LALARRY

Oreilly in Wonderland

I have restrained myself  of late in pointing out BillO's inanities but I couldn't resist this one:

From the April 26 broadcast of Westwood One's The Radio Factor with Bill O'Reilly (thks media matters)

There isn't any right-wing cabal at all in the United States, because it's fragmented. Now, there is obviously right-wing talk radio, which is very successful, and there's obviously the Fox News Channel, which some believe is a right-wing enterprise. I work there, and I can tell you it is not. And if you do an analysis every day of the voices and the time given to stories and people, you'll see that liberal people get just as much time as conservative people on the Fox News Channel, and the commentators are pretty much split down the middle on their ideological bent. So that's a bunch of garbage.

split down the middle

like say Brit Hume's panel of commentators:

Krauthammer (right)

Barnes (author of a hagiography of W = right)

Kondracke (right)

Mara Liason (npr - you can call her left if you want)

Or that FOXNEWS commentary show: Beltway Boys in which Mort Kondracke and Fred Barnes almost have orgasms agreeing and finishing each others' questions

Or Neil Cavuto on business where in a typical moment he literally interrupted and shouted down Dem Cong Durbin in an interview. Author of a bestselling rightwing diatribe of "economic analysis"

Or John Gibson (the funny hair guy) author of the War on Christmas

but oh yes the meek Alan Colmes gets 1/3 of the airtime to set up the diatribes and distortions of college dropout ex construction worker Sean Hannity.

and of course Tony Snow left Fox to join the WH because he always played things right down the middle.

yup fair and balanced

If You're A Financial Markets Geek Like Me (and maybe even if your're not)....

You will find this video quite funny.

It's also on youtube entitled Every Step Bernake Takes

Thank You, Thank You NPR ! Someone in The Media Actually Sat Through More than the First Hour of the First Day of Econ 101 and Absorbed Something !!!!!

more here

OK. So the rising cost of crude oil and of refining help account for the spike in gas prices. But at the same time, oil companies are reporting record net profits. They're being accused of price gouging. What's their response?

Big oil companies are making most of their money by producing crude oil. They invested in oil fields when prices were much lower, with the expectation that they could break even at, say, $25 per barrel. Since the market price is now more than $70 a barrel, the extra money is gravy. It's like a farmer who can raise corn for $1.50 a bushel. If the market price is $1.75, he makes a quarter per bushel. If the market price jumps to $2.25, his profits jump as well. (If the market crashes to $1 per bushel, the farmer loses money. That can happen to oil companies as well.) Oil companies, like the farmer, are the beneficiaries of high market prices, but they can no more control those prices than a farmer can dictate what he gets for a bushel of corn.

Critics would say the oil industry is far less competitive than the corn market, which is certainly true. But if oil companies could control the price of crude oil, they would not have allowed the price to fall to $10 a barrel as it did in 1998.

Then who sets the prices?

Oil companies don't set crude-oil prices; the global market does. Basically, the market decides what people are willing to pay at a certain moment in time. And a lot of that has to do with the fact that the world is getting richer. Countries like

India

and

China

are growing, and that has created more demand for oil and gas. In the

United States

, we're still going full throttle when it comes to energy use. At the same time, there have been supply disruptions and political instability in major oil-producing nations. So you have a situation where demand has been growing steadily and inexorably, and the system of supply is quite vulnerable. That's the basic recipe for high prices. (amazing how that works, isn't it ?)

Hey Bill Let's Breakup the Broadcast Networks

From Bill O's summary of one of this week's shows:

Oil companies are reaping record profits, and Senator Chuck Schumer has been among their harshest critics in Washington. "They find excuses to raise profits," Schumer told The Factor. "Hurricane Katrina forced the price of oil up, but they raised it more and kept it higher. There's only one real answer, and that's to break these guys up. You can not have four or five big oil companies because you get no competition. Who let them merge? Bill Clinton. This is not a Democrat versus Republican issue. The government's one job is to make sure there is competition." Senator Schumer vowed to introduce legislation to confront, in his words, "windfall profits, profiteering, and gouging.

