Oil War: The Media Crusade

     There’s an oil war going on, but it isn’t raging in the Middle East. It’s an ongoing assault on the oil industry by the media for everything from profits to offshore drilling to global warming. CNN has even accused oil companies twice of manipulating prices to influence elections.


     On July 31 and August 1, NBC and CNN attacked oil companies – namely Exxon – for making too much money. As the presidential candidates argued over solutions to the “energy crisis,” August 4 broadcasts on ABC and CBS repeated Sen. Barack Obama’s, D-Ill., claim that Sen. John McCain, R-Ariz., is “in the pocket of Big Oil.” Journalists have even opposed offshore oil drilling – despite widespread public support – and repeated liberal talking points about oil companies not drilling currently leased properties.


     NBC “Nightly News” complained strongly about ExxonMobil’s record $11.68 billion quarterly profit on July 31.


     “Another kick in the gas tank,” CNBC correspondent Trish Regan called it. Regan interviewed drivers who wondered why they have to suffer while oil companies make “so much money.”


     CNN’s senior correspondent Allan Chernoff also focused on disgruntled drivers in his August 1 segment on “American Morning.”


     “It’s sickening to see that they make so much money and we suffer for it. They should take less of profit and help all the little people out” driver Debra Perette said.


     On camera interviews in Chernoff’s report were stacked 4-to-1 against oil companies; two upset citizens joined Obama and Sen. Charles Schumer, D-N.Y., in railing against the industry while McCain promoted offshore drilling.


     But the attacks on oil companies don’t end with criticism of the industry’s success. Journalists have long fought against “Big Oil” by dismissing calls for more drilling, promoting windfall profits taxes and repeating unfounded claims of “price gouging.” The oil industry can’t even catch a break in entertainment where it is often the villain of choice (see: “There Will Be Blood” and “Syriana”).

Oil Thieves


     Journalists saw red on July 31 and August 1 as ExxonMobil profits were solidly in the black and Chevron was prepared to release its quarterly figures. But that was typical of media treatment of the industry. In 2007, NBC’s Meredith Vieira cited the perception of oil companies as “a bunch of thieves … ripping people off.”


     “ExxonMobil is laughing all the way to the bank,” said NBC “Today” co-host Vieira on August 1. “People having their cup of coffee today, and they are boiling mad when they hear those numbers. We are drowning in debt, so many people, while the oil companies seem to be rolling in dough.”


     Trish Regan complained to “Nightly News” viewers on July 31: “It’s a record. Exxon’s profits are exploding. The company earned nearly $12 billion in the last three months. Exxon earns nearly $90,000 a minute – that’s almost $1,500 every second. The reason profits have gone up so much: the price of oil has exploded on the world market, up 61 percent in the last year.”


     Regan’s NBC report included four attacks on the industry including three people pumping gas and Obama’s campaign rhetoric. On the other side was a push for offshore drilling from McCain and industry representative John Felmy of the American Petroleum Institute (API).


     Felmy defended the industry that employs 1.9 million people and benefits the retirement accounts of millions more, He told “Nightly News,” “There’s no way you can characterize them [profits] that they are out of line. In fact, they’re less than the average.” According to API, the oil industry has lower profit margins than many other industries including pharmaceuticals, computer equipment and appliances.


     People from all walks of life benefit from the oil industry’s profits because 98.5 percent of its public companies’ shares are held by outsiders through mutual funds, pensions and other asset management groups, said API. Only 1.5 percent of those shares are held by board members and officers of the companies.


     Oil and natural gas companies made about 7.4 cents on the dollar in the first quarter of 2008, according to API. According to MarketWatch, CBS’s margin is higher – at 8.9 percent.


      In contrast to many other news reports, CNN’s John Roberts mentioned that point on August 1 following Allan Chernoff’s slanted segment. “That’s only a 7-percent profit margin. If you were talking about that sort of volume in financial services industry or retail or something like that – profits would be much, much higher,” Roberts said.


