The New York Times Wins the Alfred E. Neuman Award For Its OPEC Coverage

I know, this is getting tiresome. But the New York Times is relentless in its coverage of the oil industry and at shoveling OPEC alibis at us by the fistful. Its coverage is worthy not only of the "Alfred E. Neuman, What, me worry?" award, but now it has earned the even higher degree ribbon, "What, me think?" appended.

This weekend covering the OPEC heads of state meeting in Riyadh, the Times reached an epiphany in journalistic laziness and naiveté ("OPEC Gathering Finds High Oil Prices More Worrisome Than Welcome",11.17.07). As example, only a New York Times oil industry reporter could quote verbatim the nonsense served up by Prince Abdel Aziz bin Salam, Saudi Arabia's deputy petroleum minister as in:

"We are so perplexed and so frustrated with the idea we have anything to do with these prices."

To report this pearl of wisdom with complete seriousness is breathtaking. This without ever asking or questioning or informing his readers that the Prince's frustration could easily have been alleviated if Saudi Arabia together with its OPEC brethren reinstated the 1.2 million barrels a day they cut from their production quota a year ago.

For those not following the bouncing ball, and that's not your job, but for the New York Times one would have expected professional pride if not professional responsibility to inform its readership. In any case, a short explanation is in order. In November of 2006, with prices in the $50 plus range, OPEC cut its production quota by 1.2 million barrels a day. This cut was supplemented in February of this year with a further cut of 500,000 barrels/day. As prices were escalating past $80/bbl in August/September, OPEC announced, graciously in their view, that the 500,000 barrel/day cut would be reinstated, but not until November. That still leaves the perplexed and frustrated Prince Abdel Aziz bin Salam 1.2 million barrels a day short of his and OPEC's production quota of a year ago. Could this be the reason oil prices have escalated? Given this irrefutable statistic, only in the never never land of the New York Times' oil patch reporting would the Prince's confusion be presented with deadpan seriousness without further query.

The article goes on to advance the OPEC party line intoning the ususal concern about the falling dollar (please see "A Short Tutorial On The High Price of Oil And The Falling Dollar" 10.19.07). It then continues reporting to us that among the gathering at the Riyadh "fears are rising that that high oil prices will help throw the global economy into recession." (This, while OPEC members go skipping to the bank -- my aside.) The Times continues quoting such sound bites as that from the oil minister of the United Arab Emirates, Mohamed bin Dhaen al-Hamli, "These prices are potentially dangerous especially if they remain high...We cannot remain complacent."

A shivering resident of Maine couldn't have said it better.

Raymond J. Learsy is the author of the updated "Over a Barrel: Breaking Oil's Grip on Our Future"

Comments

[realitytrumpsbull]

Yep, the whole thing's a bullshit story, a
LUCRATIVE bullshit story, with many participants
and zero public accountability.

http://www.impeachbush.org

[swift_goat_pet_for_truth]

So the NYT continues a tradition begun with their insightful analysis of the Bush Administrations statements leading up to the invasion of Iraq.

So why is this news?

[darcy]

Sheiks, my ass. bush and cheney engineered the rise in oil prices, which is why cheney went to court to keep secret the energy policy negotiations.

It's very simple; deadly simple.

[joebaggadonuts]

Raymond,

You are asking the reporters to think. Why do you think they are paid for that? Oh, but that was then, this is now.

Thanks for pointing it out. It probably wouldn't have occurred to me otherwise. The other commenters here have similarly useful information.

Thanks.

[RobertPaul]

Thanks for the article and thanks to those who commented.

WOW!

I didn't realize how much I didn't know until I read the Comments.

I'm still confused though...

[Yogsoggoth]

Of course all of all this could be explained if you figured Peak Oil into the equation. But wait, you would rather demonize the Saudis for not selling oil to the U.S. for the price we want. It's their resource, so they can charge what they want. If we don't like it, we don't have to buy it. But wait, we do. We NEED oil to survive and the Saudis know that. So, why is it great business in the U.S. to get the best price for your product, but evil if the Saudis do the same?

