Congress is currently considering legislation calling for a near fivefold increase in the use of ethanol. Leave it to the oil industry's plant at the New York Times, oil reporter Jad Mouawad to trot out a front page article on May 24th ("Oil Industry Says Biofuel Push May Hurt at Pump"), in the authoritative hauteur that only the New York Times can muster, to pitch its readers without barely a drop of incredulousness, the received wisdom of such oil industry flacks as the American Petroleum Institute and the Energy Policy Research Foundation to parade the oil industry's incredibly self serving point of view. It seems, according to the article, that the government's push to increase the supply of biofuels will inhibit the the oil industry's decision-making toward building additional gasoline refineries and that the program is already "forcing many companies to reconsider or scale back their plans for constructing new refinery capacity".
It goes on to say the obvious, that without this capacity we will be more dependent on imported gasoline. Then it continues to state that imported gasoline is "more expensive than fuel refined domestically". Mr. Mouwad's observation is patent nonsense. We are importing significant volumes of gasoline presently just as we import oil as well as other fossil-based fuels such as Liquefied Natural Gas (LNG). Gasoline is shipped here from refineries both near and far, from points in the Carribean and Canada, as well as from refineries in Europe as elsewhere. These imports are priced at market levels, at levels competitive with domestic gasoline. Not only is his argument misleading, he chooses not to draw our attention to the fact that much of the fuel that is or would be "refined domestically" is cracked from imported crude oil on which our growing addiction is becoming clear to all. Nor that imports of crude oil will be significantly reduced through a domestically grown and formulated ethanol program.
Then as though to raise the flag of caution, in all likelihood stitched together by his mentors in the oil patch, he informs that some member of Congress would like to make the president's 10 year goal for biofuels mandatory. Rather than comparing the 2.3million bbls/day goal as the equivalent of an integrated oil company's daily oil production such as BP, or half the daily production of an Exxon Mobil, he puts on his Halloween hat and makes the ten year goal as daunting as possible. He dramatically compares it to creating an ethanol industry "roughly the size of world class oil producers like Kuwait and Nigeria."
And finally Mr. Mouwad brings us near crocodile tears by pointing out that the oil companies have "spent vast amounts -- more than $50 billion the last ten years -- to meet requirements to produce cleaner fuels" and presumably to add capacity. Now the adjective "vast" has, to my knowledge, never been applied by Mr. Mouwad to oil company earnings nor to crude oil profit margins. Nor does he clarify that the $50 billion capital expenditure is a tax-deductible item and impacts the bottom line by some half the flagged amount. Nor does he put the sum in perspective in a universe where the current quarterly earnings of the major integrated companies, say Exxon Mobil ($9 billion last quarter alone), Shell, BP, Conoco Phillips and on, would in one quarter alone easily cover the net outlay of this "vast" ten year expenditure. So much for unbiased reporting.
In keeping with this spirit of the New York Times, reporting what is good for the oil folks and ignoring what oil news is good for the rest of us, a deafening silence greeted what otherwise should have been hailed as a truly significant event. Last week the House proactively voted to give the FTC the authority to bypass issues of sovereign immunity in order to sue members of OPEC (Organization of Petroleum Exporting Countries) for price manipulation. This pertinent news was buried by the Times in an article on the House's Price Profiteering Bill. The Times further diminished the House's action by brushing it aside with the observation that the Bush administration has vowed to veto the bill "because it could pinch supplies". End of story!
Nor was the rest of the press any more forthcoming. And therein lays the rub. Here is an issue that needs be processed to its conclusion and a responsible press would focus on it with laser like intensity. Eventually, if the President vetoes the bill, so be it. We will all know where he really stands on the issue of oil independence, the lengths he is prepared to go to accommodate his friends in the oil patch, and the degree of nefarious Saudi influence on this White House.
The process would be enormously instructive to the citizenry in understanding exactly how dependent we are and to whom. It would also identify for all to see, those in our government who, in the thrall of oil profits, are prepared to tolerate this holdup of the world's consumers without the semblance of protest.
This time the House has one of the major players of the oil price con-game in its sights. Let's hope they persevere.
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