their share price not by investing in other energy sources. They pointing out that Exxon gave $10B back to shareholders insinuating that this was evil in some way. That leaves $5B to $30B of profits totally unexplained. Why the range? Because CNN wasn’t clear about whether the $10B was on an annual basis or just for the quarter.

3. They “interviewed” an oil company spokesman who claimed that 75% of the price of gasoline is for the crude oil. This would imply that Exxon doesn’t make any money on this 75%, and it ships, refines, and distributes oil and takes their profits all from the other 25%. I don’t think this is true. I think the reason that the oil companies profits are increasing are because they make money on the crude oil side, not because of any money they make on the refining side. CNN didn’t ask, I couldn’t tell.

4. They looked at the counter at the end of their piece and made some cracks about the size of the “windfall.” It was about $800K.

That was their report. Maybe I misunderstood the question, but I thought they were going to figure out how much profit Exxon makes on a per gallon basis. I realize that this requires ACTUAL research, but then CNN must have an internet connection somewhere.

I decided to use the internet to figure out the answer:

According to Exxon’s 2007 annual report, Exxon had $404B in revenue. Of that revenue, they paid about $200B for the crude oil, $61B for operations and other expenses, and $103B in taxes and duties. That leaves about a $40B profit. The U.S. consumes about 150B gallons of gasoline per year, so if the U.S. were to take ALL of Exxon’s profits (not just the “windfall” profits) then it could give back about $0.25 per gallon. Of course, Exxon would be out of business. My guess is that the “windfall” that Congress could get would be closer to $7B, and that would mean less than 5 cents per gallon.

It took me a whole hour to get that information, most of which was spent downloading Exxon’s 57 Megabyte annual report (my internet connection is really slow). Maybe Al Gore can explain this internet thing to CNN.

One Response to “CNN: Don’t Ask, Don’t Tell”

  1. kezobr Says:

    CNN is not in the business of telling the truth.

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