Oil, Markets and the Media: Business & Media Institute Event, May 10, 2006

Jerry Taylor, a senior fellow at the Cato Institute, provided some context for today’s gasoline prices.
▪ Most people adjust only for inflation when comparing today’s prices to the past. But incomes have increased faster than gas prices, and today’s cars have far greater fuel efficiency than yesteryear’s.
▪ Taylor calculated that, considering income changes, gas would have to be $5.17 per gallon today to take the same bite out of our budgets as it did in 1955.

Rep. Jack Kingston (R-Ga.) advocated expansion of domestic energy sources, such as drilling in ANWR, and pursuing alternative fuels.
▪ The portion of the Arctic National Wildlife Refuge where we would drill for oil is about the size of a dollar bill in comparison to a basketball court.
▪ The government should audit its own use of energy, looking at ways to cut costs and conserve – such as ending Saturday mail delivery, which uses the same amount of energy as any other day but delivers only 30 percent of the mail.

Bob Slaughter, president of the National Petrochemical and Refiners Association, showed that media reports consistently leave out details about the nation’s refining capacity.
▪ Though it’s common for politicians and media alike to harp on building new refineries, it’s much more cost-efficient for refiners to expand existing facilities – which companies have done.
▪ The recent “price-gouging” legislation takes the burden of defining price gouging off lawmakers, giving them the political victory but putting the difficult follow-up onto the Federal Trade Commission.

Dan Gainor, director of the Business & Media Institute, detailed how the media have ignored inflation-adjusted prices and context for the issue in general.
▪ Broadcast network news personalities have called gas prices “record highs” at least 100 times since September ’05, and they have been wrong every time. Prices still have not reached the high they hit in 1981 of $3.12.
▪ The media’s outrage about oil companies’ profits is ludicrous when you look at newspaper companies’ own profits. Though Exxon’s profit margin in 2005 was 10.6 percent, newspaper companies regularly turn profits of 25 or 30 percent.