CNN recently ran a story (Mar 14) about “dissecting a gallon” of gasoline, from a cost perspective. Of course, they use government numbers, which in my mind, that makes the numbers suspect. (Like the balanced budget, government spending and who’s really paying taxes. More smoke than substance.) Anyway, their drawing shows the costs break down for each gallon of gas you purchase. (The drawing is by the US EIA, not CNN.)

The article also points out that the oil companies don’t really make all that much money on crude, which is the biggest cost in the mix.

Now I’m no economist, but how can a “qualified news journalist” working for a huge media conglomerate like CNN say that stuff with a straight face? CNN’s own web site has numerous articles covering the record oil industry profits. Some how “refiners” got their own price catagory when refering to oil production and big oil.

According to the story “Profits for refiners have been squeezed lately because the price they pay for oil has risen so much faster than the price they can sell the gas for. This helps explain why Big Oil companies -like Exxon, which actually buys more crude oil than it produces - haven’t seen their profits rise as much as the price of oil.”

Holy cow, or, cow pies, depending on your preference.

I believe that someone who would write something like that would lie about other stuff as well! Ever heard of r-e-s-e-a-r-c-h? Come to think of it, I wonder if the author has relatives working for the oil companies. It’s just a thought. Or, maybe s/he owns oil stock? The byline has a male’s name in it, but I’m hard pressed to believe a real person would write that column and actually put their name on it!

Here’s a zinger of a story that’s actually from August of last year. It talks about the smoke and mirrors used by the oil companies to keep everyone from figuring out how they’re stuffing more profit margin in the cost of crude oil and the other “costs” that are tracked by the government. Instead of a “puff piece”, it’s the kind of “news” I would think worthy of CNN.

This is from Oil Watchdog.org:

*quote*

Here are Insider’s comments:

“People who work in the oil industry often break out laughing when watching reporters try to explain why the price at the pump is going up. If one small piece of truth emerges during the broadcast, its truly a miracle.

“If consumers take the time to read the recent study by the Washington Attorney General they’ll quickly see the deceptiveness of the myths spun by oil companies to explain soaring pump prices.

Here are some examples:

“As in the rest of the U.S. West, which is supplied by many of the the same oil companies and refineries, the average pump price in Washington rose from $1.54 cents per gallon in December 2003 to $3.46 in May of 2007. While the companies and PR hacks tried to focus media and consumer attention on the rise in the price of crude oil, state tax rates, and other contributing factors, the study found that 93.6 cents per gallon of the rise at the pump was simply increased refinery profit margins. During the period, the Washington Attorney General reports oil companies experienced a whopping 413% increase in refinery profit margins. The bulk wholesale price charged by oil companies for gasoline far exceeded any actual increased cost of doing business.

**end quote**

You can read the full story at http://www.oilwatchdog.org/articles/?storyId=6750. It talks about the Attorney General of the State of Washington trying to figure out the wild retail gasoline pricing in the state.

The State of Washington conducted the study called “2007 Gas Price Study Phase I: Fact-finding CONDUCTED BY: DR. KEITH LEFFLER, ECONOMIST, UNIVERSITY OF WASHINGTON” that tries to pull facts together about oil industry pricing. You can get it here.

Here’s their parting shot. It should give you something to think about!

“The next time you see the media hyping environmental restrictions, crude oil prices, or market jitters, remember the lessons offered by this report. You might as well laugh, since the oil boys back at the corporate offices have been laughing at you for decades.”