ANALYSIS: Media Watch - The usual suspects - not OPEC - are toblame for gas prices

Just like last summer, as the temperature rises so do the prices at

the gasoline pump. What's setting this season apart is a lack of media

attention on OPEC as the spoiler of summer fun. Crude oil is plentiful,

say many, leaving journalists to search for new culprits, and forcing

oil industry spokespeople to point fingers elsewhere. The likely

suspects this summer are high demand, low supply and a patchwork of

emission standards across the country.



The majority of coverage in late April weighed heavily towards the fact

that price rises are a result of clean air regulations and emission

standards that distort supply levels across the US.



Few argued that emission standards should be reduced or eliminated.

Instead overall media coverage moved in favor of national standards. The

industry argues that high prices from region to region result from

shortages of specific gasoline formulations for warmer seasons.

'Wherever you have a boutique gasoline, you run the risk of greater

volatility,' stated ExxonMobil chairman Lee Raymond (Milwaukee Journal

Sentinel, April 25).



Refineries are having to spend time reformulating to the cleaner brands

that must be used in summer, instead of producing inventory to increase

the existing supply. Some are calling for the federal government to step

in and reevaluate these policies. But journalists cautioned President

Bush on his position on the issue: 'Remember the 1970's malaise?

President Carter went on TV in a cardigan sweater, preaching the virtues

of conservation to a nation rocked by higher fuel costs. If oil prices

soar, (Bush) is likely to find himself in the same spot as Carter: out

of work.' (Investor's Business Daily, April 24). The industry argues

that environmental regulations make expansion tough and point out that

no new refineries have been built in the last 20 years.



Skeptics don't buy it. Profit margins for oil companies are fatter than

ever. Many note that refiners have a price incentive to keep supplies

low. (Independent CARMA research shows ExxonMobil ranked no. 17 out of

the top 100 companies in the month of April, due to positive coverage on

earnings.) These same skeptics urge the public not to blame OPEC, noting

that crude oil supplies are plentiful.



Said reporter Cynthia Bowers on CBS Morning News (April 24): 'It's a

gold mine out there with crude oil prices relatively low and gas prices

so high, refiners stand to make as much as dollars 17 on every barrel

they sell.' Industry analysts admit that their own greed has contributed

to the shortages.



'We're supposed to build supply in late winter or spring, but we delayed

turnarounds because margins were so good. Now we find ourselves smack in

the middle of spring thinking that these inventories are a concern, and

it's not summer yet,' said a UBS Warburg oil analyst (The New York

Times, April 25).



Your average consumer isn't completely off the hook. The media reported

that demand has been rising steadily. Nevertheless, coverage suggested

that many consumers are changing travel plans for the summer, or even

considering switching to more gas-efficient or electric cars.



Journalists did report on new data that shows the supply of gas is

growing.



'Unless crude oil prices increase significantly or an emergency occurs

affecting refineries, both gas price and supply should soon cease their

extreme behavior,' said analyst Trilby Lundburg (Charleston Gazette,

April 24).



But few media outlets are reporting this theory, leading us to believe

that most aren't expecting a reprieve soon.



Evaluation and analysis by CARMA International. Media Watch can be found

at www.carma.com.



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