Hmmm. let's see: Broadcast networks: CBS, NBC, ABC, Fox and WB (I think that's only 5)

News networks: Fox, CNN, MSNBC

Newspapers in NYC: Daily News, NYT and NYP (murdoch owned)

and the most approvals of media mergers has occurred.....under the current administration

more wisdom from Bill:

Even though oil supplies are plentiful, gas prices are 64 cents a gallon higher than a year ago. The Factor blamed the situation on oil companies and financial manipulators. "We have speculators driving up the price because they fear something bad will happen in Iran. The oil companies then use that as an excuse to raise prices when they don't have to." Arguing the other side was journalist Mac Johnson, who said that any business naturally maximizes profit. "The oil industry went through a downturn for a long time where it was not worth their while to find oil. Now they're finally entering the upside of the cycle and it's in their interest to go out and find new sources of oil. The federal government and state governments are making more per gallon in taxes than the oil companies are in profits." The Factor framed the issue in patriotic terms. "You didn't see profiteering in World War II, and you shouldn't see it now. We're in a war on terror, and the oil companies are damaging their own country."

Hey Bill wanna be patriotic ?: call for govt policies that will wean us away from oil from folks like the Saudis, Iranians, Venezuelans and Sudanese as soon as possible. As Tom Friedman argues in today's NYT, the most patriotic thing to do would be to tax gasolne at least another $1 per barrel.

What Could Be More Pathetic ...

... than the politicans of both parties who have done jack about an energy policy for decades, scrambling to do something as people bitch about gas prices and proposing:

$100 tax rebate to consumers (repubs) -- at least make it a $100 tax credit for documented use of public transportation

and

"windfall profit tax and irs investigation" of oli cos. (dems).

In other words develop energy sources, invest in infrastructure, suffer losses in the periods when oil prices (set by the world mkt, not you), but pay extra taxes when you make more money.

Now THAT is guaranteed to encourage them to invest in alternative energy so that when they start to make money on that they get extra taxes slapped on them.

Brilliant, we are truly in bizarro world: let's start policies that will reduce supplies, increase demand and while we're at it do nothing among emissions.

And I love the American people: bitch, bitch, bitch and hold Oiliver Stonelike views of why gas is higher.

  And Chevy Tahoe sales are up 27%  (officially 15 mpg city/21 highway, although you know it will never get that) Over $80 to fill up at current prices

At least Tom Friedman in the NYT is talking some sense. The Economist magazine has been advocating this policy: higher gasoline taxes to drive people away from high gas consumption and use of the tax proceeds to pay down the deficit and fund alternative energy research.

It Only Took 6 Years and A 33% Approval Rating

Bush Backs Raising
Cars' Fuel-Economy Standards

By JOHN J. FIALKA and RUSSELL GOLD
April 28, 2006

Responding to public anger over gasoline prices, the White House and Senate Republican leaders backed new measures to shift the burden to car makers and oil companies.

Both President Bush and Senate Majority Leader Bill Frist yesterday urged Congress to pave the way for higher passenger-car fuel-economy standards, a measure Detroit has long resisted. White House spokesman Scott McClellan said a rise would "save jobs, save lives and save fuel." Mr. Bush said during a visit to a Mississippi gasoline station that he would ask Congress for clearer authority to raise the levels, and Mr. Frist, as part of a new energy bill, offered to give it.

and not that this one is shameless pre election pandering but....(CNN)

from the guy that gave you the diagnosis of Terry Schiavo based on a 5 minute videotape (and unlike economics, that was his area of professional expertise):

Our plan would give taxpayers a hundred dollar gas tax holiday rebate check to help ease the pain that they're feeling at the pump," Senate Majority Leader Bill Frist announced Thursday.

and of course the traditional Republican bashing of big business:

"It also includes strong federal anti-price gouging protection to protect consumers against anti-competitive behavior by oil companies or other suppliers of gasoline. Our free market system works, but it works best when there's full accountability and full transparency."

Frist said the rebates would go to single taxpayers making less than $125,000 per year, and couples making less than $150,000.

How about this....if you're going to give a $100 rebate, make it a dollar for dollar rebate for documented use of public transportation ?

