SHALE GAME: Why Won't Fox Disclose Murdoch's Oil Interests?

Fox has repeatedly featured reports on controversial oil shale ventures that Rupert Murdoch -- the chairman and CEO of Fox's parent company -- is a prominent investor in and adviser to without disclosing the conflict of interest.

Last year, Murdoch joined the “strategic advisory board” of Genie Energy and purchased an equity stake in Genie Oil and Gas, which consists of Genie Energy's interests in oil shale initiatives on federal land in Western Colorado and in Israel's Elah Valley.

Genie Energy -- which is a division of IDT Corporation, a global telecommunications company -- has attracted several other high-profile advisers and investors, including former Vice President Dick Cheney, Lord Jacob Rothschild, and Michael Steinhardt, a prominent hedge fund investor and philanthropist.

Genie Energy clearly sees value in its association with Murdoch. It touted the “vast experience and immeasurable value” Murdoch would bring to the board when he joined it last September. This week, the company stood by Murdoch, calling him a “valued member of Genie Energy's Strategic Advisory Board” even as public outrage grew over allegations that his British tabloids illegally hacked the voicemails of thousands of people and bribed the police.

In May, Media Matters reported that on three consecutive days in April, Fox Business Network promoted Genie Energy's oil shale project in Israel -- known as Israel Energy Initiatives (IEI) -- yet never disclosed Murdoch's financial stake in it.

This week, Fox News aired reports on domestic oil shale production that featured Genie's shale project in Western Colorado -- American Shale Oil -- but didn't disclose Murdoch is a prominent investor and adviser.

Throughout the day on July 13, Fox News ran versions of a news package with senior national correspondent John Roberts on the viability of oil shale ventures out west. Two segments -- which aired during the Fox daytime shows America's Newsroom and Happening Now -- specifically mentioned American Shale Oil, yet did not disclose Murdoch's connection. In addition to mentioning the company by name, the report airing during America's Newsroom also featured footage from American Shale Oil's test site in Colorado.

Following these segments, Media Matters emailed Roberts about the conflict of interest, seeking comment. Roberts did not respond. An hour later, however, Roberts delivered a similar oil shale report on Fox's Special Report. This time, Roberts made no references to American Shale Oil.

Oil shale development has long enticed investors and those seeking a route to energy independence, but no company has yet proved a way to make the process both commercially viable and environmentally sound.

The Fox Business segments that aired in May, which featured interviews with a Wall Street Journal columnist and a scientist employed by Murdoch's oil shale venture in Israel, paid scant attention to the environmental concerns.

Roberts, who traveled to Utah and Colorado to report firsthand from oil shale pilot sites, interviewed a wide variety of experts on the issue and provided more balanced coverage than Fox Business did. As Roberts' report described, vast deposits of oil shale -- an organic-rich sedimentary rock -- are located in the western United States, and several companies are investing in technology to extract shale oil from that rock.

If U.S. resources can be tapped successfully, conservative estimates place the amount of recoverable shale oil at 800 billion barrels -- some estimates exceed 2 trillion barrels.

The key, as Roberts noted, is getting the oil out “without going broke, or ruining the environment.” As Roberts described, for decades companies tried and failed to capitalize on oil shale. In the 80's Exxon invested heavily in an oil shale operation, only to pull out suddenly -- on a day known as “Black Sunday” -- after oil prices dropped. Thousands of people lost their jobs overnight and the economy of Colorado's Western Slope was devastated.

Roberts interviewed energy analyst Randy Udall, who weighed in on the difficulties behind oil shale development. “Oil shale is a petroleum equivalent of fool's gold. It's something that looks shiny and bright, and seems very promising, but when you look more closely at it, it's empty,” Udall said. “We've been trying to do this for a hundred years,” he added, “Everyone that's tried to produce oil shale has lost their shirt and broken their pick.”

Roberts also interviewed Glen Vawter, the director of the National Oil Shale Association, who said, “I think we have new technologies, and there's a chance it will go this time.” The CEO of EnShale, an oil shale venture in Utah, told Roberts, “We see oil at $100 a barrel, and we know we can produce for less than that.”

Beyond commercial viability, Roberts also noted there are “big environmental concerns” with oil shale development. “Oil shale could be a real water hog in a region that barely has enough to go around,” Roberts reported. Ken Neubecker of the Western Rivers Institute told Roberts, “What we have, essentially, is a dwindling supply and growing demands. In my mind, wasting that kind of water on the ever-chasing fantasy of oil shale is really just not worth it.”

Indeed, David Abelson, an oil shale analyst for Western Resource Advocates, a non-profit environmental law and policy organization, told Media Matters:“Fox News' story on oil shale presents strong reason for approaching potential commercial development of oil shale deposits with caution. There are technical problems, community and economic impacts, and issues with energy and water demands that must first be overcome. Otherwise, we risk, as the segment noted, another regional economic catastrophe.”

However, Abelson was critical of Roberts' concluding remarks to Fox News co-hosts Alisyn Camerota and Bill Hemmer during the report that ran on America's Newsroom. Roberts said, “Now there is a political battle brewing in Washington over this [domestic oil shale development]. The Bush administration had come out with a plan to develop oil shale, but after it was sued by environmental groups, Alisyn, the Obama administration has put all of that on hold.” Hemmer responded, “Some day, they'll make a decision. Some day soon, let's hope.”

Abelson told Media Matters that the Fox report “was subverted to some extent by staff in studio commenting that oil shale development would be proceeding if not for interference by environmental groups and the Obama Administration. That statement misrepresents the realities on the ground, where research into commercially-viable technologies continues.”

Western Resource Advocates was a party in the suit and subsequent settlement, which did not affect, for example, the American Shale Oil project on federal land featured in Roberts' report.

Contacted about the Fox report, a spokesman for American Shale Oil told Media Matters, “In this report (July 13, 2011 - ”Will Oil Shale Ever be Viable?"), Fox News correctly asserts that oil shale has the potential to move America toward energy independence, but incorrectly states that shale oil production in Colorado will require a great deal of water and electricity. In fact, American Shale Oil (AMSO) is developing environmentally responsible commercial production processes that will require relatively little water and will be powered primarily by gas co-produced with the shale oil - not by electricity."

American Shale Oil, which expects to begin its pilot test phase soon, says it has a goal of one barrel or less of water per barrel of oil shale. According to the company's website, its unique process also results in lower greenhouse gas emissions than those typically associated with shale oil production. Though carbon sequestration “is not anticipated for the field testing phase,” the company says, it “is an option for commercial operations if regulations at that time require reduction in the emission of green house gases.”