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
'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,
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