Myths and falsehoods about oil policies

In reporting on high gas prices and initiatives that have been proposed to address the issue, the media have repeated or failed to challenge several myths, falsehoods, and claims contradicted by government agencies. Many of the media-advanced myths and falsehoods have promoted the notion that lifting the current moratorium on offshore drilling and expanding domestic drilling in the Arctic National Wildlife Refuge (ANWR) will have an immediate impact on rising gas prices.

1. Opening additional acres for offshore drilling will lower today's oil and gasoline prices

After successive speeches from Sen. John McCain and President Bush in which they both called for an increase in offshore oil drilling, many major news outlets have uncritically reported the suggestion by drilling proponents that lifting the federal moratorium will have an immediate effect on fuel prices, without noting that, in its Annual Energy Outlook 2007, the Energy Department's Energy Information Administration (EIA) estimated the effects of allowing the moratorium to expire in 2012 and said that “access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017.” June 23 articles in The Washington Post and New York Times, as well as July 15 articles in the Los Angeles Times and Washington Post, reporting on suggestions that offshore drilling would lower oil and gas prices, made no mention of the EIA's findings. By contrast, a July 14 Post article did note the EIA's conclusions, although that article appeared on the front page under a headline -- “Offshore Drilling Backed as Remedy for Oil Prices” -- whose suggestion of short-term effects was contradicted by the article itself.

2. Opening ANWR to drilling will impact today's oil and gasoline prices

Suggestions that opening federally protected ANWR to drilling will help lower today's gas prices also frequently go unchallenged by news media outlets. For instance, while discussing Bush's trip to the U.S.-European Union summit on MSNBC Live, anchor Contessa Brewer said Bush “will push for help from our European partners on the oil front” and aired a video clip of Bush saying, “The United States has an opportunity to help increase the supply of oil on the market, therefore taking pressure off gasoline for our hard-working Americans, and that I've proposed to the Congress that they open up ANWR, and open up the continental shelf, and give this country a chance to help us through this difficult period.”

But in its May 2008 “Analysis of Crude Oil Production in the Arctic National Wildlife Refuge,” the EIA concluded that oil drilling in ANWR would not impact the U.S. oil supply for at least a decade: “The opening of the ANWR 1002 Area to oil and natural gas development is projected to increase domestic crude oil production starting in 2018” [emphasis added]. Further, the report says: “This analysis assumes that enactment of the legislation in 2008 would result in first production from the ANWR area in 10 years, i.e., 2018.” Further, based on its Annual Energy Outlook 2008 report, EIA estimated that the opening of ANWR would reduce the price of imported low-sulfur, light crude oil by $0.75 per barrel in 2025 (in the “mean oil resource case”), from a predicted reference case price of $64.49. As of the close of trading on August 13, the price of oil settled at $116 per barrel.

3. No oil was spilled offshore as a result of Hurricane Katrina

Proponents of lifting the moratorium on certain offshore drilling have on several occasions falsely claimed that no oil was spilled offshore during Hurricane Katrina -- with no challenge from cable news anchors; at least one Fox News contributor has also made this false claim. In fact, as Media Matters has noted, a 2007 report prepared for the U.S. Minerals Management Service (MMS) by the international consulting firm Det Norske Veritas found that damage related to Hurricane Katrina resulted in 70 spills from outer continental shelf structures with a total volume spilled of approximately 5,552 barrels of petroleum products. The study specifically identified damage from Katrina to 27 platforms and rigs that resulted in approximately 2,843 barrels of spilled petroleum products. The combined impacts of hurricanes Katrina and Rita on outer continental shelf structures in the Gulf of Mexico, according to the report, were “124 spills ... with a total volume of roughly 17,700 barrels of total petroleum products.”

On Fox News' Fox & Friends, former Republican presidential candidate and Fox News contributor Mike Huckabee falsely asserted, “When Katrina, a Cat-5 hurricane, hit the Gulf Coast, not one drop of oil was spilled off of those rigs out in the Gulf of Mexico.” The claim has also been promulgated on MSNBC. NBC News chief foreign affairs correspondent Andrea Mitchell has twice allowed guests to claim that Hurricane Katrina did not result in any oil spills. On the June 24 edition of MSNBC Live, Mitchell did not challenge Sen. Richard Burr's (R-NC) false assertion that “there wasn't a drop” of oil spilled in the Gulf of Mexico due to a Category 5 hurricane. And during a July 15 interview on MSNBC Live, Mitchell did not challenge energy lobbyist and former Sen. Trent Lott's (R-MS) false claim that "[w]e didn't have one drop of oil spilt when we had the biggest hurricane in, you know, recent history, Hurricane Katrina."

