Thursday, April 28, 2011

Why Big Oil Will ALWAYS Lose the High Profits-High Gas Prices PR Battle

Pity poor Exxon, "demonized" in the media for earning a record of almost $11 billion in profits in the first quarter of 2011.

Pity Ken Cohen, Exxon's embattled Vice President of of Public and Government Affairs, whose pugnacious response sought to decouple Exxon's profit from increasing gas prices at the pump.

Pity them, because no matter how logical, reasonable or well-parsed Cohen's statement was, the American public will always equate rising fuel prices with higher profits for Big Oil.

From a public relations perspective, it's easy to understand why Cohen sought to explain how the two issues (Big Oil profits and high gas prices) are separate: By providing a coherent, rational explanation, he wanted to get ahead of the story.

The problem for Cohen--indeed, Big Oil overall--is that when gas hits $4 or $5 a gallon, the American public isn't coherent or rational. It's angry. And trying to defuse raw anger with rational thought is like trying to douse a fire with... gasoline. It makes it worse.

And this, friends, is precisely what Cohen's statement has done.

Here's what he said in the lengthy statement sent to reporters: "We understand that it's simply too irresistable for many politicians in times of high oil prices and high earnings-they feel they have to demonize our industry."

He lashed out at the task force recently created by the Obama administration to crack down on speculation in the oil market, adding the fact that federal and state taxes make up 40 to 60 cents of the price for a gallon of gas, versus the 7 cents per gallon that Exxon Mobil earns.

He further argued that most of Exxon's profit comes from its overseas operations, and that earnings in its refining business, which converts crude into oil and diesel, make up only 6% of its earnings.

What did the public hear? "We made $11 billion in profit this past quarter, and as gas prices continue to increase, we're going to make even more money next quarter."

Better he had endured the momentary media excoriation, saying nothing until tomorrow, when the media's (and the American public's) attention will be focused on the Royal Wedding.