Media Misinformation Promotes Dysfunctional Energy Policy
Over the years I have had some enlightening interactions with the news media. I have gradually developed the view that many in the media believe their role is more to entertain than to inform. My naive younger self believed that the media generally presents objective information, which is important to ensure that a well-informed general public makes rational choices. A public that is well-informed about energy issues can elect leaders who legislate sound energy policy. A public that is consistently misinformed on energy issues will elect leaders who legislate the kind of policies that have led us to where we are today.
Here I will share three incidents in which the news media put sensationalism ahead of objective journalism. In cases like these it would appear that the media is attempting to entertain rather than inform. The first incident took place about six years ago. I was contacted by a journalist from one of the big East Coast newspapers about a story they were doing over whether refiners purposely withhold gasoline supplies in the spring to drive up prices. I exchanged a number of e-mails with the writer, and finally spoke with him on the phone for an hour. I explained both sides; going into detail of why people think this is true (the spring correlation between low inventories and higher prices) and then I explained to him about the transition from winter to summer gasoline and how that plays a role. (See Refining 101: Winter Gasoline).
The ‘No Notification’ Red Flag
I have since learned that when an author promises to notify you when a story publishes — and then fails to do so — it is probably because they are feeling a bit sheepish over the final version of the article. I suspect in many cases their intentions were to write an objective, informative article, but then an editor took a look and said “We are in the business of selling papers. Dry facts don’t sell papers. Now go back and write something that titillates. That sells papers.”
That was exactly what happened in this case. Instead of presenting the facts objectively, the writer laid out half the story exactly as I had framed it. He brought up points that I had brought up to him — but only insofar as it supported a specific narrative. He pointed out — because I had shown him where to find the information — that each spring refinery utilization and gasoline inventories decline, and fuel prices rise. Instead of then taking the opportunity to fill in the information gap of why that is, this became the core of his evidence that oil companies are indeed ripping people off.
Not only was I not quoted after spending a great deal of time helping him with his story (again, many of his points came verbatim from our conversation), I only received a passing reference as an anonymous person with a minority viewpoint: “Some sources believe that market forces explain these changes” — without then putting any details behind that viewpoint. By withholding key facts, a very slanted story was produced; one that would have the tendency to keep the public angry over high gas prices while missing an opportunity to explain some of the factors behind the price increases. The newspaper made the decision to titillate rather than educate.
Nate Hagens on ExxonMobil’s Profits
My friend Nate Hagens — previously a lead editor at The Oil Drum — had a similar recent experience. Nate is no cheerleader for the oil industry. He has spent a lot of his energy educating people on the threat posed by dependence on oil. Following the most recent quarter of ExxonMobil’s profits, Nate was contacted about writing an editorial for a major newspaper on that topic. But instead of going on a rant, Nate provided a well-written article that explained why ExxonMobil is so profitable. The problem was that it wasn’t sensationalistic. It didn’t scream righteous indignation at ExxonMobil or call for a government takeover of the company. He explained that their profit margins were not unusually high. He explained how small a player ExxonMobil really is the global oil market, and that their profits were an indicator that we greatly demand their product.
The editor rejected the article: “This isn’t what I am looking for.” If you want to read the article that was rejected, you can find it here: Complaining about mosquito bites while a crocodile bites our leg. It would have been one of the most informative articles that this newspaper had published about energy, but would have failed to stir up a public frenzy over ExxonMobil’s profits — clearly what the newspaper was after.
Hot Air About ‘Hot Gas’
And that brings me to the latest exchange I had with a reporter, and the reason for writing this article. I was just so appalled by the article he wrote, I decided to write this article highlighting how some in the media operate — and why that helps keep our collective energy IQ at such a low level. I believe that our low energy IQ is precisely why our energy policy is so dysfunctional, and I believe the media bears direct responsibility.
