The incredible spike in oil and gas prices was a huge story in 2008. Consumers struggled as a gallon of regular gasoline soared from nearly $3 to $4.11 by mid-summer. Network news shows bombarded viewers with more than 500 stories about oil and gas prices - an avalanche of coverage - as anchors and reporters warned gas would hit $5 or $6 and, as CBS put it, 'that high gas prices are here to stay.'
One problem with the warnings: they were wrong nearly two-thirds (63 percent) of the time. As it turned out, $4.11 was the ceiling and by autumn, gas prices had come crashing down. Fears of new highs were replaced by the chance of $1-a-gallon gas.
It didn't matter if it was journalists, government officials or 'experts.' When oil and gas prices were going up, the news reports over-predicted how high they would go. And none of them predicted prices would fall anywhere near as much as they have.
The bottom line is troubling: the 'news' media have no understanding of the oil industry, period.
The Business & Media Institute analyzed the rise and fall of gas and oil prices from February 11, when, at $2.95, gas prices began the climb to their July peak, to November 30, when gas had lost more than $2 per gallon from the record high.
BMI examined 548 'oil' and 'gas' price stories during the evening news broadcasts of ABC, CBS and NBC. Among the key findings:
- It's All Guesswork: Viewers would have been better off flipping a coin than relying on media predictions for gas and oil prices. Failed network warnings ranged from $5 gasoline to $200 per barrel oil. The TV crystal ball was wrong 63 percent of the time and right just 37 percent. ABC Was Honest: While all three networks had failed predictions, ABC was the only one to own up to the errors and point them out in later reports that showed how analyst warnings of high prices were simply wrong. Bush Had No Impact?: President Bush lifted the ban on offshore oil drilling on July 14, the day oil closed at its all-time high of $145. Although Speaker of the House Nancy Pelosi called the plan an 'absolute hoax,' oil had dropped more than $20 per barrel two weeks later. Only GOP presidential candidate Sen. John McCain credited Bush with any impact on prices. Journalists ignored it. Driving Home Negative News: Journalists emphasized the 'nightmare' impact of high gas prices, showing how 'soaring' prices were affecting everything - food, clothes, travel, jobs and the economy. But as soon as prices declined, so did news coverage. News outlets gave far less attention to the positive result of lower prices. Oil and gas stories declined from 114 in July to just 26 in November, when gas prices were the best news about the struggling economy. There were more stories when prices were at or near their peak in July than in September, October and November combined. NBC the Worst: NBC bought into the theme that bad news is the only news. When gas prices hit their July peak, the network did 41 stories that month. NBC then did fewer stories in September, October and November combined, as gas and oil both dropped to recent lows. In addition, NBC 'experts,' including 'Mad Money' host Jim Cramer, were wrong close to three-fourths of the time (13 out of 18). CBS the Best: CBS experts were accurate more than half the time (56 percent) and wrong just 44 percent. The 'Evening News' team was also the most consistent in its use of both gas and oil prices. When gas was high, CBS covered the price, but it did the same as the price declined.
BMI has four recommendations to help the media improve energy coverage in the future:
- Beware Predicting the News: Journalists aren't fortune tellers. They are supposed to report the news in a neutral fashion. When they or guests make predictions, they should do as ABC did and point out how wrong, or right, they prove to be. Be Consistent: Hyping high oil prices one day and discussing a drop in gas prices the next is confusing to viewers. Network news shows should create a consistent template and include both pieces of news and show them regularly whether they are up or down. Follow up the Story: High gas and oil prices have a sweeping negative impact on the economy and are newsworthy. Similarly, a decline in those prices has a positive economic effect and is just as newsworthy. Journalists need to figure out a way to cover both. Report Good News: The theme of high energy prices was one of consistent consumer pain. High gas prices forced workers to telecommute, hiked food prices and caused a ripple effect through the economy. When gas prices plummeted, the media moved the discussion on to other negative topics - such as home foreclosures or Wall Street. When gas prices were good news, they received nowhere near the same attention they had when they were bad news.