Once again The New York Times has come to the defense of the oil industry propagandizing a point of view certain to bring cheer to the American Petroleum Institute and all in the oil and refining business. See yesterday's first page right hand column "Record Failures At Oil Refineries Raise Gas Prices," an article that could have been scripted for them by the American Petroleum Institute. To make sure we learn our lessons well, about the hardships being encountered by the industry, the Times belittles any suggestion of profiteering. And of course there is no mention of the manipulated supply of oil a la OPEC, no hint of the possibility of manipulated futures trading on the commodity exchanges (see "Manipulating Stock Prices and Oil Prices: It's in the Air" 3/22/07), and no reference to the possibility of purposeful restraint of gasoline imports to make up whatever shortfalls may actually exist.
You see, according to the Times, it's all about a litany of sad events rarely experienced before by a beleaguered industry, such as leaks, spills, breakdowns, power losses (sounds a bit like my mother's kitchen) and natural phenomena as lightning strikes, and even --'sacre bleu!' -- "a midsize refinery in Kansas was flooded by torrential rains last month" not to speak of hurricanes past (you do remember Katrina and if not, the Times gainfully reminds us of its long-lasting impact on this beleaguered industry). I must tell you its hard to fathom that so many disasters, both terrestrial and celestial could be visited on one hapless industry that is doing its very best to supply us its product at the highest price possible. But, according to the Times, the price is an of element of circumstance and the industry should be lauded for its Herculean efforts.
The New York Times goes on to sing the oil patch lament, humming to us about the industry's difficulty at their meeting environmental regulations, safety concerns and all manner of unfortunate, unforeseen circumstances visited upon them all at once. Almost incidentally, we also learn from the Occupational Safety and Health Administration (OSHA) that "there is a lack of investments in modern equipment." This, about an industry literally swimming in money with cracking margins at the highest levels ever, at $25 a barrel compared to "$5 a barrel just a few years ago."
But that said, leave it to the good ole Times to spring to the defense of this beleaguered industry by advising admiringly that "Refiners spent $9 billion from 2002 to 2006 to make low sulfur diesel." No mention, of course, that Exxon-Mobil alone (they have extensive refinery operations) earned over $9 billion in the last quarter (multiply by four to see where one year gets you), and for Exxon, as but one player, this investment over four years could probably have been handled out of petty cash.
Nor is there any mention that a sizable portion of our gasoline needs are supplied by offshore refiners. That the shortfall after Katrina was quickly made up by imports, that any current production constraints could readily be supplied by imports of gasoline if there was a willingness to do anything by the oil industry to rein in prices (please remember most of our refining capacity is in the hands of integrated -from well to gas pump- oil companies such as Exxon-Mobil, BP, Shell, Conoco Phillips and on).
The dire circumstances in the Times' article is not in the least reflected in data collected by the Energy Information Administration. The EIA allows that we have about 21 days of gasoline supply on hand, which is a fully normal inventory level. Further, according to the EIA, the capacity utilization of refineries has been in the range of 88 to 91 percent over the past two months, much at the higher end of normal, and at 91 percent last week. So "where's the beef, New York Times"?
The New York Times has been unabashedly consistent in its defense of the fiction that the oil business is the reflection of unfettered market forces. Have touched on this and related issues in previous posts, among them please see "As Oil Prices Rise the Media Slumbered Away (Psst, Don't Wake up the NYTimes or Wall Street Journal" 4/25/06; "The New York Times Shamelessly Shills For OPEC" 9/12/06; "The House Acts With Authority, The Press Remains Silent, the New York Times Trolls for the Oil Industry" 5/28/07.
To the American Petroleum Institute, my compliments. You pick your allies well.