ABC Panics Over ‘Highest Gas Prices Ever’; Vows Oil 'Truth Test'

On Tuesday’s "Good Morning America," co-host Diane Sawyer and reporter Claire Shipman hyperbolically investigated "soaring" gas prices. After noting that oil companies have been publically presenting their explanations, she wondered, "But are they true? We put them to the truth test."

Apparently, it's ABC that needs the "truth test." Diane Sawyer’s intro included this comment from Gulf Oil President Joe Petrowski’s May 14 interview with CNN:

Diane Sawyer: "And all day yesterday, executives from Gulf and Shell for 24 hours have been giving the reason. They blame refineries. Listen"

Joe Petrowski (President & CEO, Gulf Oil): "Refinery utilization has been particularly awful this spring and that’s been a huge contributing factor, probably thirty to forty cents in the price of gasoline."

Correspondent Claire Shipman, as she began her segment, proceded to claim that "what you didn't hear those CEOs talk about is those refineries, and the people who own them, are reaping windfall profits right now because of the higher prices." Video (0:41): Real (1.10 MB) or Windows (1.25 MB), plus MP3 (448 kB)

Apparently, Sawyer and Shipman must not have listened to the entire CNN segment, because Petrowski, the Gulf executive, said exactly that in his interview with "American Morning" :

Joe Petrowski: "It is refining profits that are at absolute record levels. Normally, a refining margin to turn the crude into refined products is between 15 and 20 cents a gallon."

CNN host Kiran Chetry: "You guys don't get money off of refining?"

Petrowski: "We don't refine. We just distribute and store oil. We run terminals and downstream distribution. But the integrated majors, there's been a lot of consolidation in the oil business in the last few years, and there are probably five or six major refiners worldwide who control the brunt of refining and those margins are at absolute all-time record levels to a degree that's 80 cents a gallon to put it in perspective which..."

Earlier in the GMA piece, the following graphic appeared onscreen: "Highest Gas Prices Ever: Are Americans Being Lied to?" This is also misleading. As Brent Baker noted on Monday, prices, after being adjusted for inflation, are actually lower than they were in 1981.

After Shipman’s comments about oil executives, she claimed that the problem might have been fixed with "a little more advance planning":

Shipman: "And there’s a serious sense that this problem could have been solved with a little more advance planning. The problem this year is what's between crude oil, and the consumer. The refineries, 149 of them across the country, turning oil into gasoline. Already, in 2007, a fifth of them suffered serious breakdowns, everything from fires to equipment failures, to, in one case. a squirrel who sabotaged a refinery control room. Those breakdowns, together with the time consuming switch over from winter to summer fuel and increased demand, have created a perfect storm, according to refinery executives."

However, Ms. Shipman waited until the end of the segment to discuss the real problem with oil refineries: Nobody is building new ones. It was at this point that she also admitted there isn't a quick solution to this problem. That fact, however, might not be as sexy as talking about "truth tests" and wondering if the oil companies are lying to the American public:

Shipman: "The solution, make refineries bigger or build new ones. But oil companies face countless restrictions and no one wants one a new refinery in their own backyard."

Red Cavaney (President, American Petroleum Institute): "People say we need new refineries, or we could use that extra capacity. But then when you go to a specific local, or a specific community and you start to talk about trying to bring that in, people say no, no, no. I don't really want that. I'd rather have that produced somewhere else and brought here."

Shipman: "This is a problem with no quick fix. You need a long lead time. And in fact, there is a plan in place to increase capacity at the nation's refineries by 2011. So for the next few years we are likely to continue to see these sorts of spikes, Diane, when there’s huge demand."

Finally, Sawyer, in on last stab at class warfare, ended the report by actually mentioning a proposed gas boycott that has been circulating the internet. The GMA co-host helpfully called the plan a "diesel protest" and asserted, "a lot of consumers have decided they’re going to fight back." ABC went so far as to feature an excerpt of the e-mail onscreen:

[E-mail appears onscreen while Sawyer closes the segment, but not read aloud]:"It has been calculated that if everyone in the United States did not purchase a drop of gasoline for one day and all at the same time, the oil companies would choke on their stockpiles."

Of course, Sawyer provided some cover by quickly noting, "economists say it rarely works 'cause people fill up the day before or the day after and don't really save the gas."