A reporter from another East Coast newspaper (all three of these situations described involved newspapers in New York or D.C.) left a voice mail with Consumer Energy Report and also reached out to me on Twitter (@rrapier) about a story he was working on. We finally connected, and he explained that he was investigating some of the “hot gas lawsuits” that are working their way through the courts. Since I had written about this issue before (See Hot Gas Lawsuit in Utah, Hot Gas Issue Heating Up, Hot Gas is a Bunch of Hot Air, A Lost Litigation Opportunity, and The Lawyers Win on Hot Gas) — the reporter contacted me for my insight into the story.
I won’t go through the entire history on this; if you are interested you can read through some of the links. In a nutshell, a gallon of gasoline is typically sold based on a standard temperature of 60 degrees F. If the temperature of the gasoline is higher when you pump it into your car, the gallon weighs less, and vice versa. The premise is that consumers are getting less than they pay for, and this amounts to unfair enrichment by oil companies.
There is a consumer organization based in California that is a front for lawyers who make their living suing people. They have created an organization for the sole purpose of stirring up public anger against oil companies. The idea is to get people angry enough to sue, and then these lawyers might get a piece of that action. They decided that this hot gas issue just might be worth a class action lawsuit, so they have beaten the drum on this issue for years. In support of that, they issue frequent press releases in which they quote themselves as experts. There isn’t a technically competent person on their staff, which consists of liberal arts majors — journalism, political science, sociology, and several lawyers — but they do have a Litigation Director.
Despite their transparent motives, the question should be answered of whether their argument is valid. Are consumers being cheated? This is where we run into a bit of a problem. Many attorneys have made a nice living on poor science. Lawyers made millions suing on behalf of women who had gotten silicone breast implants and then claimed that they were causing autoimmune disorders. Ironically, it was Ralph Nader, another “consumer advocate”, who first sounded the warning bells in the 1980’s by claiming that silicone breast implants were causing cancer. Lawyers lined up, put ads in major newspapers across the country inviting women to sue, and they enriched themselves — unjustly as it turned out.
During the 1990’s, even as plaintiffs and their attorneys collected millions of dollars from the lawsuits, numerous studies found no increased risk of autoimmune disease in women with silicone implants. The lawsuits continued to come, but the plaintiffs started to lose them in greater numbers as the science failed to support their case. More studies came out showing no connection between the implants and the autoimmune diseases. Finally in 2006 the Food and Drug Administration quietly ended the moratorium on the implants. But the lawyers got to keep their unjust enrichment.
There are a great many parallels between that story and the hot gas story. The bottom line is that plaintiffs are pushing bad science and/or naive economic thinking, and lawyers are encouraging that in the hopes of cashing in. The result will be higher costs for everyone. The premise of the hot gas issue is that consumers are being short-changed; that is they are receiving a smaller quantity of gasoline when their gas is “hot.” Let’s assume for the sake of argument that this is true; consumers are being shortchanged. Let’s assume that adding temperature-correcting equipment means more gasoline for consumers. Now who — outside of these law firms masquerading as “consumer advocates” — thinks that this won’t cause gas prices to increase?
Therein lies the fundamental flaw in the hot gas issue. If retailers have to install new equipment — and that ultimately translates into you the consumer getting more gasoline per gallon — you are going to pay for both the new equipment and the incremental gasoline. Only the incredibly naive can believe that retailers will just eat that money. So lawyers are once more engaged in a practice that will drive up costs for everyone, and the primary beneficiaries will be the lawyers themselves and the makers of the temperature compensation equipment.
I walked the reporter through the science and the economics of the issue. In fact, he told me that he learned during his investigation that Hawaii does have temperature compensation equipment — but they also consistently have the highest gas prices in the nation. (As I explained to him, that isn’t the main reason why gas prices in Hawaii are so high, but it undoubtedly adds to the cost of doing business).
