Fox News Resumes Perennial Gas Price Charade
Research ››› ››› JOCELYN FONG, SHAUNA THEEL, DAVID SHERE & JILL FITZSIMMONS
As the employment outlook improves, Fox News is advising Republicans to focus on blaming President Obama for rising gasoline prices -- a claim with no relation to economic fact.
Fox News Talkers Converge On Highly Misleading Talking Point
Fox Blames Obama For Change In Gas Prices From January 2009 To Now. On at least six occasions in the past week, Fox News has pushed the talking point that gasoline prices have almost doubled (increasing 83% or 90% or 91%) since Obama took office in January 2009. The claim was also promoted this week by the Drudge Report and CNSNews, as well as the Senate Republican Conference. Fox falsely suggested that Obama's energy policies are to blame for the increase in prices, without explaining that prices were low in January 2009 because the recession slashed demand. [The O'Reilly Factor, 2/9/12][CNSNews.com, 2/14/12] [Drudge Report, 2/14/12][Senate Republican Conference, 2/15/12][Fox & Friends, 2/15/12][Your World with Neil Cavuto, 2/15/12][The Five, 2/15/12][Special Report, 2/15/12][Fox & Friends, 2/16/12]
Fox also repeatedly aired variations of the following graphic:
[Your World With Neil Cavuto, 2/15/12]
Gasoline Prices Plummeted In Late 2008 In The Midst Of A Massive Recession. This chart shows that oil and gas prices fell sharply in late 2008 (displayed as an index to show the correlation between oil and gas prices):
[Federal Reserve Bank of St. Louis, accessed 2/16/12]
Wash. Post In Feb. 2009: "The Overwhelming Cause Of The Collapse In Oil Prices Has Been The Faltering World Economy." From a February 2009 Washington Post article:
Just one year ago, the price of oil finished trading at more than $100 a barrel for the first time, fueling speculation about a new era of oil prices. Yesterday, oil finished trading in New York at $39.15 a barrel, and that after surging 13 percent for the day.
The overwhelming cause of the collapse in oil prices has been the faltering world economy, which has fueled the drop in consumption.
Oil use in China, which most forecasters a year ago assumed would be the engine for increasing global demand, has screeched to a halt. [Washington Post, 2/20/09]
Former API Economist: Recession Is "One Way To Reduce Oil Prices, But Not A Very Attractive One." In an email to Media Matters, Michael Canes, Senior Research Fellow at the Logistics Management Institute, former Chief Economist of the American Petroleum Institute, and a supporter of increased offshore drilling, wrote:
Most oil market experts believe that the rapid and sustained reduction in oil prices that began in 2008 and extended beyond occurred because the world economy began to slow down and ultimately to experience a deep recession. This is one way to reduce oil prices, but not a very attractive one. [Email to Media Matters, 3/7/11]
Gasoline Prices In Canada Have Followed Same Trend As U.S. The following chart shows that gasoline price trends are basically the same in Canada as in the U.S., underscoring the fact that prices are driven by the world oil market and not by Obama's policies. The difference between the two lines reflects the fact that the U.S. has relatively low gas taxes.
[GasBuddy.com, accessed 2/16/12]
Analysts: Speculation, Refinery Closures Currently Pushing Up Prices. From a February 14 Bloomberg Businessweek report:
Strangely, the current run-up in prices comes despite sinking demand in the U.S. "Petrol demand is as low as it's been since April 1997," says Tom Kloza, chief oil analyst for the Oil Price Information Service. "People are properly puzzled by the fact that we're using less gas than we have in years, yet we're paying more."
Kloza believes much of the increase is due to speculative money that's flowed into gasoline futures contracts since the beginning of the year, mostly from hedge funds and large money managers. "We've seen about $11 billion of speculative money come in on the long side of gas futures," he says. "Each of the last three weeks we've seen a record net long position being taken."