One More (and Last) Example of Outrageous Profits

GlaxoSmithKline, the world's second-largest pharmaceutical company, said net profit in the three months to March 31 was 1.5 billion pounds ($2.7 billion), compared to 1.2 billion pounds in the first quarter of 2005.(25% increase a bit less than 3x the income increase at exxon mobil)

Sales of 5.81 billion pounds ($10.4 billion) were up 15 percent compared to the year-ago quarter thanks to strong revenues from asthma drug Advair/Seretide, diabetes treatment Avandia/Avandamet and the vaccines unit, the company said

that's a profit margin of 25% 3x that of Conoco Phillips

outrageous

The Anerican People, Their Leaders, The Media and Their Educators Speak Out on Oil Companies' "Outrageous Profits"

From the Los Angeles Times

Oil Firms Cast as Villains

As prices rise, motorists and politicians grow angrier. The industry feels misunderstood.

By Elizabeth Douglass
Times Staff Writer

April 27, 2006

Oil company earnings have never been sweeter. Stock prices are up. Shareholders are pocketing ever-bigger dividends. By nearly every measure, the petroleum industry is in its heyday.

But in the realm of public opinion, things could hardly be worse.

Motorists paying up to $3.50 a gallon for gasoline castigate oil companies and their executives with a growing list of high-octane epithets: Greedy. Un-American. The new robber barons.

On Wednesday, Sen. John McCain (R-Ariz.) invoked the harshest image yet. "I think they have the least PR sensitivity of any group outside of satanic cults," he said.

Responding to public outrage, the Senate Finance Committee on Wednesday asked the Internal Revenue Service to hand over the tax returns of the 15 largest oil and gas companies, saying they were concerned about excessive profit and outsize executive pay.

The news got even better — or worse — for the industry Wednesday with the news that Wall Street analysts expect the three largest oil and gas companies to report combined quarterly earnings of more than $16 billion, a 24% increase from last year.

Instead of celebrating their windfall, oil companies are battling demands for a tax on "windfall" profits, President Bush's call for an investigation into allegations of price gouging and mounting consumer resentment...

...Ron Perkins, a Blythe, Calif., resident who drives more than 23 miles to his prison guard job, said he saw a station's price jump 10 cents to $3.49 a gallon Wednesday. "It stinks … and their profit margin is outlandish," he said. "They're kicking consumers when we're down."...

Oil companies are flush because the price they get for each barrel of crude is rising much faster than the cost to extract it. In refining, profit margins are rising because the wholesale and retail prices for gasoline and diesel are far outpacing the additional costs of the resource they process.

In the end, the major oil companies can take solace in the fact that dozens of price-fixing investigations into the industry have come to naught and that public hatred does not amount to a criminal conviction.

Big Oil's top executives have appeared before congressional committees twice since the summer — once to explain the high prices that followed Hurricane Katrina and again in March to explain their record-setting 2005 earnings. Those included Exxon Mobil's $36.1-billion profit, the biggest ever at a U.S. company.(note that the profit margin not the gross profit number would be a sign of outrageous profits) ...

Exxon Mobil, based in Irving, Texas, is expected to post first-quarter earnings topping $9 billion.(actually it was 6 3/4% less than that) Industry analysts expect the company's full-year income to surpass the record set in 2005.

Analysts expect San Ramon, Calif.-based Chevron Corp., the nation's second-largest oil company, to report first-quarter net income of $4.1 billion on Friday. No. 3 ConocoPhillips of Houston on Wednesday reported profit of $3.3 billion.(again the gross number which is not reflective of the low margins of under 10%)

Michael Smith, a communications professor at La Salle University in Philadelphia, said the earnings could have "investors doing cartwheels…. For them, this is really good news," he said. "For everybody else, and for consumers especially, it's going to be another sign of greedy oil companies taking advantage of the little guys."

More Outrageous Profits...This Time from Exxon Mobil

Exxon Mobil 1st-Qtr Profit Rises as Oil Prices Surge

April 27 (Bloomberg) -- Exxon Mobil Corp., the world's biggest oil company, said profit climbed 6.9 percent to a first- quarter record of $8.4 billion as output rose for the first time in a year and a half and increasing energy demand lifted prices.

Profit rose to $1.37 a share from $7.86 billion, or $1.22 a share, a year earlier, Irving, Texas-based Exxon Mobil said today in a statement. Per-share profit was 10 cents lower than the average estimate from 20 analysts surveyed by Thomson Financial. Revenue climbed 8.4 percent to $89 billion.