Perhaps the chain e-mail will be as effective as GMA’s "truth test?"

For an excellent analysis of the media's handling of gas prices, head over to Reason magazine.

A transcript of the segment, which aired at 7:11am on May 15, follows:

7am tease

Diane Sawyer: "And, news for the road. As gas prices reach the record, oil companies give their reasons. But are they true? We put them to the truth test."

7:11

ABC Graphic: "Highest Gas Prices Ever: Are Americans Being Lied to?"

Diane Sawyer: "And now we turn to gasoline prices in this country. And those soaring prices they are! Gas now at $3.10 a gallon, the highest ever, up a whopping 94 cents in the last 15 weeks alone. And all day yesterday, executives from Gulf and Shell for 24 hours have been giving the reason. They blame refineries. Listen."

Joe Petrowski (President & CEO, Gulf Oil): "Refinery utilization has been particularly awful this spring and that’s been a huge contributing factor, probably thirty to forty cents in the price of gasoline."

Sawyer: "We wondered about that and, of course, Shell weighed in too, saying, ‘We are trying to produce everything we can produce. There have been a couple of fires in refineries which have aggravated the situation.’ So, we started making some phone calls, wondering how in America can refineries be out of commission for so long? Senior national correspondent Claire Shipman has some answers this morning. Claire?"

Claire Shipman: "Good morning, Diane. Let me tell you, with prices like these, people are looking for answers. And here's what we found. Those CEOs are right on one count: There are huge problems with the nation's refineries right now, huge bottle necks there. But what you didn't hear those CEOs talk about is those refineries, and the people who own them are reaping windfall profits right now because of the higher prices. And there’s a serious sense that this problem could have been solved with a little more advance planning. The problem this year is what's between crude oil, and the consumer. The refineries, 149 of them across the country turning oil into gasoline. Already, in 2007, a fifth of them suffered serious breakdowns, everything from fires to equipment failures, to, in one case. a squirrel who sabotaged a refinery control room. Those breakdowns together with the time consuming switch over from winter to summer fuel and increased demand have created a perfect storm, according to refinery executives."

Lynn Westfall (Chief economist, Tesoro Corporation): "We’re finding more oil every year. We simply can't keep up with demand growth. Even one refining incident is felt in the market place."

Shipman: "But consumer advocate Mark Cooper says the refineries should have been prepared."

Mark Cooper (Consumer Federation of America): "They are guilty of mismanaging this business. Predicting demand? Hey, that's their job and it’s pretty constant. Having spare capacity so you don't run out? That's their job."

Shipman: "The average refinery shutdown this year? 40 days. Why so long when so much is at stake?"

Westfall: "Before you can get into the units to figure out what is going on, they have to spend several days cooling down, depressurizing. And once you get inside, there may be some damage that requires long lead time equipment."

Shipman: "The solution, make refineries bigger or build new ones. But oil companies face countless restrictions and no one wants one a new refinery in their own backyard."

Red Cavaney (President, American Petroleum Institute): "People say we need new refineries, or we could use that extra capacity. But then when you go to a specific local, or a specific community and you start to talk about trying to bring that in, people say no, no, no. I don't really want that. I'd rather have that produced somewhere else and brought here."

Shipman: "This is a problem with no quick fix. You need a long lead time. And in fact, there is a plan in place to increase capacity at the nation's refineries by 2011. So for the next few years we are likely to continue to see these sorts of spikes, Diane, when there’s huge demand."

Sawyer: "That’s something. Well, if the squirrel eats your refinery, that's a new one for me. Okay, thanks Claire. As you know, a lot of consumers have decided they’re going to fight back. Those e-mails have been going out, you might have seen them, calling for a gas out. In fact, doing it today. It’s a kind of a diesel protest and the idea is to turn the tables on the oil companies by boycotting the pump for one day. But, even though today is that day, economists say it rarely works 'cause people fill up the day before or the day after and don't really save the gas."

E-mail appears onscreen while Diane closes the segment (but not read aloud): "It has been calculated that if everyone in the United States did not purchase a drop of gasoline for one day and all at the same time, the oil companies would choke on their stockpiles." - Chain e-mail proposing National "Gas Out" day.

Scott Whitlock
Scott Whitlock
Scott Whitlock is the senior news analyst for the Media Research Center and a contributing editor for NewsBusters.org