In June last year, Fox News' Sean Hannity was claiming that BP's voluntary agreement to set aside $20 billion to compensate people and businesses affected by the oil spill might cause them to go "bankrupt." Several Fox News figures complained about this "shakedown," and claimed BP was being "looted" and "persecuted."
BP announced its third quarter earnings yesterday -- more than double its profits at the same time last year. With this week's earnings reports we are learning, once again, that the major oil companies continue raking in tens of billions of dollars in what the Wall Street Journal called "soaring profits," while receiving billions more in tax subsidies. Meanwhile, Fox is downplaying oil profits.
Last week, Fox Business' David Asman hosted actress and environmental activist Daryl Hannah to discuss energy policy. When Asman criticized clean energy investments, Hannah pointed to worldwide fossil fuel subsidies, which are far greater than worldwide subsidies to renewable energy. Asman responded by claiming the oil industry "doesn't take a big profit margin. It ranks - I think it ranks about 114th in terms of the amount of profit that it takes for every dollar that it earns."
However, U.S. News reported in 2008 that while "the oil industry urges people to look beyond its profits to its profit margin," "profit margins across industries vary greatly based not on how well each business is doing but how capital- or labor-intensive it is. Oil is among the most capital-intensive." Another measure, U.S. News said, is the oil industry's return on equity, which is "unrivaled."
Indeed, oil giant Exxon Mobil emphasized earlier this year that its profit margin is in line with other industries, even though it is "by far the most profitable" company in the entire United States, according to the 2011 Fortune 500 rankings.
When ExxonMobil announced its massive first quarter earnings in April, as the American economy suffered near record gas prices, many on Fox passed along talking points that minimized Exxon's profits and overstated its tax burden.
Fox reported that ExxonMobil made an even lower profit margin -- 7 cents for every gallon of gas sold. Fox's Andrew Napolitano claimed that he got the statistic from the nonpartisan Congressional Budget Office, however, the numbers actually came from ExxonMobil itself. EIA economist Neal Davis told FactCheck.org that trying to determine such a figure would be "heroic at best" and "sadly misinformed ... at worst." FactCheck.org concluded that "the 7-cents-per-gallon figure grossly underestimates the industry's earnings. It includes only earnings from the sale of gasoline and not earnings on producing and selling crude oil. There are no independent figures on how much oil companies earn on a gallon of gasoline."