The Moment of Truth — May 26, 2007

Big Oil Has Us Buggy-Whipped

In a sane society, someone at National Public Radio would ask reporter Adam Davidson why he is so adamantly antagonistic to breaking up the major oil companies. One can understand the logic underlying the Democratic Congress of the United States’ contention it might be a GOOD idea. More companies means more competition, that’s the theory, and that’s what happened when they broke the long distance telephone service monopoly. And in Adam Davidson’s report on Morning Edition of May 25, 2007, the Democrats who favor the break-up said pretty much just that.

I want to assure the reader than I do not think breaking up the major oil companies will lower prices. I don’t think anything short of a drastic global power shift on the order of the collapse of the British Empire will lead to any change in the whimsical fluctuations in the price of the lifeblood of nations. Adam Davidson’s reporting on the topic, though, was insanely biased–the kind of bias one might expect from someone who wasn’t actually a journalist, but some kind of libertarian hack from the Cato Institute.

The Federal Trade Commission is against breaking up the oil companies, just like Adam Davidson. They’re partisan, though–although Davidson doesn’t say they are. He makes it clear the Democrats are. But anyone who knows the FTC is an arm of the Bush Administration would have a clue that they have a tendency to agree with the oil industry.

Adam Davidson did present an independent voice in his little piece of reporting. An expert. An independent expert. An independent energy expert. Here’s what the independent energy expert said: breaking up the major oil companies is a great idea if you want “everyone to ride bicycles and go back to the days of the horse and buggy.”

See? The independent experts have spoken! Clearly, few agree with the Democrats.

Adam Davidson, why do you have a job? If you want to know why I’m lambasting you, it’s because of that horse-and-buggy line. This is the response you deserve for making that quote the independent rebuttal to the trust-busting argument. You brought it on yourself, Davidson.

The independent energy expert Davidson used has spoken on NPR before–for example on “Talk of the Nation,” a call-in show hosted by Neil Conan, an NPR reporter whose rightwing slant was most evident immediately after the 1991 U.S. invasion of Iraq. He’s the kind of newsman who would volunteer on the air to help the giant ants who are coming to invade Earth. Not to say he isn’t capable of choosing a non-partisan energy expert to be on his show, but neither is his bias beside the point in examining the bias of Adam Davidson’s story. The bias of Adam Davidson’s story being a bias toward incompetent journalism. Horse and buggy. Jesus!

The independent energy expert in question is a man named Phil Verleger. Verleger worked in the Carter Administration, which means the last time he did anything important was around thirty years ago. It also might be why he so often talks about what happened with oil in the 1970s instead of what’s happening right now. In the years since leaving public service he’s been a consultant of one kind or another. He bills himself as an “independent petroleum economist.” An economist without a steady job is a consultant, and a consultant is just a lifestyle coach for companies with weak-minded CEOs. Oh, and consultants also contribute to news stories.

Verleger got big notice for predicting $70/barrel oil back in 2004. He’s been coasting on that ever since. For some reason it just sounded crazy to people, but he had the guts to say it. The last crazy thing he had the guts to say, before the horse and buggy thing that is, was that oil would return to $15/barrel eventually. I assume he meant after Armageddon, when most vehicles will be running on brimstone.

The story about how stupid the Democrats are for suggesting breaking up the oil companies was introduced on NPR like this:

“Democrats in Congress are proposing legislation to break up the big oil companies, and maybe… mmmaybe, it will lead to lower prices at the pump, but few experts agree with them.”

Whoever wrote that intro should be fired along with Davidson. One expert is not many, and quoting one expert does not support the claim that few agree, and “it’s a great idea if you want to go back to the days of the horse and buggy” is not substantive disagreement, it’s just an insult to the opposing idea. Why didn’t the introduction tell like it is? Like this: “Democrats suggest breaking up the big oil companies, but reporter Adam Davidson found one expert who thinks that’s the stupidest piece of horseshit he’s ever heard.”

Davidson himself proceeds to mock the idea of trust-busting, insinuating it’s a grandstanding technique by Senator Charles Schumer and the other Democrats on the Senate-House energy committee, who are just trying to act like they stand with the common man. You can almost hear Davidson say, “Remember John Kerry windsurfing? What an elitist!”

Then Davidson reminds us that the biggest oil company merger happened under the Clinton Administration, not under Bush, as if that somehow bears on the validity of trust-busting as a strategy to lower gasoline prices.

To be fair–though I don’t know why I should bother–Davidson did say Verleger thinks big oil companies are more efficient and more able to invest for the long term. But Verleger as filtered through Davidson gives no reasonable evidence whatsoever to back up his statements. He fails to explain why, for example, if they’re able to invest in the long term, they haven’t built any new refineries since Hurricane Katrina. You’d think a reporter who could dig up the fact that Clinton oversaw the biggest oil merger could dig up that fact as well.

In Davidson’s story, the FTC’s chief economist Michael Salinger says the only good policy is one to either increase supply or curb demand. It’s supply and demand, stupid! Supply and demand! Why do we keep having to teach the Democrats about supply and demand!

