As the price of gas continues to climb many of us have noticed that the profits of the oil companies goes right along with it. Something just isn’t right there and it’s pretty obvious. Since when do you make out better when costs increase for anything you’re involved in?
Sean Hannity, in response to this concern, has found a new argument that I see him trot out at every opportunity. Like most of his arguments, it’s only paper-thin and doesn’t stand up to any real scrutiny. Sean likes to try to embarrass people with it by using a statistic that sounds incredible and tends to make you have to think twice when you encounter it initially. This is all a good debater (and that’s one thing he is good at) needs to make you look bad. He’ll ask someone, “How much do you think the oil company makes on a gallon of gas?” His current answer is 8 cents per gallon.
First of all, this being Sean Hannity, I’d like to see those numbers. I suspect very much that we’re talking about creative accounting here like the type Hollywood and the music industry tries to use to show a movie or record didn’t make any money while everyone at the top gets rich.
Second of all, the oil companies don’t just sell gas. How much do they make on a quart of oil? While that’s a minor point, it still adds to the bottom line.
Third, since when is a gallon of gas all you buy? Why is a gallon the only measuring stick that’s valid to measure this with? I remember once, when I was a kid and was flat-broke, buying a single gallon of gas to get my car home after running out of gas just down the road. Aside from that, I can’t think of any other time I’ve ever bought a single gallon of gas. Gas is not milk. We buy gas in bulk.
Fourth, it doesn’t matter if the oil companies make 80 cents a gallon, 8 cents a gallon or .8 cents a gallon. The bottom line is that right now, with prices going through the roof, the oil companies are reporting record or near-record profits. Every business has different variables to determine profitability. If 8 cents per gallon is realistic then the point is it’s still too much profit.
Oil companies should not be experiencing record profits unless oil consumers start using the product in dramatically higher quantities. We’re not doing that. In any other business when costs go up you hear about the industry having to adjust and complaining about it. When is the last time you saw a story about Exxon complaining that the increased costs are hurting them? I see stories about the airlines getting pinched. I see stories about Wal-mart taking a hit.
The reason Sean Hannity uses the argument is because it sounds good. It translates to the bulk of his audience and I have serious doubts about the IQ of a good portion of his audience. These are the same people who still think Iraq had something to do with 9-11 and that Sadaam had WMD’s and a host of other things that all are born generally out of faith in what others tell you. Sean Hannity says oil companies only make 8 cents a gallon and that’s good enough for the faithful audience.
The joke is that, based on the way its presented, how the hell can any company survive making so little money? If that argument really amounted to anything then this should be one of the worst businesses to be in, according to Sean. Instead they’re making a fortune while we all pay. As I said in my other post today. I don’t mind so much about the price of a gallon of gas for my car. I’m hopeful I’ll be able to offset that (with a hybrid, or using my bike more often, public transit, etc.) What I cannot easily do is reduce the cost to heat my home easily.
So Sean, stop with this lowest common denominator argument that oil companies only make X cents per gallon. It’s a useless argument only meant to distract your audience from the real debate and you know it.