Networks Include Fear Premium in Oil Coverage
Oil speculators are staying busy these days, and theyâre not just on the trading floor. Theyâre active at all three broadcast news networks, helping to hype oil prices even higher than they are.
âFour dollars a gallon may be coming down the pike,â said CBSâs Jim Acosta on the July 15 âEvening News.â âIf you think $3 gas is bad, what about 4?â said NBCâs Anne Thompson the day before on the âNBC Nightly News.â
And as Thompson said on that broadcast,â âAll this on fear, without a hurricane or other major event that really squeezes the worldâs oil supply.â
Price speculation has been all the rage on network news, based on fighting in the Middle East. In the two weeks between July 3 and July 17, $100/barrel oil was mentioned six times on the networks and $4/gallon gas was mentioned 13 times. That averages out to almost once a day.
Last year saw its own round of $4 and $5 gas price predictions surrounding Hurricane Katrina â but the national average didnât go higher than $3.06.
So how grounded are the stories this time?
Not very, said Tom Kloza, an often-quoted expert and chief oil analyst with the Oil Price Information Service. âThereâs this attraction to the one who has the most outrageous and hyperbolic claim,â he said in an interview with the Business & Media Institute. Apparently, the media donât seem to think that dialed-down stories will appeal to audiences, so reporters find spokesmen who project wildly soaring prices, he said.
âI probably talk to about 500 reporters a year,â Kloza said. After talking about many points and market explanations in an interview, he said, âit happens quite oftenâ that only his quote mentioning a high price for a barrel of oil will be used by the reporter.
âMost of the coverage is extremely shallow â âWhat can motorists expect?â âWhoâs gouging?ââ Kloza said. âThereâs a lot of silliness. Every day that the market moves up, itâs attributed to some specific cause.â
Reporters also choose talking heads who might have a financial stake in oil, Kloza said, and could benefit from changes in the market, including rising prices. His own firm is prohibited from holding a position in oil futures.
And oil traders have been appearing on the networks. On CBSâs âSunday Morningâ July 16, Anthony Mason had two guests who were introduced as traders, Phil Flynn of Alaron Futures and Options, and independent trader Eric Bolling. âSo how high can we go, we just donât know,â Flynn said. Bolling added, âIf anything else happens here, you could see a $100 barrel.â
Mason rejoined: âOne hundred dollars a barrel. If oil goes that high, say goodbye to the $3 gas weâre still getting used to. That would push the price at the pump well over $4 a gallon.â
On the July 13 âCBS Evening News,â Mason had had another report with Flynn and Bolling. That evening, Bolling said, âThere is no question that you could see $100 a barrel for oil.â Mason added: âThat would push gas well over $4 a gallon.â
CBS was at it again on the July 12 âEarly Show,â featuring energy analyst John Kilduff with Fimat USA. BusinessWeek dubbed Fimat âthe Futures Kingâ in 2002. Kilduff told CBSâs Harry Smith, âAnd the first hurricane of any significance that tracks into the Gulf of Mexico, 3.50, $4 gasoline.â
Predictions like that abounded after Hurricanes Katrina and Rita last year, although the national average for gas didnât approach the $4 level. Back in September 2005, NBCâs Tim Russert declared that âgasoline is now heading to $4 a gallon.â Likewise, CBSâs Michelle Miller warned, âAnalysts fear that in such an active storm season, after the one-two punch of Katrina and Rita, a third blow could bring those $4 or $5 a gallon prices into play, and hurricane season isnât over until the end of November.â
Partly because of the active futures market, the price of crude oil is very transparent, Kloza said. âThat transparency comes with a price, and it becomes a funhouse mirror,â he said, accentuating prices to the extreme â for now, to the high end.
But We Must Blame Someone
âThereâs the penchant to â rather than fix the problem, fix some blame.â Kloza said, adding, âIâm not an apologist for the oil companies.â
Fighting in the Middle East has drawn reportersâ focus away from the oil companies lately, which has provided acknowledgement of some factors that go into the price of oil and gas.
Still, ABCâs Dean Reynolds was flabbergasted by Americansâ fuel consumption on the July 10 âWorld News Tonightâ: âWell, Americans have been using up fuel like there is no tomorrow almost as if theyâre in a state of denial about the price of gasoline âŠâ Later, he said that âmany are looking for someone to blame.â
A motorist then said, âI donât understand why they keep going up and they donât â theyâre not starting to go back down.â Reynolds answered, âYou could blame the markets. They set the price of oil based on what the future holds.â
That actually might be news to viewers who have watched the networks repeatedly stoking the fires of blame against the oil companies, bringing consumers stories of profits âthat will get you a little outragedâ and that âhave America fuming.â (For more stories about media coverage of oil and the oil companies, visit our Energy Archive.) With second-quarter earnings due out next week, the Business & Media Institute will be watching the networksâ coverage for a shift back to Big Oil.
Meanwhile, in Congress âŠ
While concern about Middle Eastern oil and gas prices abounds, the media have focused far less on efforts to increase domestic oil production. When the Senate made a move in that direction, the âCBS Evening Newsâ was the only evening news show that covered the July 12 story.
Anchor Bob Schieffer announced: âWith gasoline prices rising by the day now, Americans have been pressuring Congress to do something about it. Well today Congress did, something unexpected.â
Reporter Sharyl Attkisson explained: âBob, with gas hovering about three bucks a gallon, this may be the biggest thing your Congress does all year in response. Today, the Senate announced a surprise deal to open up new areas in the Gulf of Mexico to drilling for oil and natural gas. The area we're talking about holds more than a billion barrels of crude oil and more than five trillion cubic feet of natural gas.â
Researcher Rachel Waters contributed to this report.