Energy is something of a backwater beat, elbowing its way to the front pages of general interest newspapers (or at least of their business sections) only when certain events take place. Gasoline prices increase precipitously. The Organization of the Petroleum Exporting Countries (OPEC) meets. The lights go out in California and the Northeast. The battle over oil and gas leasing in Alaska’s Arctic National Wildlife Refuge (ANWR) heats up in Congress.
What tends to get overlooked—or buried on back inside pages—are the agencies and administration’s handling of often arcane regulations, obscure policy initiatives, and the slow, relentless grinding of bureaucratic and legislative machinery. Yet the ultimate impact of these decisions on energy’s use and costs—both monetary and environmental—can be dramatic.
Collecting Every Bit of Energy News
Platts, a McGraw-Hill company, is the world’s largest energy news and price reporting service. Our Washington bureau covers both ends of the energy spectrum—the arcana and the big issues. This is the kind of coverage our audience, which is comprised largely of industry professionals and government policymakers, demands and requires. The news and information we report hourly, daily and weekly informs their decisions. No item seems too insignificant for us to report. Putting it another away, any bit of news about energy can be put to use.
Our newsletters and real-time news services cover specific industry sectors—oil, natural gas, electricity, nuclear and coal. And we pay a great deal of attention to the minutiae of each of these sectors, making certain to report on Federal Register notices, industry filings with regulatory agencies, and the flood of reports and statistics from government offices. Of course, we cover congressional hearings, House and Senate floor debates, conferences and press briefings.
With this intensive coverage, we get to stories early. We start to track a regulation when it is a gleam in a bureaucrat’s eye or follow an amendment when it first gets buried in a piece of legislation. We follow these stories well before they catch the attention of the general press. Having this kind of focus enables our reporters to learn the issues intimately, and they can then share expertise across the bureau because so many energy issues overlap industry sectors. And our reporters have the background and knowledge to frame a story when it emerges as big news and provide context and insight that cannot be matched by a reporter who parachutes in when an energy story gets hot and walks away when it cools.
Major news organizations, for example, covered the sharp increase in gasoline prices last summer and the record high prices earlier this year. Many of us dutifully trudged up to Capitol Hill to listen as politicians denounced rapacious oil companies for price gouging and demanded federal investigations, as well as pointed fingers at members of the other party for not doing anything to prevent the price increases. However, notwithstanding the culpability of the oil industry (and previous federal and state investigations have failed to find any illegal activity), a number of factors and events in the preceding weeks, months and even years—many of which received only scant coverage in the mainstream press—had set the stage for price spikes.
This story actually had its origins on Capitol Hill, where Congressional action concerning energy, or its first cousin, the environment, can and does affect gasoline prices. What led, in part, to the rise in gasoline prices involved the additional cost of producing a complex slate of less polluting gasolines to meet federal and state environmental requirements. Away from Capitol Hill, there had also been supply disruptions resulting from pipeline or refinery accidents, which occur in the course of running complex industrial facilities. Add to that the fact that refinery closures and industry consolidation had halved the number of U.S. refineries and the remaining refiners had reduced inventories to historically low levels, which is a reasonable business practice because it saves money, but can result in tighter supplies and higher prices. There is also an ever-growing U.S. demand for gasoline needed to fuel a vehicle fleet increasingly dominated by gas-guzzling sport-utility vehicles and minivans. Finally, there are OPEC production cuts to consider and the resulting increase in crude prices.
By knowing these factors—and interweaving their impact—it was not a surprise this spring when gasoline prices spiked well over two dollars per gallon in parts of the country. When adjusted for inflation, this price is still below prices of 20 years ago. But that fact hardly registers with irate motorists who don’t pay with 1980 dollars.
Connecting With the Mainstream Press
It doesn’t require an army of investigators armed with subpoenas to learn these things. But neither does this kind of information have much day-to-day news value for the mainstream press. But this news and information gathering is the stock-in-trade for Platts’s oil reporters who have a different role and approach their jobs differently than do mainstream reporters. As a reader of mainstream energy news, I don’t expect each newspaper article about gasoline prices to include a primer on oil markets. But enough information should be conveyed over time to give the attentive reader at least a basic understanding of the web of issues.
Because energy issues affect so many critical areas of our nation’s well-being and our daily lives—the economy, environment, health, national security, and even whether and where the United States chooses to go to war—superficial or ill-informed stories are inexcusable. This observation is not intended as a sweeping indictment of press energy coverage. I see some very good energy reporting from the mainstream press and then I see some stories that simply don’t measure up.
The comprehensive energy bill, pending in Congress, has provided ample opportunity for both kinds of stories to surface. On balance, the coverage makes me wonder whether a lot of Americans can rely on their usual sources of news to learn what is actually in this bill, why it’s in the bill, and how passage of it will affect them. What follows is a selective summary of information members of the mainstream press should provide about its more important oil-related provisions:
- Gasoline prices: A number of politicians contend that this year’s record-high gasoline prices underscore the need to pass the energy bill. In fact, nothing in the legislation will affect current gasoline prices.
- Energy or farm policy?: The renewable fuel in this bill will be ethanol, because little else is or will be available. Ethanol is an oxygenate, which when mixed with gasoline provides a cleaner burning fuel. Refiners can make clean burning fuels without using an oxygenate. However, the renewable fuel’s mandate means a guaranteed market for ethanol producers and farmers (most of the ethanol will be produced from corn), and the provision is in the bill at the insistence of farm-state members of Congress.
- MTBE vs. ethanol: Driven by the agricultural lobby (again), Congress mandated the use of an oxygenate in reformulated gasoline in 1990 with the expectation that corn-based ethanol would be the oxygenate of choice. Instead, refiners generally chose to use methyl tertiary butyl ether (MTBE) that was more widely available, easier to handle, and cheaper. However, as a result of gasoline leaks and spills, MTBE, which smells like turpentine, contaminated drinking water in communities across the country. Cleanup costs could run to hundreds of millions of dollars. The House bill will exempt MTBE producers from defective product liability lawsuits. Not surprisingly, both House and Senate bills will also exempt ethanol producers from any future liability for environmental damage.
- The dream of energy independence: The House version of the bill contains a provision authorizing oil and gas leasing in a portion of the ANWR. Advocates of ANWR leasing talk of a need to free the United States from dependence on oil imports by developing domestic resources. But it will take at least 10 years to develop ANWR and to begin moving its oil to market, if oil is found. When fully developed, and if the refuge contains as much oil as some studies estimate, ANWR would provide less than two percent of U.S. consumption. There is little in the bill to lessen U.S. oil demand, which makes talk of energy independence, or even significantly reducing oil imports, a pipedream.
These oil-related issues are just some of the complex items contained in this huge stalled energy bill. With each sector of energy, there are numerous topics whose coverage need to be strengthened and made more clear if Americans are going to be able to understand—and care about—what this bill contains and how passage of these new policies are going to affect them and all of us. When these, and a host of other energy-related issues, are not well covered by the press, the public—and its future—is being poorly served.
Gerald Karey is Washington bureau chief for the daily newsletter, Platts Oilgram News, and its real-time news service, Platts Global Alert, and reports on the oil industry and issues related to it. Before joining McGraw-Hill, which publishes Platts, he worked for the Asbury Park (N.J.) Press and The Newark Star-Ledger.