For the past few weeks Bill O’Reilly of The O’Reilly Factor has been railing against oil company profits. Last night he continued his campaign against what he feels is price gouging. Bill’s thesis is that the five major American oil companies exploited the war on terror and the hurricanes to jack up prices beyond the reasonable and said he had proof to back up his claims. So what was his proof? The price of gas is now about 15% higher than it was a year ago and at its peak in September it was more than 50% higher than year ago levels. He added that demand from September and October of this year is virtually the same so why are prices falling if demand hasn’t changed? The answer O’Reilly said was “I think the oil companies are scared that congress will investigate their internal dealings.” The oil companies are scared all right. They are scared that congress will unfairly tax their profits. As the Wall Street Journal pointed out, Exxon earned 75% of its profits overseas, so most of what they earn isn’t on the backs of American consumers.
During the program last night O’Reilly debated the issue with author and actor Ben Stein and former actor and now financial advisor Wayne Rogers. Stein admitted that while he was a huge fan of O’Reilly that his thesis didn’t make sense since oil prices aren’t set by the oil companies but by world markets which are free markets and that oil prices are supposed to fluctuate. He also added that oil companies are owned by widows, orphans and pension funds and that profits aren’t a dirty word. Wayne Rogers pointed out that it isn’t about price or demand but about supply. O’Reilly then responded by accusing the oil companies of withholding supply to manipulate the price of gas. One statistic that betrayed O’Reilly was the drop in gasoline demand from 9.3 million barrels a day in August to 8.9 million barrels a day in October. So as prices rose demand dropped. Now prices are decreasing and demand is increasing. How is that manipulative?
If O’Reilly really wants to help the average Joe who is struggling with higher gas prices then he should be pushing for the building of more refineries which would increase supply than jumping on the anti-big oil bandwagon.