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A new low for 'record' highs

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Big Media Repeatedly Wrong Claiming ‘Record-High’ Gas Prices

A new low for ‘record’ highs

Since Hurricane Katrina swept ashore on the Gulf Coast, we’ve heard seemingly countless reports of "record high" gas or oil prices. From the beginning of September last year, the big three networks — ABC, CBS and NBC — have told us about record high gas or oil prices close to 100 times.

They’ve been wrong each and every time.

That’s right. Wrong close to 100 times.

This isn’t my opinion. It comes from the Energy Information Administration of our own U.S. Energy Department. According to their figures, oil hasn’t even come close to the $86.99 it needs to reach inflation-adjusted record highs.

And though gasoline did come close after Katrina when it hit $3.07, it hasn’t passed the $3.12 mark needed to break that record. Right now, it’s dropped a bit to around $2.87 nationwide.

Not everyone in the media has gotten it wrong. Print reporters have done a good job on the issue. The Washington Post’s Justin Blum took pains to point out that gas prices haven’t reached those records.

But you don’t have to look far to see the story done incorrectly.

Post Style writer David Montgomery repeated the error talking about "new records" in a story he wrote last August. Even Montgomery admitted later in his piece that he just chose to ignore the facts. Here’s how he put it: "Never mind the inflation-adjusted nerds who point out that regular unleaded gas today is still cheaper than the $3.11 it cost in today’s dollars in 1981."

To get it wrong is bad enough. To get it wrong deliberately is inexcusable. And then he called people who try to get it right "nerds" for their preoccupation with pesky things like facts.

Most Americans know some numbers have to be adjusted over time. When Roger Maris topped Babe Ruth’s season high for homeruns, the record books gave him an asterisk because the season was longer. If Barry Bonds outdoes Hank Aaron’s record just like he passed the Babe’s, you can bet he’ll earn an asterisk — or several.

Gas prices are similar. Because of inflation, prices change over time. Americans understand this, but they still think they are paying too much for gas. "Record highs" give them an excuse to be even more upset.

It’s also the perfect comparison for reporters who insist on connecting "record high" gas prices with what they also claim are "record profits." Here’s CBS’s Hannah Storm on the attack: "As consumers pay record highs at the pump, oil companies are reporting record profits…"

I don’t know a soul who would claim oil companies aren’t doing well. Of course they are. But to harp on "record profits" simply hypes totals and ignores investment reality.

Investors don’t look only at the total profit of a company. If they did, no one would ever invest in small, up-and-coming firms. Thankfully, many investors do just that. Small companies find investors because they offer far higher potential profit margins.

Big companies, whether it’s Wal-Mart or ExxonMobil, might earn the largest total numbers, but their actual percentage profit is far lower than other firms. Frankly, it’s also far lower than many of the same media companies whose reporters criticize them for "record profits."

According to Fortune magazine, ExxonMobil’s profit was 10.6 percent of revenue for 2005. Gannett, the parent company of USA Today and 90 daily newspapers, had a profit of 16.2 percent.

David Carlson, president of the Society of Professional Journalists, recently wrote that "even in today’s difficult climate, many newspapers turn an annual profit greater than 25 percent." That wasn’t even the top. "One national chain reportedly demands 30 percent profit from each of its newspapers," he continued.

I bet I could find lots of articles in those publications about "price gouging" in the oil industry. What’s that old expression about glass houses?

Except we know there isn’t any price gouging in the oil industry. That’s right — the Federal Trade Commission just released its own analysis following post-Katrina congressional complaints and found there was nothing to the charge. Here’s what it said about the results: "The FTC found no instances of illegal market manipulation that led to higher prices during the relevant time periods."

The FTC did find 15 examples "that fit the relevant legislation’s definition of evidence of ‘price gouging,’" but found those were caused by "other factors such as regional or local market trends."

Somehow, CNN’s Andy Serwer interpreted that as a "half-yes, half-no conclusion." It appears the only market trend we can count on is that the media spin numbers and results any way they like. That’s a record of sorts — a broken record.

Written By

Mr. Gainor, director of the Business & Media Institute and the Boone Pickens Free Market Fellow, is a veteran editor with two decades of experience in print and online media.

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