Politico Drops The Ball On Gas Price Story

Blog ››› ››› JOCELYN FONG

A study released this week finds,"Passive news reporting that doesn't attempt to resolve factual disputes in politics may have detrimental effects on readers." Ohio State University researchers concluded that these he-said/she-said news reports can lead audiences to believe that they are unable to determine the truth in political issues. Raymond Pingree, the author of the study, said this "may make it easier for people to just quit following politics at all, or to accept the dishonesty in politicians."

The press release on the study also stated: "While some disputes in politics involve subjective issues where there is no right or wrong answers, some involve factual issues that could be checked by reporters if they had the time and the desire, Pingree said."

Case in point: A Politico article today titled, "John Boehner blames Barack Obama for gas prices." The article reports:

House Speaker John Boehner is playing the gas-price-blame-game, pointing to President Barack Obama's policies for the sudden rise in gas prices.

With the price of gas surpassing $4 per gallon in parts of the country, Boehner said that Obama's moratorium on oil drilling in the Gulf, as well as his decision to cancel leases on drilling in national parks, has contributed to the rising prices.

The White House has previously said the turmoil in Libya has caused the rise in prices.

So who's right? Do any energy economists agree with Boehner that Obama's drilling policies caused the high gas prices we're seeing? The Politico article doesn't say. Nor does it mention that U.S. production of oil increased in 2009 and 2010, making restrictions on drilling an unlikely candidate for blame. But that's ultimately beside the point.

Michael Canes, who previously served as Chief Economist of the American Petroleum Institute and who calls for expanded domestic oil and gas drilling, told Media Matters via email that "it's not credible to blame the Obama Administration's drilling policies for today's high prices because of the relative scales involved." Canes added: "World oil prices are determined in a market of around 85 million barrels per day of production and consumption, while the consequences of domestic drilling, particularly in the Gulf, likely would be more in the range of several hundred thousand to one million barrels per day, and most of that production would not occur for a number of years."

News outlets have been far too willing to entertain the notion that the U.S. can dictate what we pay for oil by expanding drilling at home. As Ken Green of the conservative American Enterprise Institute and economist Philip Verleger have explained, increased production at home cannot shield us from the vagaries of the world market:

Crude oil is a global commodity, Green said.

"The world price is the world price," Green said. "Even if we were producing 100 percent of our oil," he said, if prices increase because of a shortage in China or India, "our price would go up to the same thing.

"We probably couldn't produce enough to affect the world price of oil," Green added. "People don't understand that."

U.S. production could be negated by decisions that the Organization of Petroleum Exporting Countries makes, said Philip Verleger Jr., energy economist, and David Mitchell EnCana, professor of management, at the University of Calgary's business school.

"Suppose the U.S. were to boost production 1 million barrels a day," Verleger said. "OPEC has the capacity to cut 1 million barrels."

The oil industry has been able to convince people there is a connection between U.S. drilling and prices, Verleger said.

Posted In
Economy, Environment & Science, Drilling
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