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By Robert Rapier on Jan 24, 2008 with no responses

I Want to be a Consumer Advocate

The job of “consumer advocate” has got to be one of the easiest jobs in the world. You don’t need any credentials, you don’t need to fact check, and you get to write your own press releases in which you liberally quote yourself as an authority. And the most important rule of all seems to be – Send out frequent, hysterical press releases so people will think you are relevant.

This latest release from the FTCR (which spawned Oil Watchdog) has got to be one of the most ill-informed pieces of tripe I have ever read. Does the press who decides to run this junk bother to critically analyze anything? Well, if they won’t, I will:

Foundation for Taxpayer and Consumer Rights: ConocoPhillips Rides Oil Prices to Record Earnings As Consumers Face Soaring Costs at the Gas Pump

SANTA MONICA, Calif., Jan. 23 /PRNewswire-USNewswire/ — ConocoPhillips reported a 37 percent increase in earnings, the best fourth quarter profits in its history, by benefiting from record crude oil prices at the expense of hard-pressed U.S. consumers facing soaring gasoline prices at the pump, consumer advocates said today.

The first of the Big Oil companies to report 2007 results, Conoco said income in the last quarter was $4.4 billion, or $2.71 per share, an increase from $3.2 billion or $1.91 a share in the comparable 2006 quarter.

That bit is accurate enough. The profits did come at the expense of consumers, as do all profits for all corporations. And oil prices are surely higher, and oil companies that produce oil benefit from that higher price. I don’t follow the fates of gold mining companies, but given record gold prices I suspect they had a pretty good year as well. That is the way it goes when one is producing a commodity.

Of course I should probably also point out that oil is a worldwide commodity, and the price is set on the world market. Furthermore, “Big Oil” pales in comparison to the national oil companies like Saudi Aramco. Those are the guys with pricing power. As big as ExxonMobil is, they control only 3% of the world’s oil.

These oil giants post obscene profits, regularly setting new records and then stick it to the consumer at the gas pump, said John M. Simpson, consumer advocate with the Foundation for Taxpayer and Consumer Rights. Then instead of using their gains to invest in research or to reduce outrageous prices, they simply buy back their stock.

Since Simpson authored this piece, one wonders whether he was interviewing himself. Maybe it’s just me, but I find it highly amusing when people speak of themselves in the 3rd person. But this is where he starts opining on matters in which he is out of his depth. I would first ask Mr. Simpson to define terms. What is an obscene profit? How much profit is deemed reasonable when a company’s capital budget is $15.3 billion for the year? And speaking of capital budgets, didn’t you just say that they don’t invest their gains, but instead simply buy back stock? It seems in your rush to react to the profit announcement, you either failed to check facts, or knowingly put out false information. The stock buybacks are a fraction of the annual capital budget. Is that responsible journalism, Mr. Simpson.

“A responsible company would accept equitable profits and reduce prices to consumers or perhaps take the long view and make substantial investments in research and development,” said Simpson.

And a responsible journalist would bother to correctly report facts instead of rushing out to slander corporations on behalf of their trial-lawyer backers.