However, on the July 17 edition of MSNBC Live, anchor David Shuster did confront McCain senior policy adviser Nancy Pfotenhauer about her past use of the false claim on MSNBC. Shuster said: “Earlier this week on this program, though, you defended offshore drilling and said, quote, 'We withstood Hurricanes Rita and Katrina and did not spill a drop.' In fact, the U.S. Mineral Management Service said that Katrina and Rita caused 124 offshore spills for a total of more than 743,000 gallons of oil and refined products spilled. So, Nancy, do you want to take back what you said?” Pfotenhauer replied: “Right. Well, I actually do. I was misinformed, and my embarrassment aside, the point is still that we had a remarkable performance.”

4. “Natural seepage” of oil into the ocean means oil spills have insignificant environmental impact

Some in the media have cited reports finding that more oil leaks into the water from “natural seepage” than from oil tanker and offshore drilling accidents to suggest that the damage caused by spills is comparatively insignificant. But a report by the County of Santa Barbara discussing the effects of natural seepage and oil spills, including a 1969 oil spill off the Santa Barbara coast that released an estimated 80,000 to 100,000 barrels of oil, stated that “major spills can have far greater” environmental impact than seeps have, as the blog Think Progress noted.

In a July 12 Wall Street Journal op-ed, Manchester Union Leader editorial page editor Andrew Cline wrote that a “joint study by NASA and the Smithsonian Institution, examining several decades' worth of data, found that more oil seeps into the ocean naturally than from accidents involving tankers and offshore drilling. Natural seepage from underwater oil deposits leaks an average of 62 million gallons a year; offshore drilling, on the other hand, accounted for only 15 million gallons, the smallest source of oil leaking into the oceans.” Likewise, during the July 15 edition of Fox News' Special Report, correspondent William La Jeunesse stated: “Almost 40 years later [after the Santa Barbara spill], the National Academy of Sciences says mother nature spills more oil into the environment than Exxon, Shell, B.P., and Chevron combined -- 63 percent of all oil in U.S. coastal waters comes from natural seepage from cracks in the earth; 32 percent from consumers in their boats and runoff from cities; 4 percent from oil tankers; and just 1 percent from offshore platforms.”

However, in a 2002 report, the Santa Barbara County Planning and Development Energy Division stated that a “comparison of the impacts of seeps and spills based solely on volume would be misleading. The evidence is clear that, far from being invisible against a background of seeps, major spills can have far greater and qualitatively different impacts on the environment than do seeps.”

From the report:

A comparison of the impacts of natural oil seeps versus oil spills involves much more than determining the volume of oil released. Natural oil seeps in the Santa Barbara Channel introduce substantial volumes of hydrocarbons into the marine environment. Seepage rates may be on the order of 100 barrels of oil per day. Most spills associated with oil production offshore of Santa Barbara County have been small during the years since the catastrophic 1969 Santa Barbara oil spill. The Minerals Management Service estimates that total combined spill volume for the 841 reported spills between 1970 and 1999 was about 830 barrels. However, a comparison of the impacts of seeps and spills based solely on volume would be misleading. The evidence is clear that, far from being invisible against a background of seeps, major spills can have far greater and qualitatively different impacts on the environment than do seeps.

The county concluded: “Natural seeps and spills differ in that seep rates do not, on average, exceed the marine environment's capacity to digest the oil, whereas spills may exceed its capacity. Major spills overwhelm nature's mechanisms for processing the oil, in the short term. The consequences include severe oiling of shorelines and mortality to organisms that are ill-prepared to live in an oil-soaked environment.”

5. China is drilling for oil 60 miles off the coast of Florida

In the June 5 edition of The Washington Post column, columnist George Will falsely asserted, “Drilling is underway 60 miles off Florida. The drilling is being done by China, in cooperation with Cuba, which is drilling closer to South Florida than U.S. companies are.” Vice President Dick Cheney made a similar claim -- citing Will's column-- about China drilling off the coast of Florida in a June 11 speech to the U.S. Chamber of Commerce, but according to an Associated Press article the following day, Cheney's office issued a statement saying he was mistaken. The AP reported that the statement said: “It is our understanding that, although Cuba has leased out exploration blocks 60 miles off the coast of southern Florida, which is closer than American firms are allowed to operate in that area, no Chinese firm is drilling there.” The article stated that “Jorge Pinon, a senior energy fellow at the University of Miami specializing in Latin America, said Cuba has awarded offshore oil leases, or concessionary blocs, in its offshore waters to six oil companies -- none of them Chinese -- and soon may announce an agreement with Brazil's state oil company, Petrobras.” It further reported that Pinon said, “But no one is currently drilling in any of those concessions.” Will issued a correction to his claim in a June 17 column.

