THE BLOG
07/11/2011 07:08 pm ET | Updated Sep 10, 2011

Facing Scrutiny, the Oil and Gas Industry Yet Again Resorts to Ad Hominem Attacks and Tantrums

By Demoni Newman

The energy industry is out for blood once again. Over a decade ago, it went after POGO for revealing that the largest oil companies were underpaying royalties to the government. And now it appears they've found a new target.

The New York Times is under fire this week for publishing a series of stories criticizing the natural gas industry, the U.S. Energy Information Administration (EIA) and the political momentum natural gas has enjoyed for the past few years. In particular, the NYT's June 25 story and June 26 story, both by Ian Urbina, have provoked a full-on attack from the powerful industry.

Urbina uncovered documents that raise doubts about the viability of natural gas. The documents are mostly internal EIA emails, sent to the Times by whistleblowers on the condition of anonymity. They expose an over-reliance by the EIA on industry information for reports, experts' skepticism of the economic sustainability of shale gas, and an "overly rosy" representation of shale gas in EIA publications.

Some of the more provocative quotes from internal emails include calling the shale industry "set up for failure," and a "gold rush wherein a few folks have developed 'monster' wells, so everyone assumes that all the wells will be 'monsters.'" Other emails released by the Times refer to shale oil ventures as "inherently unprofitable" and "giant Ponzi schemes." One email from a retired oil and gas company geologist said, "And now these corporate giants are having an Enron moment."

So the industry is fighting back. CNN Money reported on June 29 that multiple energy giants are attacking the Times. In a blog post titled "Don't Facts Matter Anymore?" Ken Cohen, ExxonMobil's Vice President of Public and Government Affairs, wrote, "You really have to wonder why The New York Times is campaigning against cleaner-burning, domestically produced natural gas," and calls the research for the Times piece "little more than anonymous sourcing, two-year-old emails and analysis unsupported by fact." The CNN Money piece goes on to list other companies similarly "firing back" at the Times.

The Energy Information Administration is also displeased. On June 27 the EIA released a statement asserting that its views are not accurately represented by the NYT's piece.

The current storm of criticism faced by the Times sounds all too familiar to POGO, which has been the target of the oil and gas industry's wrath before. In the 1990s, POGO and other plaintiffs sued the 14 largest oil and gas companies for underpaying billions of dollars in royalties to the government for drilling on federal lands. POGO won, forcing the companies to pay back $438 million. The industry retaliated, even convincing its advocates in the House of Representatives (those who received the most campaign contributions from oil companies) to press contempt of Congress charges against POGO and its executive director, Danielle Brian. The resolution to hold POGO and Danielle in contempt of Congress was eventually withdrawn.

During the investigation of POGO and Danielle, the oil companies' congressional allies even tried to get POGO to reveal the names of the whistleblowers who had helped POGO uncover the wrongdoing. POGO's office phone records and Danielle's home phone records were subpoenaed. POGO refused to give up the names of its whistleblowers.

Danielle had this to say about the experience: "We witnessed the industry pulling out all the stops -- including going through our trash and trying to get our phone records -- in order to scare us. We're simply seeing them at it again to scare the The New York Times. We're glad to see the Times standing by its reporter in the face of that pressure."

POGO's and the NYT's experiences are similar in another way -- both highlight the radical difference between what the oil and gas industry says publicly and what its experts say internally. Rep. Carolyn Maloney (D-N.Y.), who fought against the industry when POGO revealed its wrongdoing in the 1990s, said in her opening statement for a 2001 House Energy and Mineral Resources Subcommittee hearing, "[M]ajor oil companies were paying royalties based on prices that were far lower that the market value of the oil they were buying and selling. They kept two sets of books, one for themselves and one for the people of America."

The natural gas industry today seems to be saying different things internally and externally. In its communications to the public, the Natural Gas Supply Association, an industry group, calls natural gas a "valued resource" of which we have an "abundance." This contrasts with the message of the internal emails revealed by the NYT, which indicate that there is doubt within the industry about its viability.

Rep. Maloney told POGO this week that she wasn't surprised to hear about the industry's response to The New York Times.

"As someone who has battled the oil and gas industry's duplicitous bookkeeping in the past -- way before Enron -- it's not surprising to me that there are real questions about the industry's self-estimates of natural gas reserves, or that the industry is now attacking those who are asking the questions," Maloney said.

For more on Big Oil's showdown with POGO in the 90s, be sure to check out our 30th anniversary video.

Demoni Newman is a POGO Intern.