ExxonMobil Finds A Home At Fox News

by Jocelyn Fong

Download Fox News' brand new iPad app and you'll notice something curious: there's an ExxonMobil advertisement on nearly every page, sometimes filling the whole screen. Click on it and you can watch a video of a smiling ExxonMobil geologist touting the natural gas boom. As the tech news website Mashable reported, this is because "Exxon is the exclusive launch partner for Fox News' iPad app":

"We decided we wanted to work with one sponsor," [Fox News' Jeremy] Steinberg said, explaining that there are always question marks surrounding a launch, so Fox News wanted a partner comfortable with that. He said Exxon, which is in the midst of a new branding campaign, thought the app was a perfect platform for broadcasting its message.

It makes sense that one of the biggest funders of interest groups that obfuscate the threat posed by global warming would team up with the news outlet that has done more than any other to promote misinformation about climate science.

The partnership further undermines ExxonMobil's 2008 pledge to stop funding groups "whose positions on climate change could divert attention" from the need to develop secure, clean energy. As an internal email revealed last year, it has been the policy of Fox News to question even the basic fact that the planet has warmed in recent decades.

Climate change is not the only issue on which ExxonMobil might find Fox News' coverage agreeable. Last month in the midst of both soaring profits for big oil and attempts by Congressional Democrats to roll back oil companies' tax breaks, ExxonMobil's spin could be heard on Fox News.

With the notable exception of Bill O'Reilly, many on Fox eagerly passed along talking points first outlined by ExxonMobil vice president of public affairs Ken Cohen in a series of blog posts designed to preempt any backlash against Exxon's massive first quarter earnings report.

"WE INCURRED A TOTAL U.S. TAX EXPENSE OF ALMOST $59 BILLION"

In an April 27 post, Cohen wrote: "Last year, our total taxes and duties to the U.S. government topped $9.8 billion, which includes an income tax expense of $1.6 billion. Over the past five years, we incurred a total U.S. tax expense of almost $59 billion, which is $18 billion more than we earned in the United States during the same period." (Cohen repeated these figures in posts on April 28 and May 2.)

Cohen also provided the following graphic to underscore that Exxon has paid billions in taxes to the U.S. Treasury, as you'd expect the most profitable company in America to do:

Two days later, Fox Business anchor Lori Rothman appeared on Fox News' Happening Now to discuss Exxon's earnings report. During the segment, she aired ExxonMobil's graphic and stated:

ROTHMAN: Ken Cohen actually made a point to say yeah, ExxonMobil, we're a huge taxpayer in this company. They provided us with this graphic as part of their conference call. Pays more taxes than virtually any other publicly traded company in the United States. Look at that: 59 billion to the United States over the past five years, compared to earnings of over $41 billion from U.S. operation.

That night Lou Dobbs appeared on The O'Reilly Factor and said of ExxonMobil: "They pay $59 billion over the past five years. Their net profits from U.S. operations, $41 billion" (accessed via Nexis).

And on May 10 Ben Ferguson, radio host and frequent Fox guest, said on Fox News' America Live that Obama "should stop making these oil companies into evil companies.  I mean, look at the profits the other day of Exxon. They posted $11 billion in profits. They paid $10 billion of those dollars in profits went to taxes." He later added: "we're getting $10 billion out of $11 billion in profit from Exxon."

So what's wrong with Fox News reporting a company's tax bill? Well, nothing, if the numbers are accurate. But the reality is that ExxonMobil's claim to have paid $59 billion in U.S. taxes over the past five years, including $9.8 billion last year, is highly misleading.

Exxon inflates these numbers by including the money they collect from consumers for state and federal gasoline taxes. You pay the tax, but Exxon counts those dollars as part of its own tax burden. 

According to the Washington Post, ExxonMobil officials said that of the $9.8 billion in U.S. taxes they say they paid in 2010, $6.2 billion was gas taxes paid by drivers. CNN noted that Exxon used the same fuzzy math for the figures it gave for its U.S. tax bill the first quarter of 2011.

Not only that, but the company has been overstating its tax bill by counting gasoline tax payments for a while, as Robert McIntyre showed in 2006. But rather than letting viewers in on how these figures were calculated, Fox News simply repeated the disingenuous claim that Exxon's tax payments eclipse its earnings.

Fox News personalities also withheld important information from their viewers about ExxonMobil's tax rate. On the May 19 edition of Fox & Friends Eric Bolling argued that expanding oil drilling in the U.S. is good for tax revenue, adding: "Exxon pays 45 percent tax rate. Conoco, 42 percent. The oil companies are the highest taxed on the planet." Martha MacCallum used the same talking point while hosting the May 12 edition of America Live:

MACCALLUM: Lots of anger on display on Capitol Hill today over record profits for oil companies and the subsidies that they get from taxpayers. But we dug a little bit deeper into this story and the numbers. And we found that the three largest oil companies, ExxonMobil, Conoco Phillips and Chevron, pay at least 40 percent tax on their profits.  So their tax rate is 40 percent.