Profit fell short of expectations because the company's effective income-tax rate jumped to 46 percent from 39 percent, shaving $1.03 billion in net income, said Kenneth Carroll, an analyst at Johnson Rice & Co. in New Orleans.

Shares of Exxon Mobil fell $1.40, or 2.2 percent, to $61.70 at 9:12 a.m. New York time in trading before U.S. exchanges opened. The stock has 20 buy ratings and five hold recommendations from analysts.

wait, it gets more outrageous:

Exxon Mobil is the latest major oil company to report first-quarter earnings. London-based BP Plc, the world's No. 2 oil company, on April 25 said net income fell 15 percent to $5.62 billion on higher taxes and a drop in output.

Houston-based ConocoPhillips, the third-biggest U.S. oil company, yesterday said its profit rose 13 percent to $3.29 billion. Marathon Oil Corp., No. 4 in the U.S., today said net income more than doubled to $784 million, or $2.13 a share.

Outrageous, Scandalous Corporate Profits !!!

from today's WSJ

ConocoPhillips Net Climbs 13%;
Asset Sales Planned to Cut Debt

By BOB SECHLER and JOHN M. BIERS
April 27, 2006; Page A9

ConocoPhillips's first-quarter profit rose 13%, as surging commodity prices offset a drop in refining income. The company, like its big oil competitors that also report earnings this week, faced a tough comparison from a year earlier when strong commodity prices began to pump up bottom lines.

The Houston energy giant reported net income of $3.29 billion, or $2.34 a share, up from $2.91 billion, or $2.05 a share, a year earlier( for a profit margin of 6.8%). Revenue climbed 23% to $47.9 billion from $38.9 billion.

ConocoPhillips, the third-largest U.S.-based oil and gas company by market capitalization, behind Chevron Corp. and No. 1 Exxon Mobil Corp., also said it would sell several billion dollars of assets in the next 12 to 18 months. Proceeds will be used to reduce debt after its $35 billion acquisition of Burlington Resources Inc. The deal closed earlier this month so revenue and production from the company weren't included in the first-quarter data.

ConocoPhillips posted a $390 million profit from refining and marketing, down from $700 million a year earlier. The company attributed the drop to lower refining margins, maintenance and unplanned refinery downtime.

from the Apple website:

Apple Reports Second Quarter Results

Revenue Grows 34 Percent Year-over-Year; Earnings Increase 41 Percent

CUPERTINO, California—April 19, 2006—Apple® today announced financial results for its fiscal 2006 second quarter ended April 1, 2006. The Company posted revenue of $4.36 billion and a net quarterly profit of $410 million, or $.47 per diluted share.(and a margin of 9.4%) These results compare to revenue of $3.24 billion and a net profit of $290 million, or $.34 per diluted share, in the year-ago quarter. Gross margin was 29.8 percent, equivalent to the year-ago quarter. International sales accounted for 43 percent of the quarter’s revenue.

Apple shipped 1,112,000 Macintosh® computers and 8,526,000 iPods during the quarter, representing 4 percent growth in Macs and 61 percent growth in iPods over the year-ago quarter.

“We’ve generated over $10 billion in revenue and almost $1 billion in earnings in the first half of fiscal 2006,”(for a margin of 10%)  said Steve Jobs, Apple’s CEO. “Our transition to Intel processors is going very well, and our music business just experienced another quarter of outstanding growth.”

from the Starbucks website:

The Company’s record-breaking numbers in fiscal 2005 have proved impressive for Starbucks and its shareholders with consolidated net revenues of $6.4 billion, an increase of 20 percent from $5.3 billion in fiscal 2004. Net earnings for fiscal 2005 increased 27 percent to $494 million,(twice that of conoco phillips, and a profit margin of 7.7% vs 6.8% for conoco phillips (i.e. 13.5% higher)) and the Company realized 14 consecutive years of comparable store sales growth of five percent or greater. The strong year was followed by a robust fiscal 2006 first quarter, leading Starbucks to raise its fiscal 2006 earnings per share target to $0.68 - $0.70....

The Company is targeting total net revenue growth of approximately 20 percent on a quarterly and full year basis.  The Company continues to expect comparable store sales growth in the range of three percent to seven percent for the remainder of fiscal 2006, with monthly anomalies.