Gas Price Hysteria Doesn't Pan Out
Broadcast journalists have been the only ones bidding up gas prices lately. While they foretell a horizon of $4 and $5 gas, consumers on U.S. streets are paying an average of $2.81 – up just 6 cents since hurricane Rita.
ABC, NBC, CBS, CNN and Fox News all covered the constant speculation about Gulf refinery damage and subsequent gas price spikes before and after Hurricane Rita’s September 24 impact. CNN used its 24 hours each day to raise fears about higher gas prices with show after show. A Nexis search of CNN transcripts around Rita’s landfall (from September 21 to 25) showed more than 20 mentions of the possibility of $4 or $5 gas from at least 12 different reporters in just five days on that network.
“Hurricane Rita is sure to affect you even if you don’t live in the strike zone,” said CNN’s Kelly Wallace on the September 22 “Daybreak.” “How does $5 a gallon for gasoline sound?” Also on CNN September 22: Lou Dobbs: “oil analysts say $5 a gallon for gasoline is certainly not out of the question.” Miles O’Brien: “New predictions say gas could reach five. That’s right, $5 a gallon.” Paula Zahn: “One oil analyst is predicting $4 per gallon gasoline within two weeks, another analyst saying it could go as high as $5 a gallon.”
A day earlier, Anderson Cooper warned viewers: “Just like after Katrina, gas prices could climb. But this time, the experts fear, it could be worse. Prices could hit a whopping $5 a gallon.”
Carrie Lee took it a step further on the September 23 “Daybreak,” suggesting that Rita foreshadowed recession. “Think about this,” Lee said. “The last four recessions we’ve seen in this country have been preceded by very high oil prices. Well, this time around all of these refineries shut down in the Gulf of Mexico, causing some people to worry about rising costs for gasoline, $5 a gallon.”
The reality, a few days later, is that massive price spikes have not occurred. The Washington Post’s Justin Blum related a calmer story on September 27: “Gasoline prices at the pump are edging higher after Hurricane Rita but are expected to start easing in several weeks as demand softens and damaged refineries begin operating again, analysts said.” Blum noted that the national average for regular had risen just 5 cents since before Rita’s landfall – to $2.80 on September 26. According to AAA’s Fuel Gauge Report, the price had leveled off at $2.81 on September 28.
But viewers watching many news broadcasts since Katrina hit have seen hype and speculation in abundance. CNN’s Ali Velshi gave some reasons why hype and disasters are a dangerous combination. On “The Situation Room” September 21, Velshi said: “One thing to keep in mind, Wolf, we’ve had person, one analyst at least talk about the fact that oil, gas prices could go up to $5 a gallon, if we start seeing panic buying and anxiety, which we saw after Hurricane Katrina. Remember that it feeds on itself. If people start rushing to the gas station thinking there are shortages, that’s what pushes the price up. There no reason to fear immediately a shortage of gasoline.”
Of course, it is difficult to tell exactly where a hurricane will strike. Without knowing how much of the Gulf’s refinery capacity would be down and for how long, network newscasters cited worst-case scenario predictions again and again. NBC’s Ann Curry said “analysts are predicting prices of more than $4 a gallon within two weeks” on “Today” September 23. On “Good Morning America” the same day, ABC’s Charles Gibson hailed predictions higher than $4 “if those refineries are hit hard.” On NBC’s “Meet the Press” September 25, Tim Russert wasn’t guessing: “Gasoline is now heading to $4 a gallon,” he declared.
Even when it looked like the predictions wouldn’t bear out for Rita’s aftermath, some journalists would not relent. On the “CBS Evening News” September 25, Michelle Miller reported that “it looks like Rita’s effect on the pump may not be as bad as Katrina’s was.” Tom Kloza, an analyst with the Oil Price Information Service, said, “We’ll probably pay above $3 on average across the country, which translates to about $400 million more than we paid last year. But it’s not gonna be the $4, $5 and $6 numbers that some folks have been talking about.” But Miller didn’t let it end there. She added another warning for the future: “Analysts 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 isn’t over until the end of November.”
A few reports did bring context and perspective to the fearful gas predictions. On ABC’s “20/20” September 23, John Stossel interviewed Sen. Charles Schumer (D-N.Y.), who proclaimed it was “the beginning, not the end, of this gasoline crisis.” Schumer said, “We are so close to the edge without the hurricanes that the hurricanes push us right over the top.” Stossel: “And over the top means?” Schumer: “Means $5 a gallon for gasoline.”
However, Stossel included another viewpoint, which he introduced as an “opinion you hear less often in the news.” Economist Rob Stein explained that the hurricanes brought a “short-term supply interruption.” “In the long run or in the medium run or even in the not-so-short run, we still have enough gasoline, enough energy sources where the economy and the country is not going to be in gas lines,” Stein said. “You’re not going to be flipping on the light switch at home and seeing it dark.”
Stein noted that “the price of oil is actually lower than where it was the day before Katrina hit,” and Stossel concluded: “The point? Hurricanes provide enough misery for the people in their path, says the economist. Let’s not make it worse by suggesting that all America is in trouble.”
Fox News also included other voices in its reports. During Katrina coverage on September 1, anchor Bill Hemmer said, “It’s three bucks a gallon. It’s four bucks a gallon,” but asked Jonathan Hoenig if gas was “priced where it should be.” Hoenig, investment manager for Capitalistpig Asset Management, replied, “It is. I mean, adjusted for inflation – people are saying, oh, you know, ‘Gas prices are so high.’ But adjusted for inflation, you know, gas really isn’t at its all-time high.” Hoenig was right. According to the Energy Information Administration, the adjusted high for the national average was $3.11, reached in the early 1980s.
Fox’s Neil Cavuto challenged New Mexico Gov. Bill Richardson’s (D) price complaints on the September 22 “Your World with Neil Cavuto.” Richardson said if refineries were damaged by Rita, “prices could go up to 4 or $5.” But Cavuto asked him, “why do you dismiss just supply and demand?” adding that China and India were bidding up oil prices before the destructive hurricanes. Cavuto said, “So, maybe we are looking for a boogeyman where no one exists, where it’s just us.”