ABCs Lisa Stark Goes After Oil Profits

     High gas prices have had the oil industry feeling the heat, said ABCs Elizabeth Vargas, adding, Today, it launched a counterattack, as she teased World News Tonight reporter Lisa Starks January 25 story on the 2005 profits for oil companies. Vargas announced that ConocoPhillips (NYSE: COP) reported $13.5 billion in earnings in 2005, giving Stark the opportunity to hint that Congress should consider a tax on oil profits.

     She opened her story featuring complaints about oil companies from frustrated motorists.

     It annoys the hell out of me but thats big business. Thats what they do, said one man. A woman fueling her car complained that unless somebody stops them, then they have no reason to think about the little people.

     Although the word tax went unmentioned in the story, Stark promoted the views of a left-leaning issue group that calls for a windfall profits tax on oil companies, leaving out the fact that even liberal economists like former Clinton advisor Robert J. Shapiro argue the so-called windfall profits tax is fundamentally flawed.

     In a November 2005 study, Shapiro estimated an additional 50 percent tax on U.S. domestic producers for selling oil at the world price, applied to revenues that exceed $40 per barrel, would discourage domestic oil production and increase U.S. dependence on imports from the Persian Gulf. Shapiro went on to warn that such a tax would impose an economic burden on American savers and retirees, whose pension plans and retirement accounts typically include significant investments, direct or indirect, in oil company shares.

     Although she didnt make an outright call for a new tax, Stark weaved her story to show U.S. Public Interest Research Group (U.S. PIRG) consumer advocate Anna Aurilio riding to the rescue of the average consumer.

     Stark quickly dismissed a defense of industry profits offered by American Petroleum Institute chief economist John Felmy as an argument consumer groups dont buy, saying the oil companies should be forced to give up some of those profits. Felmy pointed out that average oil stock-owning investors saving for retirement benefit from oil company profits.

     These companies are making billions and billions of dollars of profits, and thats coming out of our pockets, harrumphed Aurilio, labeled onscreen as a consumer advocate for liberal activist Ralph Naders U.S. PIRG.

     A few months ago, U.S. PIRG was much less subtle. Congress should immediately enact a windfall profits tax on oil that will recoup a portion of the oil industrys record profits, Aurilios organization argued in September 2005.

     But it doesnt take an oil industry executive to see the folly of a tax on oil profits. Its been tried before. Conservative think tanks have repeatedly noted a 1990 study by the nonpartisan Congressional Research Service that exposed the problems with the repealed 1980s-era tax. Even economists unassociated with conservative politics took issue last fall with the proposed windfall profits tax.

     TheBusiness & Media Institute has previously written about media advocacy for the windfall tax and vilification of businesses that are profitable.