An interesting contrast occurred on the morning shows regarding ExxonMobil’s record high quarterly earnings. Over at CNN’s American Morning, Miles O’Brien and Andy Serwer fretted over ExxonMobil’s announcement, with O’Brien declaring it the, “outrage moment of the morning.” Meanwhile, Good Morning America’s financial contributor Mellody Hobson explained how the profits were a result of supply and demand. Hobson explained to ABC’s Charlie Gibson how the “outrage” over these profits are “not warranted” and “the oil companies have nothing to do with how gas prices are set.”
At the top of the 7:25 am segment, O’Brien hyped up the story by saying that it would "get you a little outraged":
“So while you’re pumping gas and you’re watching that meter spin, and you’re thinking about all the cash that’s coming out of your wallet, where’s it headed? Andy Serwer is here to tell you, and get you a little outraged, unless you own a bunch of Exxon stock or something, which you might be happy about this, right?”
Andy Serwer: “It heads right to the coffers of big oil companies. And you know, I was saying this months and months ago, whenever you start paying a lot for gas at the pump, buy oil stocks, because that’s where the money’s going. Exxon, yesterday, reported a profit of–here’s the net income numbers, first of all, of the big oil companies over the past couple days here. Look at that, first company in the United States to report nearly a $10 billion profit. Profit. Then you’ve got Royal Dutch, British Petroleum, ConocoPhillips, the number three companies.”
O’Brien, who did not mention the possibility that increased demand for gas, coupled with decreased supplies would result in higher prices, theorized: “it must mean that the price they are charging us is going up faster than the price of oil.”
GMA’s coverage of Exxon’s profits did entertain the notion of supply and demand. After mentioning an ABC News poll which showed 72% of Americans believes oil companies were taking advantage of the hurricanes to raise gas prices, Hobson shot that belief down.
Charlie Gibson: “Is the outrage warranted?”
Mellody Hobson: “It actually is not warranted, and the reason is, the oil companies have nothing to do with how gas prices are set. They actually have nothing to do with how barrels of oils are price--oil is priced. And more specifically, what I mean by that is that those prices are set by market forces.”
Gibson then brought up the idea of instituting a “windfall profits tax," to which Hobson forcefully argued the negative consequences price controls would have on consumers.
Gibson: “There’s a lot of talk in Capitol Hill now about the fact there ought to be a windfall profits tax, or something. Is anything going to happen because of this, or are we just going to let the market go on, and Congress will express its outrage, but essentially nothing happen?”
Hobson: “Whenever you look in history of American business, and you look where regulation has been attempted, when our country tries to regulate prices, it ultimately, not only ends up being bad for consumers, it actually ends up being bad for American business. People lose jobs. It is not a good idea. We are a capitalist system. Market forces should be allowed to work.”