Refineries have also been getting squeezed by higher crude prices over the past several months, forcing some of them to shut down rather than operate at a loss, says [equity analyst Jason] Stevens. " [Bloomberg Businessweek, 2/14/12]
Steve Doocy: Gas Prices Are An "Opportunity To Disrupt" Positive Economic Narrative. On the February 16 edition of Fox & Friends, co-host Steve Doocy said: "As you look at the price of oil going through the roof, and nobody's talking about it, this has the opportunity to disrupt what some are saying, 'oh look, good news for President Obama. The economy is getting better.' Not if gas prices mess it up." [Fox News, Fox & Friends, 2/16/12]
Steve Hayes: Republicans Should "Point To The President's Role In Causing These Gas Prices To Go Up." Appearing on Special Report, Fox News contributor Steve Hayes said: "Republicans have to make an argument. It's not just that we look at the gas prices. Republicans have to explain what gas prices have gone up, and unlike the White House, which seems to suggest this is random effect, point to the president's role in causing these gas prices to go up." [Fox News, Special Report, 2/15/12 via Nexis]
Fox Anchor Hopes High Gas Prices Will Be "Enough To Derail" Obama's Re-election. On the February 16 edition of Fox & Friends, guest-host Juliet Huddy asked if rising prices are "enough to derail [Obama's] return to the office." Fox News contributor Eric Bolling replied: "Well it better be. What else matters? How much we pay for a gallon of gas. How much we pay for a loaf of bread." [Fox News, Fox & Friends, 2/16/12]
Pat Caddell: Gas Prices Are "A Perfect Issue" For GOP. Fox News contributor Pat Caddell lamented that Republicans are unable to "mount a narrative that has a big idea to it," and said that the price of gasoline "is a perfect issue" for Republicans. [Fox News, Your World With Neil Cavuto, 2/15/12]
A.B. Stoddard: Rising Gas Prices "Will Be A Good Talking Point For Republicans." On the February 15 edition of Special Report, Fox News contributor A.B. Stoddard said: "I think the increase of gas prices since President Obama has been in office is high and it will be a good talking point for Republicans. However, I don't think that it is going to be a driving campaign issue if the economy continues in the direction that it's going." [Fox News, Special Report, 2/15/12 via Nexis]
Doug Schoen: Gas Prices Could Prevent Obama From "Benefitting From The Drop In The Unemployment Rate." On the February 16 edition of Varney & Co. Fox News contributor Doug Schoen said that Obama is "benefitting from the drop in the unemployment rate to 8.3%, and the growing perception in the polls that things are getting better and ultimately, with the Republican party divided, there needs to be some force outside the system to question that narrative for him to be hurt. Gas prices could be it." [Fox Business, Varney & Co., 2/16/12]
Fox News' Talking Points On Gas Prices Are Wholly Removed From the Facts
U.S. Oil Production Has Increased Over The Past Few Years -- And Prices Have Still Gone Up. From the 2012 Annual Energy Outlook by the Energy Information Administration:
Domestic crude oil production has increased over the past few years, reversing a decline that began in 1986. U.S. crude oil production increased from 5.1 million barrels per day in 2007 to 5.5 million barrels per day in 2010. Over the next 10 years, continued development of tight oil, in combination with the ongoing development of offshore resources in the Gulf of Mexico, pushes domestic crude oil production in the Reference case to 6.7 million barrels per day in 2020, a level not seen since 1994. Even with a projected decline after 2020, U.S. crude oil production remains above 6.1 million barrels per day through 2035.
EIA also provided the following chart, which shows the recent reversal of a 30-year trend in declining U.S. fuel production (orange line). Still, EIA projects that oil prices will continue to rise in coming decades.
[Energy Information Administration, 1/23/12]
Number Of Oil Rigs In Operation In The U.S. Now Highest On Record. From the Energy Information Administration:
[Energy Information Administration, accessed 2/16/12]
AP: "The Data Certainly Make It Harder For Republicans" To Back Up Their Claims About Obama's Energy Policies. From an Associated Press fact check:
From the presidential campaign trail to Congress, Republicans have been hammering Obama for locking up the nation's energy resources. GOP presidential frontrunner Mitt Romney, for one, accuses Obama of pursuing policies "that keep us from using our own energy."
But such complaints don't hold up. The U.S. produced more oil in 2010 than it has since 2003, and all forms of energy production have increased.
In speeches and his first campaign ad, Obama also points to the nation's reduced dependence on foreign oil. But the energy information agency says that the decline began in 2005 and comes from a variety of factors -- among them the recession, high gas prices that dampened driving and changes in efficiency and consumer behavior that pre-date the Obama administration.
Even if Obama's policies aren't the cause for these trends, the data certainly make it harder for Republicans - and the oil and gas industry - to substantiate their claim that his policies have dampened energy production. [Associated Press, 2/6/12]
EIA Director: Expanding Drilling In Federal Areas Is Not Expected To Have A Large Impact On Prices. From the March 2011 Congressional testimony of Richard Newell, Administrator of the Energy Information Administration:
In the short-term, oil markets react to many competing factors in a global context, and it is extremely difficult to disentangle the near-term impact of mid-to-long-term developments in the context of oil markets that see typical daily price movements in the range of 1-2 percent, and much higher fluctuations at times. Long term, we do not project additional volumes of oil that could flow from greater access to oil resources on Federal lands to have a large impact on prices given the globally integrated nature of the world oil market and the more significant long-term compared to short-term responsiveness of oil demand and supply to price movements. Given the increasing importance of OPEC supply in the global oil supply-demand balance, another key issue is how OPEC production would respond to any increase in non-OPEC supply, potentially offsetting any direct price effect. [Energy Information Administration, 3/17/11, emphasis added]
Even The American Petroleum Institute Doesn't Claim That Opening All Federal Areas To Drilling Would Lower Prices. CNNMoney.com reported:
[American Petroleum Institute's Rayola] Dougher said that if all federal land was open to oil drilling -- not just offshore but Alaska's wildlife refuge and all federal land in the West that isn't a national park -- the country could produce an extra 2.8 million barrels of oil a day by 2025.