Despite the statement from Cheney's office, Fox News' Sean Hannity claimed on the June 16 edition of his nationally syndicated radio program: "[W]e've got China, you know, joining with Cuba, they're drilling 60 miles off our shores of Florida."

6. Obama's energy strategy consists only of keeping tires properly inflated

During the July 31 edition of Fox News' Hannity & Colmes, Fox News contributor and former House Speaker Newt Gingrich (R-GA) repeatedly mischaracterized Sen. Barack Obama's energy policy, falsely suggesting that Obama's only “energy strategy” was to encourage people to keep the tires on their vehicles properly inflated and asserting that Obama “suggested if we all inflated our tires, that we would solve the problem.” He said to guest co-host Kirsten Powers, "[D]o you really think that inflating your tires is a rational energy strategy?" Later in the show, Gingrich also suggested that Obama's energy policy was limited to “inflate here, inflate now, avoid reality” and “inflate here, inflate now, pretend it doesn't exist.”

But as Media Matters has noted, during the July 30 campaign event in which he told the audience that “there are things you can do individually to save energy” such as “making sure your tires are properly inflated,” Obama also mentioned proposals such as “help[ing] incentivize consumers” to transition to more fuel-efficient cars, developing new technologies, “work[ing] with the auto industry in developing some of these new technologies and plug-in hybrids,” and “put[ting] people back to work building windmills and setting up wind turbines.” Moreover, Obama's “Plan for a Clean Energy Future” on his campaign's website includes proposals to “invest $150 billion over 10 years in clean energy,” “improve energy efficiency 50 percent by 2030,” “support next generation biofuels,” “double fuel economy standards within 18 years,” “investigate market manipulation in oil futures,” and enact a windfall profits tax on oil companies, the revenue from which “will be invested in a number of measures to reduce the burden of rising prices on families.”

Gingrich's ridicule of Obama's suggestion aside,, a website maintained jointly by the Environmental Protection Agency and Department of Energy, states: “You can improve your gas mileage by around 3.3 percent by keeping your tires inflated to the proper pressure. Under-inflated tires can lower gas mileage by 0.4 percent for every 1 psi drop in pressure of all four tires.” It further calculated a fuel economy benefit of 3 percent, or a savings of up to 12 cents per gallon, with properly inflated tires.

7. Oil companies reinvest all their profits into finding more oil

During the June 26 edition of NBC's Today, correspondent Janet Shamlian -- reporting from a Chevron Corp. oil and gas platform -- said: “Each barrel [of oil] yields about 26 gallons of gas. Criticized for record profits, companies like Chevron say every dollar coming out is going right back in to the quest for more.” But Shamlian did not note that according to Chevron's 2007 annual report and a press release about its earnings for the first quarter of 2008, both of which were available before her report, a portion of Chevron's earnings goes into stock buybacks and dividend payments.

Indeed, in its first-quarter 2008 earnings press release, issued May 2, Chevron “announced a 12 percent increase in its quarterly dividend on common stock” and reported spending approximately $2 billion to buy back shares of its own stock during the quarter. In its 2007 annual report, released on February 28, the company stated that it had raised its dividend by 11.5 percent to 58 cents a share, and had bought back approximately $7 billion of its stock.

The Associated Press reported in a July 22 article: “The [oil] companies insist they're trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.” The AP further reported: “The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year ... according to Rice University's James A. Baker III Institute for Public Policy." Chevron is one of the “so-called Big Five” international oil companies, according to the Baker Institute report cited in the article. The AP reported that "[i]n the first quarter of this year, Exxon, ConocoPhillips and Chevron were all among the top 10 companies for share buybacks in the S&P 500." The article also stated that "[s]tock buybacks are common throughout corporate America, not just for Big Oil. They shrink the amount of stock on the open market, essentially increasing its value and giving individual shareholders a bigger stake in the company."

From the July 15 edition of Fox News' Special Report with Brit Hume:

HUME: President Bush's move to lift the executive ban on offshore oil drilling has many environmentalists concerned about the potential for destructive oil spills.

