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API Media Blitz Seeks to Educate Public, Policymakers

May 19, 2008
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The oil and natural gas industry has been carrying out a media blitz to educate policymakers and the general public about the market at a time when opinions of the industry are at their lowest level due to high gasoline and natural gas prices.

The American Petroleum Institute (API) and its members ran full-page advertisements in the Washington Post, USA Today and the New York Times earlier this month, as well as television commercials, informing the public that the industry has invested $1.25 trillion since 1992 on exploration, development, production and distribution of oil and natural gas. Another full-page ad addressed the importance of oilsands development in Western Canada for the United States.

API's has been running full-page ads signed by "The people of America's oil and natural gas industry" in the first section of the Washington Post almost every day for the last several weeks.

The media campaign comes at a time when Congress is considering legislation that could significantly affect the industry, such as the climate change bill sponsored by Sens. Joseph Lieberman (I-CT) and John Warner (R-VA), and a Democratic measure to revoke $17 billion in tax breaks for energy companies, impose a windfall profits tax on energy companies that don't invest in renewable energy sources and levy federal penalties for energy price gouging (see NGI, May 12).

Also, looking to the future, the industry appears to be seeking a broader base of support during the waning days of Republican George W. Bush's presidency, as political analysts are projecting not only a Democratic successor, but also the possibility of a large Democratic majority in the next Congress.

API President Red Cavaney noted that the newspaper ads, television commercials and API's informational web page are nothing new. "We have been doing this for a couple of years," since Hurricane Katrina struck the Gulf Coast in August 2005, he said. "We determined then there was a basic lack of understanding" about the oil and gas industry.

The objective of the web page is to help the public and policymakers "better understand industry and what it takes to get reliable supply of oil and gas," Cavaney told NGI. The web page and newspaper ads are not trying to "convince people that they should fall in love with the industry."

There is little chance of that as producers rack up high profits. In February ExxonMobil Corp. posted the highest quarterly results in U.S. history. On the strength of higher oil prices, Irving, TX-based ExxonMobil reported that its 4Q2007 net income jumped 14% to $11.66 billion ($2.13/share), compared with $10.25 billion ($1.76) a year earlier. ExxonMobil's annual profit of $40.6 billion also was a record, beating the $39.6 billion it earned in 2006 (see NGI, Feb. 4).

The API web page features EnergyTomorrow Radio, which provides a forum every Tuesday for energy professionals to discuss key issues affecting the industry. API Senior Policy Analyst Lou Hayden and Senior Economic Advisor Russell Jones recently reviewed the industry's efforts to reduce heat-trapping greenhouse gas emissions that cause global warming.

The web page also reported the results of an API-commissioned study, which revealed that the majority of oil and gas company shares are held by average Americans rather than industry executives. Specifically, it reported that almost 43% of oil and gas firm shares are owned by mutual funds and asset management companies that have mutual funds; 27% of shares are owned by other institutional investors like pension funds; and 14% of shares are held in individual retirement accounts and other personal retirement accounts. In contrast, only 1.5% of the shares of public oil and gas companies are owned by company executives, the study said.

The study was conducted by Robert J. Shapiro, undersecretary of commerce for economic affairs under President Bill Clinton.

"Generally, we take our cue from our opinion research people" as to the issues that are addressed on the web page, Cavaney said. "We found that people didn't understand who owns oil companies."

The web page and ads are funded by API and its members. However, Cavaney declined to say how much the group is spending each year to get its message across to the public and Washington policymakers.

The API is the largest energy trade group, with its members including almost 400 producers, refiners, pipelines, the marine segment, and service and supply contractors.

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