One way to increase supply, if I may venture? More refineries.

Davidson belittles the Democrats’ notion of trust-busting as a way to greater competition, saying, “Somehow” this is will “lead to more refineries” being built. Well, I’ll tell you, Davidson, leaving the oil companies as they are is certainly not increasing the number of refineries. How would you suggest we get them to build more refineries, Adam, you smarmy bastard? Can we make a law forcing them to build more refineries? Would you and your horse-and-buggy expert support that?

Why do we have to keep teaching free-marketeers about competition?

I guess we should just sit on our hands and wait for things to improve. Maybe Phil Verleger will magically make more oil appear by doing a crazy, nutty, naked cartwheel.

But this is all beside the point. Congress is calling the Oil Companies thieves, and Davidson seems to bridle at that. So Davidson focuses on beating up the trust-busting suggestion, rather than reporting on the legislation that the House actually passed, a law making price-gouging of oil a federal crime. The law’s suggestion being that supply and demand don’t really have much to do with the price of gasoline. And I think the House is right. In fact, NPR’s flagship news show, the smugly titled “All Things Considered,” ran several stories the year following Hurricane Katrina in which economists other than Verleger said it’s often difficult to tell why gasoline prices go up and down. And anyone who pays attention to the news will agree that it’s difficult to link increased gasoline prices with anything in the real world other than events that give oil companies an excuse to raise prices, or popular clamoring and criticism that shames them temporarily into lowering them.

Adam Davidson’s story on the House-Senate Committee’s discussion about breaking up the five major oil companies is nothing more than a hit piece against the notion of attacking industry dishonesty rather than just accepting the excuses the oil companies have used to jack up the price at the pump. They’ve used the war to do it. They’ve used Katrina to do it. They’ve even used economic forecasts to do it–a spate of hand-wringing pieces about gas prices rising this spring was followed immediately by higher prices at the pump. Nothing, absolutely nothing, had happened to raise the price of gas. Oil prices per barrel, in fact, had gone down when the stories I’m talking about came out. In fact, there were other stories wondering why oil per barrel was getting cheaper but gasoline was getting more expensive, even on commercial CBS radio.

Whether the oil companies are artificially curbing supply by under-refining, or simply upping the price by caprice, is a matter of speculation. But the fact that the oil companies are raking in huge profits is not in dispute. And it’s an indication that they’re not doing anything by accident, nor in response to forces beyond their control. You don’t fall to the top of a mountain. Whether or not trust-busting is the answer, there is absolutely nothing to be gained by leaving the oil companies as they are.

And I will guarantee you something. If somehow the industry and its sycophantic organs like Davidson and Verleger and the Bush Administration fail to prevent the breakup of the big five oil companies, I GUARANTEE you we will not all be riding bicycles and going back to the horse and buggy. I PROMISE you that will not happen. I will bet any amount of money that is not what will happen.

It’s the threats that matter, though. It’s all about terrorizing the populace. No matter what you do to the oil companies, they will use it as an excuse to punish you with higher gas prices. Move to ethanol? That’s going to raise the price of gasoline at the pump! Make them build more refineries? That’s going to cost you! Windfall profits tax–how about that, Verleger, Mr. Carter Administration energy economist? Remember that? Taxing those accidental profits the winds just blew into the oil companies’ pockets? What happened again? Somehow, even though the embargo was over, the oil companies ran out of “energy.” Where’d it go? Oh, it just went away! It’ll come back when you raise the speed limit again and give us a bunch of tax breaks.

And don’t give me that crap about the Iranian revolution, Verleger. Domestic oil production increased like crazy in the late 70s, just near the end of your usefulness to society. There was no oil shortage. Shortage? I’ll give you a shortage–a shortage of me not punching you in the mouth!

I would like to add it is in no way my intent to threaten Phil Verleger with bodily harm. I was merely going for a cheap laugh. And I did appreciate it.

The worst thing of all is the way war, corporate control of resources, and crappy journalism work in an almost serendipitous synergy to hold working and poor people hostage. Don’t ask for higher wages! That’s gonna cost you. Don’t complain about dwindling benefits, that’ll cost you. Don’t demand more mass transit, that’ll cost you. Don’t ask corporations making record profits to help pay a little of the common costs of revivifying our deteriorating society–just thinking that way makes prices go up. And even if you don’t complain it’ll cost you–prices will keep rising way ahead of your ability to earn–that’s the owning class sucking your power away, making sure you feel more and more powerless and afraid of rocking the boat. It’s always going to cost the working and the poor–but it never seems to cost the people holding us hostage, it never seems to cost them anything. Why is that?

Now, there’s a story you might like to hear someone on NPR tackle one day. Don’t hold your breath, though. Unless you’re standing next to Adam Davidson. Because he stinks.

And by that I do not mean to disparage the hygiene of journalists in general or Adam Davidson in particular. I mean to disparage his crappy journalism. Don’t be so sensitive!

This has been the Moment of Truth. Good day!