Logic Times
More Quantum Media
Commentary by Aslan, 5/8/06, 12:16am. Comments (0)
"What about profits? Big oil companies like Exxon-Mobil make money at every step of the process because they take the oil out of the ground, refine it and sell it. Exxon-Mobil's profit is estimated at a hefty 29 percent." ABC News, World News Tonight, quoting an inflated value that contradicts the rest of the data presented.
Once again proving the Media Uncertainty Principle, ABC News alters reality by implying that "big oil" company profits are the cause of the pain that consumers are feeling at the pump. Indeed, every time gas prices creep upwards, so do attacks on profits being earned by oil companies. The implication is simple: oil company profits are the primary cause of high gas prices, and if civic-minded big oil took less in profits, then prices would be much more reasonable.
Nothing could be further from the truth. Using data from their very own broadcast, the breakdown of gas pricing is as follows:
In mid-April, this ABC News broadcast reported the average gasoline price at $2.68/gallon. Three weeks later, the average has climbed as much as $0.30/gallon, with reports in several states of average prices over $3.00/gallon. For this analysis, the recent figure of $2.97/gallon is used.
If "big oil" decided to forgo all profits in an effort to help struggling consumers, the cost per gallon would surely plummet, wouldn’t it?
Every penny of those fabled billions in profits surrendered to consumers in an unrivaled act of economic charity would save consumers $0.20/gallon.
Now, a fresh glance at the pie chart above shows a whole lot of light blue, a far larger slice than the evil purple one representing corporate profit. Might not a thorough investigation of costs that make up record high gasoline prices begin with the largest non-product related expense: state and federal taxes? After all, if the government decided to forgo all sales taxes (we are not even counting taxes on earnings) in an effort to help struggling consumers, the cost per gallon would drop significantly:
Yet the very same ABC News report spends only a moment on taxes, taking the time to marvel at how taxes represent a "much lower figure" than one would expect.
"And then, there's taxes — 18 cents for the federal government and 27 cents for state governments.
'Taxes used to represent as much as 40 to 50 percent of the price you paid at the pump,' Kloza said. 'Nowadays, it's a much lower figure than that because they haven't changed in 12 years.'"
How remarkable this perspective that silently declares there is an unassailable place for taxes in the American economy, but that profits are suspect.
Oil company profits have absolutely nothing to do with the current crisis; eliminating those profits would do little to relieve the short-term pain and would eventually drive companies out of business, tanking the stock market and the economy in the process. ABC News and other facilitators of the Media Uncertainty Principle may or may not know basic economics, but they are not to blame. Like the photon, they mindlessly do what they do.
Copyright © 2006 Dan Hallagan. All Rights Reserved.