Right for Oil Companies to Make Record Profits in Time of War?
{{#rendered}} {{/rendered}}This is a partial transcript from "The O'Reilly Factor," July 27, 2006, that has been edited for clarity.
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BILL O'REILLY, HOST: "Unresolved problem" segment tonight, profiteering during a time of war. Most of you know I believe the big oil companies led by Exxon are doing just that.
{{#rendered}} {{/rendered}}Today, Exxon announced another incredible quarter. Profits were up 36 percent over last year, even though demand for oil is about flat in the USA.
Exxon's profits were the second highest in the history for any company in the world. The first highest was Exxon in the fourth quarter of 2005.
Joining us now from Chicago to make excuses for Exxon is Jonathan Hoenig, FOX business contributor.
{{#rendered}} {{/rendered}}All right now, look, as I told our guest at the top of the program, I am a simple man. I think everybody would admit that I am a simple guy. I have only one question for you, Jonathan. Only one. Demand for oil, gasoline in 2006 is flat over 2005. Correct? It's flat.
JONATHAN HOENIG, FOX NEWS BUSINESS CONTRIBUTOR: Well in the U.S. it is, Bill.
O'REILLY: Yes, the U.S. is flat. OK.
{{#rendered}} {{/rendered}}HOENIG: But oil is a world market.
O'REILLY: I understand that other people have oil. In the USA, it's flat. That means it's the same now as it was twelve months ago in 2005.
Yet Exxon profits and all the other oil company profits are up. Exxon's up 36 percent. So you do the math. Exxon's profits about 40 percent derived from the USA, maybe more. OK? And you see that not only are they passing the increased costs of the barrel of oil on to me and you and everyone else, but they're jacking it up to make even more money...
{{#rendered}} {{/rendered}}HOENIG: Not true.
O'REILLY: ...which they have done every step of the way. Go ahead.
HOENIG: But Bill, they didn't jack it up in the early 1990s when oil was at $15 a barrel. I mean, I know it's impossible for you to believe, but you know, Exxon-Mobil doesn't set the price of oil. The price of oil is set by any number of factors, one of which is demand as you pointed out. Maybe demand is flat in the United States...
{{#rendered}} {{/rendered}}O'REILLY: OK.
HOENIG: ...but it's huge in China. It's huge in India.
O'REILLY: My local gas station guy is named Rudy. OK? And Rudy has a gas station. And he gets a call every morning, Rudy does, from his distributor. And the distributor says, Rudy, you charge $3.33 a gallon. And Rudy says, who told you to charge that? And he says, Exxon.
{{#rendered}} {{/rendered}}OK, and you're telling me...
HOENIG: Bill...
O'REILLY: ...you're going to sit there, Jonathan, and tell me that Exxon isn't setting the price of its own gasoline?
{{#rendered}} {{/rendered}}HOENIG: Bill, actually...
O'REILLY: I'll tell you you're nuts.
HOENIG: Well, you know, I can't believe you didn't learn anything about economics, with all due respect, Bill, at Harvard.
{{#rendered}} {{/rendered}}O'REILLY: Who me? I'm just going by what Rudy said.
HOENIG: Ask Rudy what his profit margin is on that.
O'REILLY: I don't care what Rudy's profit margin is.
{{#rendered}} {{/rendered}}HOENIG: But that's just the point, Bill.
O'REILLY: It's none of my business.
HOENIG: They make a lot of money because they're big companies. The profit margin is about 50 percent.
{{#rendered}} {{/rendered}}O'REILLY: Hold it. Jonathan, you just said on this program in front of millions of people all over the world, Exxon doesn't set the price of its gasoline.
HOENIG: They don't set the price of oil.
O'REILLY: I just told you that they do.
{{#rendered}} {{/rendered}}HOENIG: Bill...
O'REILLY: And now you're off into profit margin.
HOENIG: But Bill, could they set it at $20 a gallon?
{{#rendered}} {{/rendered}}O'REILLY: Yes, they'd be arrested.
HOENIG: Could they set the price at $50 a gallon? No, it's highly competitive market. You know, if Rudy said...
O'REILLY: Not competitive.
{{#rendered}} {{/rendered}}HOENIG: ...that if at $2.15 the guy round the corner is going to set it at $2.13.
O'REILLY: It is not competitive. There's six companies. It's not competitive at all.
HOENIG: Well, I know, Bill...
{{#rendered}} {{/rendered}}O'REILLY: It's a cabal.
HOENIG: You have this belief that oil just kind of sprouts out of the ground at the Union 76 station, but it actually is a very expensive and time consuming and risky process...
O'REILLY: Yes, OK.
{{#rendered}} {{/rendered}}HOENIG: ...to get it to Rudy.
O'REILLY: Profits are profits.
HOENIG: It doesn't just grow there.
{{#rendered}} {{/rendered}}O'REILLY: Profits are profits. I'm not talking gross amount of money. I'm not talking anything other than profits.
HOENIG: But Bill...
O'REILLY: More money is being made by the oil companies than in the history of civilization. Any other part...
{{#rendered}} {{/rendered}}HOENIG: But Bill...
O'REILLY: ...in the middle of a war.
HOENIG: The oil company...
{{#rendered}} {{/rendered}}O'REILLY: In the middle of a war?
HOENIG: Well, yes. Listen, there's no question that, I mean, I don't know if you have watched TV in the last couple weeks, Bill, but there's a lot of tension in the Middle East. There's a lot of oil in the Middle East. There's been a lot of tension for the last, you know, three years in the Middle East. That pushes oil prices up.
But I mean, if you want to talk about who's gouging, Bill, why don't you do a show on Starbucks? They charge, you know, $2.50 for a gallon of gas...
{{#rendered}} {{/rendered}}O'REILLY: Nobody has to buy Starbucks, Jonathan.
HOENIG: But Bill...
O'REILLY: Nobody has to buy it. Everybody has to buy oil. And oil can only work in cooperation with the United States government. It's a partnership.
{{#rendered}} {{/rendered}}HOENIG: Amazingly...
O'REILLY: And they're screwing us, their partners. I'll give you the last word, but I'm not buying it at all. Go.
HOENIG: Well, amazingly, Bill, most people wouldn't agree with you. They're griping about oil. They're still buying it, Bill.
O'REILLY: They have to buy it, Jonathan! They have to!
HOENIG: Well, why don't they carpool? Why don't they take public transportation? Why don't they get a smaller car? You can't bitch about the price of oil after you've bought that Hummer. I just don't buy that.
O'REILLY: I don't have a Hummer. And I agree with you conservation — we should all cut back 20 percent. Stick it to...
HOENIG: Well, that's not what I am saying.
O'REILLY: ...the greedy oil company.
HOENIG: Get guys like you off the back of Exxon-Mobil, I promise the price will come down..
O'REILLY: All right now, good-bye.
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