NBC went on the attack against "Big Oil" again May 15, alleging oil companies are to blame for high prices and don't invest enough in exploration, all while ignoring the fact that crude oil accounts for most of the price of gasoline.
"Gas prices hit yet another record high this morning and as you suffer, the oil giants are making billions," co-host Meredith Vieira teased at the top of the "Today" show. Well, with an introduction like that, viewers should expect a fair interview, right?
"Most analysts say prices at the pump will get even worse during the summer driving season," co-host Matt Lauer said, "but the oil companies are posting huge profits. ExxonMobil, the biggest U.S. oil and gas company, made a $10.9-billion profit in the first quarter of this year."
Lauer demanded that ExxonMobil CEO Rex Tillerson explain "how [he] can justify the record profits [they're] making when people can't afford to put gas in their cars to go to work."
Tillerson gave Lauer a little lesson in economics, explaining that oil company profits are so large not because of high profit margins, but because of high volume. For every $1 in revenue ($400 billion in 2007), Exxon makes a profit of 10 cents ($40 billion in 2007), placing it "about in the middle of most Fortune 500 companies, so we're not at the top in terms of profit per revenue; we're not at the bottom."
Tillerson also explained that Exxon's more than $5-billion annual investment in exploration would be bigger if the company has more access to exploration opportunities. "We have very, very robust exploration programs that span the globe. We would do more if we could gain access to more areas to apply our technology, let our geoscientists go to work," he said. "Certainly we have the financial capacity to do more. Much of what's driving the pace of what we're doing is access to those opportunities."