     CNN’s personal finance editor Gerri Willis has already dismissed that defense a day earlier, on July 31. “I don't really understand that being a business reporter and having looked at the numbers,” she said. “It doesn't make sense to me. When you look at net profit here, it's astonishing.”


     Many reports didn’t mention that the real windfall is reaped by governments because a large portion of oil companies’ incomes go to taxes. “Good Morning America” was an exception on July 31.


     Chris Cuomo asked Barron’s Mike Santoli to “look at each dollar that comes into the company.”


     “Biggest chunk, believe it or not, goes to taxes around the world, various types of taxes. About 45 percent of the income that ExxonMobil last year, by the way, had from a barrel of oil, went to taxes,” Santoli said.

Not to Drill, Don’t Ask the Question


     McCain, who formerly opposed expanding domestic drilling, has been promoting offshore drilling lately. Even Obama’s rhetoric is shifting toward begrudging compromise on the issue. Polls from Rasmussen and others found that a majority of Americans favor offshore drilling. But the “reality” is that some news networks remain firmly opposed.


     Coverage of the issue on CBS has been particularly unbalanced. The August 4 “Evening News” repeatedly undercut McCain’s perspective on how to solve the energy crisis.


     “Evening News” also attacked offshore drilling on July 30. Katie Couric’s tease said it all: “In this country, some believe at least part of the solution lies right offshore. Bill Whitaker now with a reality check.” (Emphasis added)


     Whitaker then undermined supporters of offshore drilling by complaining that it would take too long to get the oil, have little impact on prices before 2030 and be quickly used up.


     CBS aired another slanted segment against drilling by Whitaker on June 18. That time he didn’t balance the story evenly with proponents and opponents. Instead he promoted the “green” views of environmentalists and Gov. Arnold Schwarzenegger. The ratio of offshore drilling opponents to proponents was 2-to-1 in Whitaker’s story.


     Politicians, including Obama, have claimed oil companies aren’t using the land or ocean they have access to and the media have repeated the talking point. Whitaker included that argument in his June 18 report: “Democrats say oil companies haven’t yet drilled on some 68 million acres offshore and on that they’ve already leased. The CBS report didn’t include the industry’s rebuttal of that point.


     Red Cavaney, president and CEO of the American Petroleum Institute, wrote an op-ed for The Wall Street Journal on June 20 exposing the argument’s flaws.


     “[C]laims of ‘idle’ leases are a diversionary feint,” said Cavaney. “A company bids for and buys a lease because it believes there is a possibility that it may yield enough oil or natural gas to make the cost of the lease, and the costs of exploration and production, commercially viable. The U.S. government received $3.7 billion from company bids in a single lease sale in March 2008.”


     According to Cavaney, leases are listed as “nonproducing” throughout the exploration and evaluation phases as companies’ determine exactly where there is enough oil to extract. “There is nothing ‘idle’ about it,” said Cavaney.


     CBS and CNN both consulted offshore drilling opponent Gov. Bill Richardson, a former Democratic presidential candidate, on the issue in June. Richardson told CBS drilling was a “bad idea. It’s going to take 10 years to fully get that oil out of the ocean. It’s a fragile ecosystem.”


     Co-host Harry Smith didn’t challenge Richardson’s position or include another guest with a different opinion.


     But Cathy Landry of API told the Business & Media Institute that the “10-year” argument is “silly.” “You can’t say that. It’s a silly argument. Ten years from now we’ll be even worse off that we are now if don’t do anything,” said Landry. “If we had opened the OCS [Outer Continental Shelf] 10 years ago we wouldn’t be in this problem.”


      Although President Bush lifted the executive order preventing drilling in the OCS, Congress has yet to lift its prohibition. Other domestic sources including the Arctic National Wildlife Refuge (ANWR) and oil shale have been blocked politically. President Clinton vetoed opening up ANWR (with its estimated 10.6 billion barrels of oil) in 1996.


