NYT: Oil as Scarce as Sympathy for Oil Execs?

May 3rd, 2006 12:42 PM

There is a genuine laugher in the NYT this morning, attempting to address the current oil price fiasco. Kate Phillips and Julie Bosman have thrown together a slipshod piece of clichéd rhetoric, restrained disbelief and ignorance of basic economic principles so egregious, it would make any alleged informational “smokescreen” put out there by “Big Oil” seem a petulant effort by contrast.

First, the header. “SYMPATHY AS HARD TO FIND AS OIL.” Please. Oil is not hard to find - this is merely hyperbole. There are at least one million barrels per day that the nation is not utilizing thanks to the (Democrat) environmental lobbyists’ ongoing efforts to stop and restrain oil drilling and exploration in ANWR and off the Gulf Coast. I guess sympathy is easy to find then, no?

We also get the typical waxing and waning from politicians (led by media pointman the NYT) about how “we’re really going to get to the bottom of this oil profiteering THIS TIME,” but very little information presented here is new. Besides, since the industry is “awash in billions of dollars,” one might suppose it needs to explore some new avenues of expenditure (besides more drilling and refining).

The public relations effort, coupled with a huge lobbying network here in Washington, is aimed at both consumers and lawmakers, who are joining in a louder chorus of voices calling for such previously heretical ideas on Capitol Hill as a new windfall profits tax and a repeal of some of the tax breaks and other incentives Congress provided the industry just last year in its energy legislation.

Humor me, NYT. Who are among the “louder chorus of voices” calling for more taxation on the company’s product (adding to the rough average of 30% already taken in taxes, which leads to increased prices since the company will pass the cost on to the consumer)? How about going outside the circle of usual suspects - the RINOs in Congress and the Democrats. Who else is "joining the louder chorus?"

In addition, it would be helpful if the NYT noted that the federal and state governments take about three times what any oil company would as profit in taxes. There is no way to avoid discussing this fact if you are serious about discussing the totality of the cost of gasoline. It is not as simple as “throw the oil execs in jail, produce no new oil, and raise taxes on the industry (thereby crippling it).” Will excessive new taxes produce more oil? Will excessive new taxes lower the price of gas? No, and no. One thing is certain – the government needs to be investigated for collecting huge profits and windfalls from the oil companies and the American driver.

Begrudgingly, the paper concedes a modicum of success the dispersal of actual sensible financial information to the American public:

The industry can already claim an early success, with big-business interests quickly persuading the Senate leadership to drop a provision that would have increased taxes on inventories not just of oil companies but of other industries as well.

The NYT also characterizes the facts regarding international oil markets as “talking points” created by a PR firm. Unfortunately, the NYT does offer a substantive response to any one of the “talking points:”

The trade group, along with others representing refineries and independent producers, has developed a set of talking points: the impersonal forces of demand have outstripped supply, particularly as China's industrial expansion has added a new force to the global economy; oil industry profits are not outsize by the standards of other major industries; Western oil companies have only a limited share of the crude oil market, which is now dominated by OPEC and other oil-producing nations.

Basic economic realities have now become mere "talking points." Interesting.

Excusing the grammatical faux-pas, we have a big “BUT” coming up. Also, look at how the NYT characterizes John Cornyn’s remarks – they have little to with “political posturing,” and lots to do with the NYT acting like it has found a rogue Republican to support its political posturing:

But while there is certainly a fair amount of political posturing on the part of those attacking the industry, oil companies are also finding that fewer lawmakers are willing to listen to their case. Senator John Cornyn, Republican of Texas and a staunch defender of his home state's oil interests, said the industry's reputation had indeed plummeted.

He acknowledged that the industry might have to give up some subsidies or incentives that no longer seem necessary in light of the "extraordinarily high profits."

Note: “Extraordinarily high profits” are not considered to be illegal, NYT. What did the NYT make each year from advertising revenue when it was still profitable ove rthe past ten years? What do the shareholders think of it now?

"I'm not sure what they can do about it," Senator Cornyn said of the industry's image.

"I think what they need to do is tell their story, which has to do with the amount of money they actually invest to develop additional supplies," the best way that the industry can help bring down prices.”

Call me conservative, but I didn’t gather that Cornyn was “attacking” the oil industry – he was acknowledging its “image problem.”

While an industry focused on extracting oil from harsh and unforgiving environments around the world might not be terribly concerned with what “public perception” of them happens to be, one has to pause and note something here. Who creates and transmits the images in our society? The media, no? As we read in the beginning of the piece, the mass media love images:

“the officials were not required to take an oath, avoiding the infamous imagery created when tobacco company executives lined up, right hands in the air, and then proceeded to uniformly declare before a Senate panel that cigarettes were not addictive.”

I don’t think the Big Tobacco paid for that image campaign, my fine journalists. We are left to conclude that it is the media clamoring for the “perp walks” and “infamous images.” After all, media is in the business making profit for the shareholders from images and image-making, while oil is in the business of making profits for the shareholders by extracting and distributing oil.

As for the actual “truth” coming out in this cursory summation of complaints, we do in fact get it. The elephant in the room that the press refuses to acknowledge (which is based solely in economics and futures trading on international markets), comes from (surprise) a person in the industry. Brace yourselves:

"The oil and natural gas industry is very misunderstood by the public and, from what we've seen over the past week, by Congress," said Jeff Eshelman, vice president for public affairs at the Independent Petroleum Association of America, which lobbies on behalf of its 5,000 large and small independent oil and natural gas producers. "Congressional efforts have really been misguided: they've done nothing to lower gasoline prices; they've done nothing to increase supplies."

Fact, not spin. The Congress has done nothing to lower costs, increase supply and production or to make it easier for more oil to flow into the domestic pipeline. The oil companies, by contrast, do affect the supplies of gas and oil in the country and elsewhere, and prices are dictated by the size of those supplies relative to the demand for the product. Again, simple economics.

A concept lost on Congress. A notion foreign to the New York Times. Is it lost on you?