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Oil Companies to Americans: "News Flash: Gas Prices Are High!"

Despite the oil industry's attempts to steer the public's frustration to a few predictable scapegoats, the facts simply don't support our continued coddling of the world's most profitable industry.
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Americans for Prosperity Foundation (AFPF), an energy-industry funded and allegedly non-partisan organization, has begun its latest broadside against the Obama administration as it embarks on a campaign-style tour. Making its way through the states in which the Koch brothers and other energy-industry magnates are heavily invested, the "Running on Empty" tour will peddle a false scapegoat for the current spike in gas prices: the supposedly burdensome regulatory constraints imposed by the Obama administration. Don't be fooled. In reality, this is nothing more than an attempt by the Koch brothers and their industry co-conspirators to manipulate public opinion in order to benefit their bottom line.

Despite the economic crisis, oil companies continue to make huge profits: the top five oil companies raked in about one trillion dollars over the past ten years. Rep. Elijah Cummings recently issued a report which found that they have enjoyed a 32.6% increase in profits during the first quarter of FY11 compared to the same period last year.

Americans for Prosperity Foundation is right about one thing: Americans are paying a lot for gas. However, their tour fails the public in terms of accuracy and honesty as it seeks to encourage Americans to act in the industry's interest instead of their own. And given who controls the AFPF's puppet strings, this misinformation campaign comes as no surprise.

President Obama's so-called "disastrous energy policies" in AFPF's crosshairs include: the EPA's regulations concerning greenhouse gases to combat climate change, the moratorium on new off-shore drilling following the Deepwater Horizon disaster and the designation of national forest land off-limits to drilling in order to protect endangered species.

Calling attention to the high price of its product is admittedly a novel strategy for the energy industry. However, this tour appears born of a carefully-considered political analysis on the part of AFPF. So what is really going on here?

Finding friends in the right places

So far, the tour's route travels seven states -- Nebraska, Missouri, Kansas, Virginia, Ohio, Michigan and Pennsylvania, and these states carry much political value to the Koch brothers.

Consider Nebraska: the Cornhusker State is one of the 5 states that would be crossed by the proposed Keystone XL oil-sand pipeline. Though Koch Industries doesn't own the proposed transnational pipeline, it stands to profit tremendously by its construction. Lest one think that oil supply provided by the pipeline would lower the cost of gas, the cost of installing the pipeline is expected to actually increase the price per barrel by $3 -- a price increase that certainly won't translate to savings at the pump.

In his testimony before Congress regarding the pipeline, Jeremy Symons, a senior vice president with the National Wildlife Federation, put it best: "The idea that big oil companies want to spend $13 billion on a pipeline... to help Americans at the pump sounds too good to be true because it simply isn't true."

Nebraska isn't the only state where the Kochs are trying to push up their profits. Koch Pipeline Company LP, a Koch Industries subsidiary headquartered in Kansas, runs some of its 4,000 miles of pipeline through neighboring Missouri. It's also not surprising that the AFPF tour includes the heartland states of Ohio, Pennsylvania and Michigan, all states where the Koch brothers, the American Legislative Executive Council (ALEC), and AFPF have an interest in supporting these states' arch-conservative Republican governors in their pro-corporate, anti-middle class union busting efforts based on the model of Scott Walker in Wisconsin. Virginia is the national base for AFPF and home to state Attorney General Ken Cuccinelli, a climate-change denier who has attended seminars sponsored by the Koch brothers.

Cuccinelli's office has recently filed suit against the EPA, arguing that its report claiming greenhouse gases are a threat to the health and welfare of the American people is based on faulty information. This bold move is part of the Virginia attorney general's witch hunt against climatologist Michael Mann, seeking to determine if the former University of Virginia professor defrauded the public with his "hockey stick" graph depicting sharp changes in global temperatures. The bottom line: the Koch brothers could not have a better friend than Cuccinelli to help them combat the EPA's greenhouse gas and other health and safety regulations.

Speculation, not regulation, is the problem

Despite the Koch brothers' efforts to deceive the public about the causes of high gas prices through the AFPF "Running on Empty" tour, a congressional report made clear that a major culprit in rising gas prices is speculation, not regulation. Rep. Elijah Cummings, the ranking member on the House Oversight and Government Reform Committee recently released a report about the role of speculation on gas prices, finding that speculation could inflate gas prices by as much as 30%. While AFPF points a finger at the EPA, it is oil-industry financiers' skillful hedging of oil prices that is forcing Americans to pay upwards of $4 per gallon at the pump.

The AFPF claims that the Administration's moratorium on drilling in the Gulf has been a key factor in rising gas prices -- despite the fact that the Obama administration has actually approved fourteen deepwater drilling permits, 55 shallow water permits, and two exploration plans since the spill. However, the Cummings report demonstrates that drilling has the potential to save Americans only pennies per gallon over the next few decades -- hardly the short-term relief that Americans need, but definitely the short-term profits that oil companies want.

Despite the oil and gas industry's attempts to mislead the American people by steering the public's frustration to a few predictable scapegoats, the facts simply don't support our continued coddling of the world's most profitable industry while average people are asked to sacrifice. The reality is that excessive corporate greed and recklessness are hurting hardworking American families, and we cannot allow ourselves to be distracted from tackling this problem by a dishonest public relations campaign from those who seek unfathomable profits above all else.

Correction: A previous version of this post erroneously attributed a quote about Ken Cuccinelli to David Koch and has since been corrected.