Press Pumps Gas Panic While Giving Big Oil a Pass

March 9, 2022

Press Run:

At Monday’s White House press briefing, CBS News’ Ed O’Keefe actually recited quotes from motorists he interviewed at a local gas station. Then he asked press secretary Jen Psaki, “What is the President’s message to Americans who are going to the gas station today and seeing prices so high?”

The pump coverage in recent months has been especially intense because the media under Biden has gone all in on the larger issue of inflation. It’s constantly portrayed as a crushing force on the U.S. economy, even though the economy continues to expandand add jobs at a record pace.

The last time gas in the U.S. climbed above $4 per-gallon was in 2008. But we know news coverage then wasn’t as incessant and breathless as it is today because at the time President George W. Bush had no idea prices were heading towards $4 a gallon — that’s how little coverage there was. 

With Russia’s invasion of Ukraine, which has disrupted the global energy markets and once again set gas prices higher, the coverage has become truly ceaseless. (See herehereherehereherehereherehereherehere. And that’s all just from one day.) “Gas” has already been mentioned 500 times this week on cable news, according to TVeyes. A huge majority of Americans say they’re fine paying more for gas because the U.S. now refuses to buy oil from Russia. Yet most of the news coverage suggests consumers are furious about the price increases. 

Worse, today’s reporting consistently lacks crucial context that lets giant oil companies off the hook. Instead of shining a spotlight on their behavior and the central role they play in increased prices by refusing to drill for more crude, the press whitewashes Big Oil from the story, and keeps its focus on the White House. In doing so, they miss a big story.

Meanwhile, instead of drilling for more oil to ease shortages as demand and prices surge, energy companies are using billions in profits to reward shareholders by buying back their stock. “Investors are now demanding greater returns so oil companies are forgoing crude expansion and instead returning cash to shareholders while vowing to keep spending in check,” Bloomberg explained last year.

Virtually none of that context is included in today’s breathless gas price updates. Or the fact that Trump in 2020 urged a global reduction in oil drilling in order to boost U.S. firms during the pandemic when motorist demand for gas was low. That look-the-other-way approach fits the media’s larger trend of whitewashing the role of corporate America in the ongoing inflation story. Big business has most often been portrayed as merely passing along increased costs to consumers, with almost no consideration given to the idea that lots of companies have been cashing in during the pandemic.

The media blackout is especially odd considering CEO’s have boasted on their earnings calls about how they’ve pushed through multiple prices increases while simultaneously posting huge profits.

“Companies benefiting from the dynamics have told investors to expect solid sales and profitability in 2022 even as rising costs tied to supply-chain woes show no signs of letting up,” the Wall Street Journal reported in November. “P&G, maker of Tide detergent and Pampers diapers, last week announced a third round of price increases, which will go into effect over the next few months, and told investors to expect profitability to accelerate as the year progresses.” 

Meanwhile, Chipotle jacked up pandemic menu prices and its net income more than doubled during a recent quarter.

Axios Newsletter (email):

By the numbers: The 519 active U.S. oil rigs mark a huge jump from the depths of the pandemic — but the count is still at just 60% of its 2019 peak.

The big picture: The U.S. is effectively energy independent, meaning that it produces about as much oil as it consumes, as my colleague Neil Irwin reported. 

  • About 3% of U.S. imports of oil come from Russia (8% including all petroleum products) — and while that’s not a ton, there’s still a knock-on effect in world markets.
  • “Although the impact [of the ban] on U.S. supply may be limited, prices are soaring because the ban makes it more of a challenge to trade in Russian oil and more likely that other countries may follow suit,” wrote Rystad Energy’s head of oil markets, Bjørnar Tonhaugen, in a note.

Meanwhile, someone has to replace those lost imports and fill the gap in demand. President Biden has appealed to OPEC, the group of largely Middle East oil-producing countries, to start raising production — so far to no avail.

But, but, but: Why doesn’t the U.S. just drill more oil? The answer comes down to “discipline,” an industry buzzword that means companies don’t just turn on the spigot full force every time prices go up. 

  • Producers have gotten a lot more cautious, thanks to recent waves of bankruptcies that came after some took on high levels of debt to fund exploration and production. 
  • Investors in recent years have demanded more focus on dividends and steady shareholder returns — rather than big, risky bets on growth that won’t pay off if prices head south again. 

And then there’s the supply chain. 

  • Occidental Petroleum CEO Vicki Hollub said yesterday that a lack of materials, skilled labor and other supply chain troubles significantly limit U.S. shale producers’ ability to jack production back up, Reuters reports.

What to watch: U.S. oil ended yesterday at around $124 a barrel. If Europe joins the U.S. in a complete ban on energy imports from Russia, Rystad estimates that prices could “easily” settle at $150 in the coming months.

2 Responses to “Press Pumps Gas Panic While Giving Big Oil a Pass”

  1. The media and Biden administration should all be emphasizing that using as little fossil fuel as you can is the patriotic thing to do.

    It gives you all these good choices:

    You can help the Europeans by shipping extra to them.

    You can lower greenhouse emissions causing climate change.

    You reduce global demand which lowers price, chipping away at Russia’s economic power for which oil and gas are central pillars.

    You save yourself a lot of money.

    Instead of telling that story, the media projects a message that American democracy is all about punishing incumbent politicians when gas is expensive, and rewarding them when it’s cheap. They should be called out for this crap. Maybe when people see that they should submit letters to the editor pushing back hard on this.

  2. leptoquark Says:

    I think Biden played the Russian oil shutoff brilliantly, since he got the Republicans to go on the record calling for it first before he acted. You know that if he had acted first, the GOP would have been blaming high gas prices on him cutting off Russian oil.

    We drive three electric cars in our family, so we’re not having much stress over gas prices. I think it’s only a matter of time before people start making the connection that if they really want to stick it to Putin, one of the most impactful things they can do is to buy an electric car. And, since there are many models more affordable than Tesla and almost as nice, the “EV’s are for rich people” will finally die a merciful death.

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