The American Energy Alliance (AEA) isn’t pulling any punches with their new advertising campaign, spending millions of dollars to air 45 million ad spots on Pandora Radio. They are attempting to hang the high cost of gasoline around the neck of President Obama, using a series of arguments that actually have nothing to do with how much Americans are paying for gasoline.
Here is the YouTube version of their ad, titled “$9 Dollar Gas”:
Before dissecting their arguments, it’s important to remember that the American Energy Alliance is a non-profit organization established by the oil industry to carry out lobbying activities. As such, their donors are kept secret. However, AEA president Thomas Pyle is also the leader of a related organization called the Institute for Energy Research, which has received funding from the usual suspects – Exxon and Koch Industries. In fact, Pyle formerly served as a Koch Industries lobbyist.
The first main point they bring up to paint Obama as the culprit for rising oil prices is the fact that he is opposed to expanded oil drilling in Alaska. That statement is true, but it has nothing to do with oil prices.
Studies over the last decade, since the first days that such drilling options were discussed by the former Bush Administration, have repeatedly shown that increased domestic drilling (particularly in Alaska) would have no impact on the actual price of gasoline. A best-case scenario for that drilling would be that, ten years from now, it might reduce the price of oil by no more than fifty cents per barrel. That fifty cent savings per barrel translates into a paltry one to two cent savings at the gas pump, if anything at all.
The second point they bring up is Solyndra. Polluter apologists love to bring up Solyndra. Unfortunately for AEA, nothing about this point has anything to do with the price of gasoline.
Third, and possibly the most important point brought up in the multi-million dollar ad campaign is that the President opposed the Keystone XL Pipeline. Again, the statement is true on its face, and again, it has nothing to do with gas prices.
However, the ad above specifically says that his blocking the pipeline will mean that “we all pay more at the pump.” So not only was the point unrelated, but also they decided to deliberately add a lie in there as well. The truth is that the Keystone XL Pipeline would actually have the opposite effect on gas prices – rather than lowering prices at the pump, it has the potential to actually raise prices. From Treehugger:
Here's the leadoff line from a new Bloomberg report: “TransCanada Corp. (TRP)’s Keystone XL oil pipeline, a project backers including Republican Presidential candidate Rick Santorum say will create cheaper U.S. gasoline, instead risks raising prices as much as 20 cents a gallon in the Midwest, Great Plains and Rocky Mountains.” As Brad Johnson succinctly puts it, the pipeline would “allow Canadian crude to escape the United States oil market, increasing profits for oil companies and driving up domestic gasoline prices.”
That's right. The Keystone XL would raise gas prices. That fact could be the best ammo yet for Keystone opponents.
But don’t waste any energy believing that AEA will come clean about the effects Keystone XL will have on gas prices for Americans.
The advertisements are just the beginning. The AEA-affiliated group Institute for Energy Research has taken on the task of painting Obama as a foe of the fossil fuel industry on the pages of their blog. Their latest attempt to confuse the public involves attacking the President for attacking oil speculators, a group that the IER refers to as Obama’s “bogeyman”:
Earlier this week President Obama announced his Administration’s redoubled efforts to crack down on oil speculators. The only problem is, he failed to explain a single thing that these people are doing wrong. The President’s pronouncement is impossible to analyze, since it was devoid of content.
Successful speculation in the commodities markets serves a useful role in reducing price volatility and providing liquidity. By jacking up the penalties on ill-defined crimes, the Administration will actually make oil prices move more erratically. The president’s finger-wagging at the big bad speculators is just a rhetorical ploy to distract attention from his nonsensical energy policies…
As I explained in a previous post, blaming speculators for rising oil prices is like blaming thermometers for a heat wave. If some people have a strong view that oil prices do not adequately reflect (say) the danger of a supply disruption from the Middle East, they will enter the oil futures market and bid up the price. This ultimately causes oil producers with excess capacity to ramp up current output, and it causes users of oil to reduce current consumption. This allows for the physical stockpiling of inventory (perhaps on oil tankers) which is exactly what we want the market to do, in the face of an interruption of Iranian exports.
Remember the motto of the speculator is to “buy low, sell high.” By definition, successful speculation makes prices less volatile—speculators push up prices that are too low, and push down prices that are too high. By cracking down on speculation, the president will ironically make oil prices more volatile.
Luckily for the IER, we’ve already detailed the role that oil speculators play in driving up the cost of gasoline for American consumers, so they can stop pondering how this affects gas prices:
Senator Bernie Sanders (I-VT) is hoping to end the practice of oil speculation, and recently wrote at CNN.com:I've seen the raw documents that prove the role of speculators. Commodity Futures Trading Commission records showed that in the summer of 2008, when gas prices spiked to more than $4 a gallon, speculators overwhelmingly controlled the crude oil futures market. The commission, which supposedly represents the interests of the American people, had kept the information hidden from the public for nearly three years. That alone is an outrage. The American people had a right to know exactly who caused gas prices to skyrocket in 2008 and who is causing them to spike today.
Even those inside the oil industry have admitted that speculation is driving up the price of gasoline. The CEO of Exxon-Mobil, Rex Tillerson, told a Senate hearing last year that speculation was driving up the price of a barrel of oil by as much as 40%.
Keep in mind, the Exxon whose CEO admitted that oil speculation can drive the price of oil upwards is the same Exxon that has given boatloads of cash to IER (again, as mentioned above.) It is difficult to believe that the organization truly believes that speculation is harmless when their own donors have told Congress the exact opposite.
The reason these issues are so important – even though the points have been debunked by almost every organization that has looked at them – is because the AEA ad received the most exposure for political ads in the last week.
No other ad was heard by more Americans in the past week. And even though the ad is filled with false information, this talking point is not going away anytime soon, and we should expect to hear these points from every fossil fuel apologist until - and likely far beyond - November.