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The Gray Lady's Obdurate Bias on Oil Reporting

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On it goes at the "Gray Lady." And, sadly it is becoming progressively more debilitating and peculiar. Unable to present an objective view of the oil industry and oil markets the New York Times has vacated virtually all claim to responsible reporting on one of the economy's more important industries and critical commodities. In effect placing into question the bona fides of its business and financial pages. And writing of the New York Times' shortcomings on this issue is becoming boring.

On Friday, the lead Business Day article, "Can a Plucky US Economy Surmount $80 Oil" could have been written by a semi-skilled oil industry flack. It reports yes, the price of oil is high, reaching record levels. Then goes to assuage us that the fallout has been negligible, factories stayed busy, consumers continued spending.

The NY Times article then poses the question: with the economy starting to sputter, will the high price of oil cause pain? Blithely it answers the question, "Many economists do not think so...if the United States entered a recession the price of oil would quickly drop." Then, to give the appearance of balance and to lay the groundwork for continued steep prices, goes on to quote none other than Larry Goldstein of the Petroleum Research Foundation, a foundation largely supported by the oil industry and always ready to trot out whatever rationalizations are needed by a gullible press to explain the manipulated levels of today's oil prices. Says Goldstein, "Our relative importance in the global markets is diminishing" and an economic slowdown "won't have a visible impact on high oil prices." Get it? Prices will remain high and the NY Times has helped indoctrinate us into accepting the reasons why.

The Times' article goes on to state there is little precedent for understanding today's oil market. Which is probably true if you ceaselessly report oil industry PR information handouts as received gospel. The article goes on to repeat the tried and true oil industry saws, placating us with such bamboozle as "the economy has become less sensitive to energy prices," and "the amount of energy needed to produce $1 of economic output has been cut nearly in half since 1988," and on.

And then, as only those most closely wedded to the oil industry goal of making us uncomplainingly, no even appreciatively, accept $80 barrel oil for the greater glory of oil company bloated profits and export producers windfall margins, the NY Times makes us feel warm and cuddly about the oil boys. You see, according to the NY Times we are getting oil at a bargain. Why, well compared to $80/bbl these days, we should rejoice in that, adjusted for inflation, the price of oil was $102/bbl in 1980. There now, do you feel better?

One can only wonder which oil industry flack gave the NY Times this piece of soothing information. What the New York Times pointedly ignores or perhaps doesn't even know is that no less a barometer of economic activity and inflation, namely gold, was selling in actual 1980 dollars at over $800 an ounce. Using the oil industry's or the NY Times' self serving parameters, extrapolating that price in equal proportion to the $102/bbl price broadcast by the NY Times, gold's price today should be nearer to $1800/oz. Gold is currenly $740/oz, some $60/oz less, I repeat: less than $60 of what it was in 1980. In other words the NY Times' extrapolation exercise is patent nonsense, or if not, you should drop everything and run to the nearest jewelry store and stock up on gold tiepins, stickpins, hairpins, broaches and whatever else in gold they have in stock.

But beware of buying gold futures. The very next day after the NY Times' 'insightful' article the Wall Street Journal front-paged a story "Where Has All The Oil Gone" on how "financial players who have piled en masse into commodities trading in recent years have made oil markets more unpredictable." They obviously didn't use the NYTimes' previous days' article as reference, in that commodity trading and markets were never mentioned, as though they had no bearing on how the price of oil is determined.

And then to prepare the price terrain for what lies ahead, the New York Times instructed us that economists concede that political crisis accompanied by potential supply disruptions, could be enough to send oil past the psychologically important $100 mark. Well that's news, just as much as it has been over the last five years as oil was sent past the psychologically important $30, $40, $50, $60, $70 and $80 marks.

Then, the good Gray Lady rattled on about world demand in emerging economies, giving their imprimatur to a functioning marketplace while highlighting a march in oil prices from under $11 less than ten years ago (a point rarely before,if ever seen in the New York Times, but reported in the Huffington Post blog "Are We Ready For a Grain Growers OAPEC ...," 10.2.07 -- barely a week before the NY Times' epiphany) to over $80/bbl (that's an increase of some 800 percent folks). This as if to inform us that oil prices were a reflection of a free and unfettered market, never once mentioning the cartel manipulations of the elephant in the room, the Organization of Petroleum Exporting Countries (OPEC). The Gray Lady is either naïve or willfully attempting to give its readers only part of the story, and the oil industry's part at that. As I wrote at the outset, this is becoming boring. A recent post, "The NY Times, The Oil Patch's Faithful Cheerleader, Trashes Ethanol," 9.24.07, goes extensively into the Gray lady's obdurate bias on this important issue.