Oil speculators are staying busy these days, and they’re not just on the trading floor. They’re active at all three broadcast news networks, helping to hype oil prices even higher than they are.
“Four dollars a gallon may be coming down the pike,” said CBS’s Jim Acosta on the July 15 “Evening News.” “If you think $3 gas is bad, what about 4?” said NBC’s Anne Thompson the day before on the “NBC Nightly News.”
And as Thompson said on that broadcast,” “All this on fear, without a hurricane or other major event that really squeezes the world’s oil supply.”
Price speculation has been all the rage on network news, based on fighting in the Middle East. In the two weeks between July 3 and July 17, $100/barrel oil was mentioned six times on the networks and $4/gallon gas was mentioned 13 times. That averages out to almost once a day.
Last year saw its own round of $4 and $5 gas price predictions surrounding Hurricane Katrina – but the national average didn’t go higher than $3.06.
So how grounded are the stories this time?
Not very, said Tom Kloza, an often-quoted expert and chief oil analyst with the Oil Price Information Service. “There’s this attraction to the one who has the most outrageous and hyperbolic claim,” he said in an interview with the Business & Media Institute. Apparently, the media don’t seem to think that dialed-down stories will appeal to audiences, so reporters find spokesmen who project wildly soaring prices, he said.
Expert Exaggerations
“I probably talk to about 500 reporters a year,” Kloza said. After talking about many points and market explanations in an interview, he said, “it happens quite often” that only his quote mentioning a high price for a barrel of oil will be used by the reporter.
“Most of the coverage is extremely shallow – ‘What can motorists expect?’ ‘Who’s gouging?’” Kloza said. “There’s a lot of silliness. Every day that the market moves up, it’s attributed to some specific cause.”
Reporters also choose talking heads who might have a financial stake in oil, Kloza said, and could benefit from changes in the market, including rising prices. His own firm is prohibited from holding a position in oil futures.
And oil traders have been appearing on the networks. On CBS’s “Sunday Morning” July 16, Anthony Mason had two guests who were introduced as traders, Phil Flynn of Alaron Futures and Options, and independent trader Eric Bolling. “So how high can we go, we just don’t know,” Flynn said. Bolling added, “If anything else happens here, you could see a $100 barrel.”
Mason rejoined: “One hundred dollars a barrel. If oil goes that high, say goodbye to the $3 gas we’re still getting used to. That would push the price at the pump well over $4 a gallon.”
On the July 13 “CBS Evening News,” Mason had had another report with Flynn and Bolling. That evening, Bolling said, “There is no question that you could see $100 a barrel for oil.” Mason added: “That would push gas well over $4 a gallon.”
CBS was at it again on the July 12 “Early Show,” featuring energy analyst John Kilduff with Fimat USA. BusinessWeek dubbed Fimat “the Futures King” in 2002. Kilduff told CBS’s Harry Smith, “And the first hurricane of any significance that tracks into the Gulf of Mexico, 3.50, $4 gasoline.”
Predictions like that abounded after Hurricanes Katrina and Rita last year, although the national average for gas didn’t approach the $4 level. Back in September 2005, NBC’s Tim Russert declared that “gasoline is now heading to $4 a gallon.” Likewise, CBS’s Michelle Miller warned, “Analysts fear that in such an active storm season, after the one-two punch of Katrina and Rita, a third blow could bring those $4 or $5 a gallon prices into play, and hurricane season isn’t over until the end of November.”
Partly because of the active futures market, the price of crude oil is very transparent, Kloza said. “That transparency comes with a price, and it becomes a funhouse mirror,” he said, accentuating prices to the extreme – for now, to the high end.
But We Must Blame Someone
“There’s the penchant to – rather than fix the problem, fix some blame.” Kloza said, adding, “I’m not an apologist for the oil companies.”
Fighting in the Middle East has drawn reporters’ focus away from the oil companies lately, which has provided acknowledgement of some factors that go into the price of oil and gas.
Still, ABC’s Dean Reynolds was flabbergasted by Americans’ fuel consumption on the July 10 “World News Tonight”: “Well, Americans have been using up fuel like there is no tomorrow almost as if they’re in a state of denial about the price of gasoline …” Later, he said that “many are looking for someone to blame.”
A motorist then said, “I don’t understand why they keep going up and they don’t – they’re not starting to go back down.” Reynolds answered, “You could blame the markets. They set the price of oil based on what the future holds.”
That actually might be news to viewers who have watched the networks repeatedly stoking the fires of blame against the oil companies, bringing consumers stories of profits “that will get you a little outraged” and that “have America fuming.” (For more stories about media coverage of oil and the oil companies, visit our Energy Archive.) With second-quarter earnings due out next week, the Business & Media Institute will be watching the networks’ coverage for a shift back to Big Oil.
Meanwhile, in Congress …
While concern about Middle Eastern oil and gas prices abounds, the media have focused far less on efforts to increase domestic oil production. When the Senate made a move in that direction, the “CBS Evening News” was the only evening news show that covered the July 12 story.
Anchor Bob Schieffer announced: “With gasoline prices rising by the day now, Americans have been pressuring Congress to do something about it. Well today Congress did, something unexpected.”
Reporter Sharyl Attkisson explained: “Bob, with gas hovering about three bucks a gallon, this may be the biggest thing your Congress does all year in response. Today, the Senate announced a surprise deal to open up new areas in the Gulf of Mexico to drilling for oil and natural gas. The area we're talking about holds more than a billion barrels of crude oil and more than five trillion cubic feet of natural gas.”
Researcher Rachel Waters contributed to this report.