Being that she represents the oil industry, Dougher gave the idea a hard sell.
She said it would create another 500,000 jobs, add $150 billion each year to government coffers and shave a significant chunk off the country's foreign trade deficit.
But one argument she didn't make was lower prices.
"How would that play out in the market, what impact would that have on prices," she said, "we just don't know." [CNNMoney.com, 4/25/11]
Former Bush Economic Advisor: "You Can't Change The Oil Price Very Much With The U.S. Exploration." On the April 26, 2011 edition of MSNBC's Hardball with Chris Matthews, Doug Holtz-Eakin, who served on George W. Bush's Council of Economic Advisors said, "you can`t change the oil price very much with the U.S. exploration":
MATTHEWS: Well, let me ask you this. If we were raping this continent, if we were drilling offshore everywhere, deep drilling, risking everything -- just like we did, down in -- with BP, if we were taking apart the ANWR and drilling everywhere, would the price of gas be much different? In the world market, since this all fungible, if we were doing all that here in the United States, would the price of gas be much different? I`m just asking that question.
HOLTZ-EAKIN: No, he can`t change the price very much. So, I mean, he`s trying to do things --
MATTHEWS: But the conservatives are saying all you have to do is pump like -- all you got to do is drill like -- Pawlenty said, just got at this, dig, dig, and dig, drill, drill, and drill, and somehow the price of the gas is going to down on the world market. You`re saying that`s not true?
HOLTZ-EAKIN: Well, I mean, you can`t change the oil price very much with the U.S. exploration. It certainly can`t change it quickly. We know that. And I think Republicans have been honest about that.
You also aren`t going to change the price of gasoline attacking oil companies. You know, the president is saying, oh, we got to get rid of $4 billion subsidies. That`s 3 cents a gallon, OK? That`s not a solution.
MATTHEWS: Would you get rid of them?
HOLTZ-EAKIN: Yes, but it`s not going to change gas prices that way. [MSNBC, Hardball, 4/26/11, accessed via Nexis]
Energy Analyst: "Americans Tend To Exaggerate The Price Effects Of Fluctuations In Domestic Production." According to Joseph Dukert, independent energy analyst and former president of the U.S. Association for Energy Economics said via email that "Americans tend to exaggerate the price effects of fluctuations in domestic production in relation to the total amount of oil in global trade. On the larger stage, the perception of geopolitical risks is more important." [Email to Media Matters, 4/21/11]
Oil Expert: "The Oil Industry Has Been Able To Convince People There Is A Connection Between U.S. Drilling And Prices." From a January 2011 Greenwire article:
If gas prices keep increasing, Republicans probably will make a push on increased fossil fuel production, said Ken Green, resident scholar with the American Enterprise Institute think tank.
But experts disagreed about how much impact additional drilling could have. 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. [Greenwire via NYTimes.com, 1/4/11]
Oil Analyst: "Drill Drill Drill Thing" Is "A Simplistic Way Of Looking For A Solution That Doesn't Exist." From an April 2011 CNNMoney article:
The problem is this: While increased oil and gas drilling in the United States may create good-paying jobs, reduce reliance on foreign oil and lower the trade deficit, it will have hardly any impact on gas and oil prices.
That's because the amount of extra oil that could be produced from more drilling in this country is tiny compared to what the world consumes.
Plus, any extra oil the country did produce would likely be quickly offset by a cut in OPEC production.
"This drill drill drill thing is tired," said Tom Kloza, chief oil analyst at the Oil Price Information Service, which calculates gas prices for the motorist organization AAA. "It's a simplistic way of looking for a solution that doesn't exist." [CNNMoney.com, 4/25/11]
- Posted In
- Economy, Environment & Science, Drilling, Energy
- Fox News Channel, The Drudge Report, CNSNews.com
- Stephen F. Hayes, Steve Doocy, Neil Cavuto, Pat Caddell, A.B. Stoddard, Gretchen Carlson, Eric Bolling, Douglas Schoen, Doug McKelway
- The O'Reilly Factor, FOX & Friends, Your World w/ Neil Cavuto, The Five
- Drop Fox