Bolling and MacCallum suggested that Exxon pays over 40 percent of its revenue in taxes to the United States. But that's not the case. The vast majority of Exxon's earnings come from outside the United States, and the figures provided by Bolling and MacCallum probably refer to the company's worldwide tax rate.

According to CNNMoney, ExxonMobil "does business in some of the mostly highly taxed countries in the world. Want to extract petroleum in Nigeria? Be prepared to fork over up to 85% of your profit in tax payments." BusinessWeek reported that "Russia and Libya charge companies up to 90% of the revenues they collect for extracting oil."

Those figures are bound to skew Exxon's reports on its overall tax rate and don't tell us anything about the tax breaks it gets from American taxpayers, or about how much expanded drilling would help the deficit.

As for what the company contributes to the U.S. Treasury, CNN reported on May 4: "Exxon's average effective U.S. income tax rate over the last six years is about 29%, according to the firm's security filings and an interview with a top Exxon tax lawyer."

"WE EARNED ABOUT 7 CENTS PER GALLON"

In an April 27 post, Exxon's Ken Cohen wrote: "For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That's not a typo. Two cents." The next day, Cohen added:

During the first three months of this year, for every gallon of gasoline and other products we refined and sold in the United States, we earned about 7 cents. Compare that to the 40 to 60 cents per gallon that went from gasoline consumers to the government (state and federal) in gasoline taxes.

Cohen repeated the claim that "we earned about 7 cents" per gallon in an April 30 post.

On May 12, when five oil executives appeared before the Senate Finance Committee to defend their tax breaks, Fox News correspondent Doug McKelway delivered a report during America's Newsroomwhich included Cohen's talking point:

MCKELWAY: Oil companies admit that they are making record profits these days when oil is spiking towards $4 a gallon but they say it's not their responsibility. They're not doing it. It's a reflection of supply and demand, increasing thirst for oil worldwide and also because of the commodities market. They say they're not responsible.

HEATHER NAUERT (host): All right, hey Doug, by the way, what do they pay in taxes? A lot of folks are asking that question.

MCKELWAY: An interesting statement came out from ExxonMobil earlier this week in regard to what they pay in taxes. I'll read it to you verbatim, Heather.  It says for every gallon of gasoline and other products we refine and sold in the United States, we earned about 7 cents per gallon. That's what Exxon says. Compare that, they say, to the 40 to 60 cents per gallon that went to government, federal and state governments that they received in taxes from every gallon of gasoline. So the difference is clear. The oil companies maintain it is the state and federal government which is addicted to oil.

NAUERT: That's an interesting one. The government's the one making money off of it. Not the companies.

Later that day radio host Jason Lewis appeared on Fox News' America Live and said: "Exxon Mobil made two cents a gallon in the first quarter. Government with an 18.4 cents a gallon tax and state taxes makes anywhere from 40 to 70 cents a gallon. Who's gouging whom?" Host Martha MacCallum replied, "Very interesting."

Radio host Ben Ferguson made a similar claim during his May 10 appearance on Fox's America Live, saying that "their average on a gallon of gas right now is 0.3 cents per dollar you spend they're making cash off it. So about 3 cents on every gallon. They're not killing it."

However, there's good reason to question ExxonMobil's cents per gallon figures. When asked in 2008 why the Energy Information Administration doesn't calculate the average profit earned on a gallon of gas, EIA economist Neal Davis said that trying to determine such a figure would be "heroic at best" and "sadly misinformed ... at worst."

Amy Jaffe, director of the Energy Forum at Rice University's Baker Institute, said via email that "ExxonMobil makes profits in every aspect of their business, from producing oil from the wellhead to manufacturing gasoline." Jaffe added: "I don't know if they mean that they only make 7 cents at the retail pump. Or they only make 7 cents at the rack. Or they only make 7 cents at the refinery processing manufacturing operation. Or they only make 7 cents on all three together."

On May 27 FactCheck.org examined ExxonMobil's claim and 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." From the post:

We called ExxonMobil and asked how Cohen arrived at his figure. Spokeswoman Kristen Hellmer said it was determined by dividing ExxonMobil's "downstream earnings ($694 million) by the number of gallons of gasoline and other products refined and sold during the quarter in the U.S. (9,355 million gallons). The result is 7.4 cents per gallon." Downstream earnings are what the company earns from refining crude oil into gasoline and other petroleum products and then selling it. But that ignores "upstream earnings," which is how much Exxon earns in producing and selling crude oil. And the cost of oil exceeded $100 a barrel in the first quarter of 2011.

Oil industry analyst [Tom] Kloza called the 7-cents-per-gallon figure "disingenuous," because it ignores high earnings from oil production. "Bringing crude oil to market has been incredibly profitable," Kloza said. "It is disingenuous to say in the downstream we are making only this much."

ExxonMobil reported that its upstream earnings were $8.7 billion in the first quarter -- up $2.9 billion, or 49 percent, compared with a year ago. As of August 2010, it was the third largest oil refiner in the U.S.

Fox News is a network that can often be counted on not to scrutinize misleading statistics and talking points when doing so would contradict its broader political aims. Which means that on energy and environmental policy, Fox News and ExxonMobil are natural allies.