I told him that he didn’t have to take my word for any of this, since the California Energy Commission had concluded exactly the same thing when they looked at the issue:
The California Energy Commission says forcing retailers to install temperature-compensation devices on fuel pumps would drive up the price.
“If retail station owners and operators continue (are) to grow and remain profitable, then retail station owners will most likely raise their fuel prices to compensate for selling fewer ‘gallons,’” commissioners wrote in the report.
“If this is the case, then expected benefits for retail motorists will be essentially zero.”
The journalist said that he would let me know when the story published, but he expected it to be only a few days. A week later, I began to be suspicious, and so I started watching for the article. When it was finally published, it turned out to be incredibly biased. The article read as if it had been written by the consumer organization that has been pushing the lawsuits. Their claims went unchallenged. The journalist mentioned Hawaii’s temperature compensation equipment as if this had resolved the issue, but conveniently left out the bit about Hawaii’s high gas prices. More importantly, he left out the decision and rationale of the California Energy Commission in ruling against the installation of the temperature compensation equipment.
The article left out the fact that fewer than 10% of gas stations are owned or operated by major oil companies, once more leaving in place the implication that people are being cheated by Big Oil. (And that is bound to make juries angry). The journalist calculated gas losses based on a 90 degree gasoline temperature — far higher than the average temperature at which gas is delivered. (In fact, the National Institute of Standards and Technology looked into this and found the average temperature of fuel across the country was 64.7 degrees F. Therefore, anyone basing calculations off of 90 degrees is guilty of misleading people at a minimum).
The article read not as an objective piece of journalism, but rather as a hatchet job from someone with an agenda. Objective journalists don’t omit important facts. They don’t authoritatively quote people who are being paid to promote a position. They don’t base the mathematics of their position on extremes and imply that the extremes are actually fairly normal. They don’t characterize 75 degree temperatures as “toasty.” (It would be just as biased — but actually closer to the truth — to characterize 75 degrees as hypothermia-inducing).
Some might argue that perhaps it is my own lack of objectivity leading me to conclude that the article is biased. To that I would say that one shouldn’t confuse having an opinion with lack of objectivity. I never went to journalism school where I might expect that objective writing is taught, but to me that seems intuitively the best way to argue a point: State your opinion without resorting to misleading and distorted arguments, and cover the other side of the argument in the same way. And it will always be my goal as a writer to argue as factually and objectively as I can — something this journalist failed to do.
It is in fact my opinion that hot gas is a non-issue for consumers (and it was also my opinion that lawyers were pushing bad science on the silicone breast implant issue). It is my opinion that there will be zero savings for consumers if retailers are required to install temperature compensation equipment. But I can present that case objectively, and without resorting to straw man arguments. Were I to argue as this reporter did, I could point to Hawaii as proof that temperature compensation equipment will raise the cost of your gasoline. I would omit the major reasons that Hawaii’s gas prices are high, just as the reporter omitted key facts from his article.
I don’t personally care if temperature compensation equipment is ultimately required on gasoline pumps. That isn’t the issue that annoys me. What bothers me is that the issue is promoting misinformation, and is being pursued due to extreme naivety and greedy lawyers looking to extort for their “services.” I just wish we could have a system in place that would reward the lawyers only based on the actual demonstrated savings, but then would financially penalize them if the “savings” turn out to be higher costs.
In cases like this, the media reminds me of politics. Many politicians lie, pander, and promote misinformation to get elected. I have come to the conclusion that many media outlets do the same to sell papers. The casualty in both cases is a citizenry whose views on energy are perpetually distorted, and that leads to a perpetually dysfunctional energy policy.
Photo by bizior.
Robert Rapier is a chemical engineer with 20 years of international engineering experience in the energy business. He holds several patents related to his work. Robert is the author of Power Plays: Energy Options in the Age of Peak Oil. He is also the author of the R-Squared Energy Column and is Chief Investment Strategist for Investing Daily’s Energy Strategist service. Robert has appeared ...
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