Thursday, July 19, 2007

Big Oil, Bigger Lies

Okay, here goes. For quite a few years I have studied the oil market, mostly as a professional journalist, but also out of basic curiosity. I'm old enough to remember when you could get a gallon of regular for just 75 cents. I am sure it was leaded gas, but no matter. The process was the same: oil was imported, refined into gasoline and distributed at gas stations, excuse me, "service stations," where you got your windshield washed and your tires checked as part of your purchase. And maybe for few cents more, you could buy drinking glasses or a picnic cooler. The point is, you got a lot for just 75 cents. Now we are paying about three bucks a gallon and we have to do the rest on our own (unless you live in New Jersey or Oregon).

I check the business section daily for the big papers and watch to see how the industry spins the fact that, despite strong inventories, and no real worldwide oil shortage, we still pay inflated prices for gasoline. I am sure some analysts are right that we face a "future" shortage, but somehow the idea of a potential problem always rules what we currently have to pay. Add to that the myriad complaints of political unrest in the oil-producing countries, the accidents and shutdowns at domestic refineries, and the pervasive intrusion of greedy (yes, greedy) and deep-pocketed speculators in the futures market and we have the perfect storm for a continued and artifically-supported increase in retail gas prices.

I remember a few years ago I worked at a TV station in San Luis Obispo and was doing a series of stories about the run-up in gas prices. I can't recall exactly, but maybe the price then was hovering at $1.50 a gallon. What astonished me at the time was that nine separate refineries in California had shut down due to accidents, and seemingly all at once. It seemed impossible that this series of accidents was anything but orchestrated. Consider, too, that California gasoline retailers are required by law to sell a specially-formulated form of auto fuel that can't be produced anywhere but in the Golden State and in Puerto Rico. It has to do with additives and environmental restrictions. Otherwise, California retailers could easily have imported gasoline from anywhere else. Anyway, we drivers were fucked.

I talked with industry reps, retailers and wholesalers and heard the same story over and over. It was just "market conditions" and an unfortunate set of circumstances that so many of the state's refineries were off-line. Mere coincidence. Then one day, I happened to meet a guy who had retired from "the oil patch," as he called it. He had worked for a local refinery. I told him about my conversations regarding the price of gasoline and he just laughed. He told me it was routine, for his company at least, to deliberately allow equipment to malfunction so that the refinery could be pulled off-line. He said he would alert his supervisor to existing, or coming, problems, and the supervisor would just wink and send him on his way. The fact that nine refineries were off-line at precisely the same time was no big surprise to this guy. He said the dirty secret in the industry was that it was a favorite way for the big oil companies to manipulate the market and, hence, prices at the pump.

At still another time, I was told by someone who professed to know that the big oil companies routinely kept oil tankers at sea when gas prices started falling. Of course, this was in the years before the Middle East had become so volatile. I am sure there are experts who will refute these stories as myths and falsehoods. All I can offer is what I have heard. But I am angry that when the major network news organizations do stories about the high price we pay for gas, they always parrot industry excuses as gospel. In the average story, you get upset motorists at the pump, a few angry soundbites, and then a response from some industry flack who says big oil's hands are tied by current market conditions.

Maybe we will never learn the truth. It certainly won't happen as long as the Bushies run things. And maybe the situation won't change even when a Democrat is sitting in the Oval Office. I pray for the day when some courageous journalist (and not likely someone working for the NYT or WSJ) finally blows the whistle and tells the world how we have been lied to all these years. You think Enron was big? Just wait until the curtain is pulled back on Big Oil.

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