As profits rise with gas prices, oil industry offers explanation

WASHINGTON: While the public and lawmakers seethe over climbing gas prices, the petroleum industry and some of its major players are reaching out to consumers and businesses to explain they're not to blame.

WASHINGTON: While the public and lawmakers seethe over climbing gas prices, the petroleum industry and some of its major players are reaching out to consumers and businesses to explain they're not to blame.

Jim Craig, VP for policy and communications at the American Petroleum Institute (API), said educational advocacy outreach programs aimed at consumers are being ramped up.
The trade group comprises 400 members of the US oil and natural gas industry. Craig said besides launching media outreach tours to reporters, news organizations, and groups around the country, it is also running print and TV ads.

"It's really gotten intense the past few days, and I don't think it's going to let up anytime soon," said Craig, adding that API spokespeople have been doing around-the-clock satellite interviews, as well as network news shows on ABC, NBC, CBS, and Fox. "One of my staff is basically working as an internal full-time booker because we have so many requests."

The API has also beefed up its print advertising, which is being handled by Blue Worldwide, a subsidiary of Edelman. Craig said full-page ads are running twice a week in The Washington Post, The New York Times, and USA Today, discussing what goes into the pricing of gasoline. The API is also running ads focusing on earnings. Ultimately, Craig said, ads will run in Beltway publications and major-market newspapers nationwide.

Tom Libby, a JD Power & Associates analyst, doesn't believe oil company credibility problems will be solved with ad campaigns and could even make them worse. "They are perceived as large, abstract organizations that make huge amounts of money and can't be controlled," Libby said. "Trying to explain facts concerning production costs would, at most, move a small part of the public."

Craig disagrees, at least as far as media outreach goes. "I have seen an attitude change within the media in recent years because reporters get it," he said. "Now we're seeing them talk about the geopolitics and the global demand. And I think the folks who read and watch those shows are starting to get that idea, as well.

"It gets intense when there's such great interest from everyone," Craig added.

Indeed, as quarterly earnings roll in and prices for gasoline in some areas tip the scales at $4 a gallon, the administration promises a probe into major producers' records. ExxonMobil, the world's largest oil company, posted the fifth-highest quarterly profit for any public company in history.

Exxon's net income for the first quarter was $8.4 billion, up from $7.86 billion in the year-ago period. Exxon Mobil, Chevron, and ConocoPhillips are expected to have combined first-quarter profits in excess of $16 billion, a 19% increase from last year.

Lawmakers last week began mulling plans to make oil companies foot a higher tax bill or give consumers a tax break.

Dave Gardner, media relations advisor at Exxon Mobil, said Exxon is keeping its communications efforts at its current level, which is "very high." He said they include discussing its Energy Outlook presentation, Exxon's basic communication tool, in face-to-face discussions with policymakers, citizen groups, and the media.

"It's not like it's the same old same old," he said. "Continuing it at this level is like maintaining a significantly large effort."

Ann Peebles, spokeswoman for Shell Oil, said the company would definitely be ramping up some of its communications efforts over the next few days and weeks in response to consumer concerns.

Media outreach will include TV, radio, and print outlets. As for consumer outreach, Shell will look to explain that it understands their frustration and is trying to provide high-quality fuel at competitive prices.

Peebles said Shell will soon kick off a media relations campaign for its Fuel Stretch Principles - driving techniques and maintenance techniques that help people improve their fuel economy - and its Shell Platinum MasterCard, which offers a 5% rebate on gas purchases. It will target daily newspapers and financial publications.

Shell will also launch a Web page with links to third-party resources, such as the API and Department of Energy. Shell is working with Edelman's Chicago office.

Jim Sanfilippo, analyst with consultancy AMCI, said fuel-stretching messages are valid, but that consumers will politely listen and ignore them. "It's like the Pope preaching birth control to the faithful."

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