[naiverealist]

It is easy to say that all Saudi Arabia has to do it turn on the pumps, but you have to understand a bit more complex environment rather than pump or no pump. Saudia Arabia's oil stocks are composed of light sweet (which everyone wants) and heavy sour (which fewer want because of higher processing costs and lower yields - you have to have the refineries engineered to process this gunk), add into this the effect of depleting resources (you can only pump it out once) - a la Matt Simmons, plus the increase in the internal usage/consumption, plus the fact that it is not in Saudi's best interests to full out pump a declining resource that will be worth more next month/year.

The problem lies with our consumption (25% of the world production). When coupled with the emerging economies in Asia (China and India are the greatest) who want a greater percentage of the world's oil to expand their own economies, we find that we are expending our brothers/sisters/children/parents blood to secure middle eastern oil for Chindia. We have to address our own consumptive habits and start changing the way we use energy. The days of cheap oil are definately over. High prices will make us join the rest of the world and address conservation and other aspects of mass transit and energy issues.

[Durango]

I am not sure the answer to the high oil price is that simple. And I would read into the Saudi's comment the fact that I suspect hedge funds and other speculators are driving the price of oil.

Certainly the falling dollar accounts for a percentage of the rise. Just exactly what percentage I have no idea because I have not seen it reported anywhere in the media. It would be a simple task to compute that percentage but the lazy media has failed to do it. At least in any stories I have seen.

In the past the Saudi's walked a narrow tight rope on oil prices. They needed to keep the price high enough. But if it became too high the price of oil made alternatives feasible. It is in the Saudi's interest to prevent this.

In addition as the Saudi says: they need to invest their oil profits somewhere. And that somewhere is in western economies. The USA used to be the only economy big enough and secure enough, but I'll bet that has changed.

But at any rate it won't help the Saudis if the world economy tanks and the Saudi investments all go south.

In the past OPEC's production quotas failed to restrict the market because some producer or another would cheat. (Kuwaits cheating led to Saddam's invasion) Now it appears that OPEC members are disciplned enough not to kill the Goose laying the golden eggs.

I don't believe for a minute that there is any shortage. In fact as we speak supply equals demand, even with the OPEC cut. And if Iraq ever gets peace, and the Russians modernize their production and as the Central Asian Republics come on line the price of oil will drop. (and screw all the alternatives ie: biodiesel, oil shale, sand tars etc)

Here's my bet. I recon the price of oil drops dramatically the day after George W Bush leaves office.

The day President Obama gets sworn in.

[veracitatus]

I'm curious as to how the Saudi production cuts affected their revenue. Do they actually get the whole $90+ a barrel? Did their cuts cause a rise in their revenues? We know scarcity drives prices up on necessary commodities (and oil is certainly necessary) but marginal analysis should be applied to see what the rate of increase in price per barrel is and determine if this will result in an actual increase in revenue. After all, don't they need a good reason to cut production - like they'll ACTUALLY make more money.

I'm afraid just pointing out that they have cut production and prices went up doesn't cut it when making claims of cause and effect. You need more details.

As to the price of oil, ever heard of signal filtering? In a complex system with many variables and many stochastic inputs it is very difficult to point to a single variable, like price, and say something definitive until you've filtered out the noise. When you consider all of the factors affecting the price of oil, geopolitics, weather, and cost of production as just a few, it is really tough to attribute the rise in price to any one or even several. Until you account for, and subtract all of the noise you will not know what the price signal really is telling us.

I'm betting that if you do (and there are people who do do this BTW) you will find there is one factor that is accounting for the majority of the run-up in oil prices. It is, of course, the one you keep discounting for reasons which have never been clear to me.

Everyone else here can take it where they will.

V.

[wadenelson1]

Thanks for taking the NYTimes to task over such lame reporting.

[CaveatMagnusFrater]

If OPECs greed drives the Eastern and Western worlds toward renewable fuel, the oil princes may well be ushering in their own demise.

Will the Texas/Oklahoma oil barrons follow the Sheiks or are they leading from behind the scenes?