But would you believe that the greatest source of oil spills in the world's oceans is not the drilling industry, but something far more difficult to regulate. Correspondent William La Jeunesse explains.

[begin video clip]

LA JEUNESSE: 1969 -- an oil spill off Santa Barbara prompts Congress to put a stop to offshore drilling in the Atlantic and Pacific oceans.

Almost 40 years later, the National Academy of Sciences says mother nature spills more oil into the environment than Exxon, Shell, B.P., and Chevron combined -- 63 percent of all oil in U.S. coastal waters comes from natural seepage from cracks in the earth; 32 percent from consumers in their boats and runoff from cities; 4 percent from oil tankers; and just 1 percent from offshore platforms.

DANIEL KISH (Institute for Energy Research senior vice president): The truth is that two-thirds of all the oil that comes on the beaches of the United States is natural seepage.

LA JEUNESSE: Yet many politicians and green groups say the environmental damage of another serious accident, such as the Alaska Exxon Valdez tanker spill, is not worth the risk.

DAVE DAVIS (Community Environmental Council executive director): The environment of the Valdez Sound never recovered. The economic effects are still being felt today, right? Is that worth 25 cents in your tank?

LA JEUNESSE: All energy production carries an environmental cost, but offshore oil production is radically different from what it was decades ago.

From the July 12 Wall Street Journal op-ed:

On the morning of Jan. 28, 1969, a Union Oil drilling site six miles off the coast of Santa Barbara, Calif., sprang a leak. The ensuing spill stretched for miles, killed thousands of birds, and gave America the image of wildlife and shorelines covered in black crude. That spill is widely considered to have conceived the modern environmental movement. A year later, the first Earth Day was held, followed by passage of the Clean Air Act and Clean Water Act.

After the spill, Santa Barbara residents formed an environmental group called GOO! (Get Oil Out!), one of the first community groups to oppose offshore oil drilling. Thirty-nine years later, GOO! is still around. But this April the group did something astonishing. It publicly supported an oil company's proposal to drill off the coast of Santa Barbara.

Houston-based Plains Exploration and Production Company proposed drilling 22 wells from a platform 4.7 miles from land. It made numerous concessions to the local environmental groups that would curtail drilling in about a decade -- and in the end even the adamantly “no-drilling” crowd agreed that the deal was beneficial for everyone. The Environmental Defense Center, a nonprofit environmental law firm, endorsed the plan. Abe Powell, president of GOO!, told the Los Angeles Times it was “good for the community.” Terry Leftgoff, a former GOO! executive director, wrote in the Santa Barbara Independent the deal was “a brilliant proposal that finally gives the public something back: the certain removal of four offshore oil platforms, the decommissioning of a notorious industrial plant, and the reversion of rural land subjugated into oil development back into the public trust as parkland.”

When an environmental group formed for the sole purpose of opposing offshore oil drilling warmly embraces a plan to drill off its own coast, you know something important has changed in our culture: Americans have recognized that offshore oil drilling is largely safe.

Since 1975, drilling in the Exclusive Economic Zone (within 200 miles of the U.S. coast) has had a 99.999% safety record, according to the Energy Information Administration, which reports that “only .001 percent of the oil produced has been spilled.”

Thanks to technological advances, large spills are rare. Most spills are tiny, only a few feet in diameter. Large tanker spills, such as the Exxon Valdez in 1989, are so infrequent they account for a very small fraction of the oil that winds up in the sea.

A joint study by NASA and the Smithsonian Institution, examining several decades' worth of data, found that more oil seeps into the ocean naturally than from accidents involving tankers and offshore drilling. Natural seepage from underwater oil deposits leaks an average of 62 million gallons a year; offshore drilling, on the other hand, accounted for only 15 million gallons, the smallest source of oil leaking into the oceans.

The vast majority of the oil that finds its way into the sea comes from dry land, NASA found. Runoff from cities, roads, industrial sites and garages deposits 363 million gallons into the sea, making runoff by far the single largest source of oil pollution in the oceans. “Every year oily road runoff from a city of 5 million could contain as much oil as one large tanker spill,” notes the Smithsonian exhibit, “Ocean Planet.”

The second-largest source of ocean oil pollution was routine ship maintenance, accountable for 137 million gallons a year, NASA found -- more than 2.5 times the amount that comes from tanker spills and offshore drilling combined. But no one is proposing that we ban cargo and cruise ships.