      As for the estimated trillion barrels or more in oil shale in the western part of the country: “[T]he Senate Appropriations Committee in a 15-14 party line vote rejected an amendment by Sen. Wayne Allard, R-Colo., to allow oil shale drilling,” in May 2008 according to Investor’s Business Daily.

Media vs. Oil: A War that Drags On


     As gas and oil prices have climbed, news reports have stoked envy and anger among consumers and even claimed the companies were conspiring to manipulate prices to fix the 2008 and 2006 elections.


     In 2007, the Business & Media Institute exposed the springtime media ritual of hyping rising gas costs by pointing to states with the highest prices like California. In 2006, BMI reported that as gasoline prices fell, network journalists were still hyping “high” or “rising” gas prices.


     “Record profits” fuel an almost yearly call for investigations into “price gouging” as the media egg Congress on.


     “Kinda suspicious, huh?” said CBS’s Julie Chen when “Early Show” co-host Harry Smith mentioned that “higher than ever” gas prices are prompting politicians to call for another investigation.


     “It makes you wonder at least a little bit,” Smith replied on the May 23, 2007, show.


     The media haven’t seemed to notice there have been more than 30 investigations into price gouging over several decades, and no conspiracy by oil companies has ever been found, according to the American Petroleum Institute (API). And 28 states and one territory already have their own price gouging laws on the books as of 2004.


     When it came to gas price manipulation, CNN could have earned the moniker “Conspiracy News Network.” On May 18, 2008, Greg Hunter predicted price manipulation this election year: “they’re going to drive that price down, they’re going to pop the dollar up, they’re going to drive the price down, they're going to work this, say, for the election."


     Hunter’s theory was reminiscent of Jack Cafferty’s remarks in August 2006. He proposed a conspiracy theory that oil companies were artificially lowering the price of gas to re-elect Republicans.


     “You know, if you were a real cynic, you could also wonder if the oil companies might not be pulling the price of gas down to help the Republicans get re-elected in the midterm elections a couple of months away,” suggested Cafferty on the Aug. 30, 2006, “Situation Room.”

A Global Crusade


     Part of the media’s relentless attack on oil is related to another media crusade – the one to stop global warming. After all, oil is a fossil fuel that alarmists say causes climate change.


     Media reports on climate change are rarely balanced, usually hyping the threat of global warming or promoting a costly solution without mentioning the cost. A BMI analysis of 2007 coverage found that skeptics were outnumbered by a 13-to-1 ratio. Skeptics were also tarred by reporters linking them to the oil industry.


     CBS’s Bill Blakemore targeted the Competitive Enterprise Institute and oil companies on Sept. 23, 2007 when he attacked CEI – accusing them of receiving oil industry funding.


     Blakemore blamed that funding for muddling the debate, “Public awareness [about global warming] lagged behind, partly because of a disinformation campaign funded by the fossil-fuel industry,” he said.


     Using footage from a Competitive Enterprise Institute (CEI) commercial, ABC insinuated it was “disinformation.” “World News” didn’t include anyone from CEI or the fossil-fuel industry to respond to Blakemore’s attack.


     That was not the first time Blakemore expressed his opinion that oil companies have “disinform[ed]” the public about climate change. In fact, at an American Bar Association conference on environmental law in March 2007 the correspondent was even more forceful:


     “We have been spun by Exxon and Peabody Coal,” Blakemore said, according to a March 13, 2007 article in the Summit Daily News.


     Newsweek also blamed industry in its Aug. 13, 2007, issue. An article called skeptics a “well-coordinated, well-funded campaign by contrarian scientists, free-market think tanks and industry” and this “campaign” has “created a paralyzing fog of doubt around climate change.”


     Other scientists like Fred Singer who disagree with the so-called “consensus” on global warming have also been criticized in the media for being “funded by oil and coal companies.” Ironically, Al Gore is rarely criticized for funding an ad campaign to end global warming or for making money off the problem by selling carbon credits.