Thursday, July 24, 2008

Why are Gas Prices So High?

If you want to know the answer to that question, you need to first find the answer to another: why aren't journalists asking the right questions? So says Howell Raines, former editor of the New York Times. In his recent column in Portfolio, he says too many journalists today give oil companies a free pass:

When it comes to the cost of gasoline, who should we believe? Here are some nominees and their viewpoints:
1. The oil companies: It’s supply and demand at its most basic, just like your professor outlined in your freshman economics course.
2. The petro-toadies in Congress: All we have to do is open up the Arctic National Wildlife Refuge and the waters off Florida and California.
3. The Department of Energy: OPEC has to pump more, and we’ve got to allow more refineries by rolling back environmental restrictions.
4. King Abdullah: OPEC pumps plenty of crude but “despicable” oil-futures speculators in the West are driving up the prices due to their “selfishness.”
5. Senator John McCain: Exxon Mobil has done such a good job of demonstrating the magic of the marketplace that it deserves another $1.2 billion in tax breaks.
6. Senator Barack Obama: Impose a windfall-profits tax to remind American oil executives that price gouging can backfire politically.
7. About 90 percent of the print and TV reporters in America: See No. 1. It really is that ol’ devil supply and demand.
8. The White House: Never mind. Nobody’s home.

For my money, a sounder answer as to whom to believe is Don Barlett and Jim Steele, the investigative reporting team that has won two Pulitzers and two National Magazine Awards for exposing government theft and corporate greed. Their 2003 series for Time magazine on oil economics remains required reading for anyone who wants a better understanding of how gas at $4 to $5 a gallon represents a carefully arranged screwing of consumers. “The bottom line for the oil people is, How much can I make while spending the least I can get by with on refineries, synthetic fuels, and for exploration and drilling on the vast, unused acreage in existing oil leases?” Barlett says. He notes that Canada has become the United States’ No. 1 oil supplier by funding joint government-­industry exploration of the tar-sand fields of Alberta. “The most chilling statistic is Exxon Mobil’s. It spent twice as much last year to buy back stock as it did on exploration.”

As for shallow journalism that helps Big Oil, Steele makes the point that the newsrooms that were once staffed by the redistributionist children of the New Deal and the A.F.L.-C.I.O. are now populated with the children of Reaganomics: “Younger reporters come out of a mind-set that the market rules, taxes are evil, and government ought to let these people in the oil industry go about their business.”

As journalism has passed from a hungry to an elite profession, there’s no shock value in the fact that Exxon Mobil paid only $5 billion in U.S. income taxes last year while it paid $25 billion to foreign governments. Even with Exxon Mobil making $76,000 a minute, the last thing that occurs to many assignment editors and reporters is to investigate whether a windfall-profits tax would drive Exxon Mobil, BP, and other oil companies to invest in the alternative-energy strategies they boast about in their television commercials.
So, Raines says, we get puff pieces like Matt Lauer interviewing Rex Tillerson, chairman and C.E.O. of Exxon Mobil assuring Lauer's Today Show audience that Exxon is a victim along with consumers in the oil economy. They are doing all they can to explore and drill. But if only they could get more lands open for exploration that would help alot.

No mention is made of the fact that oil companies haven't explored 80 percent of their existing leases in the continental U.S., that they have closed more than half of their 300 refineries in the last 25 years, and made a conscious effort to cut back on exploration and plow money into profits.

What drives me crazy about television news in particular isn't the supposed liberal bias of Katie Couric or the conservative bias of Fox News, it is the constant deferential, trusting treatment of government and business leaders. It is one thing to be respectful and another to be fawning.

Exxon Mobile is raking in record profits while soaring gas prices are affecting the livelihoods of most everyone in the country. I happen to think that the pain at the pump is a good thing if it finally forces us to begin to wean ourselves off of oil, but the oil companies are not victims in this process; they are strategically reaping the financial benefits of our pain. You wouldn't know that by watching the nightly news. Give me back Dan Rather.

1 comment:

spl said...

Increasingly higher energy prices is the best thing to hit America. Our love affair with our lavish lifestyles is embarrassing. The only unfortunate part is that, as always, the most fortunate are hurt the least.