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By Robert Rapier on Feb 5, 2008 with no responses

The Intellectual Dishonesty of a "Consumer Watchdog"

I am having an internal debate with myself regarding which aspect Oil Watchdog I find most annoying: Their intellectual dishonesty, their reprehensible tactics, or just their plain old-fashioned stupidity. I can give lots of examples of each, but I really think it’s their dishonesty that bothers me the most. When a “consumer watchdog” stoops repeatedly to dishonesty and distortions to sell their story, it calls into question their true motivation. And when the press picks up these distortions and reports them as news, the credibility of the reporting organizations is damaged (as it should be when they don’t do their homework).

We see the tactics of Judy Dugan and her cronies all the time with politicians: One distorts the record of another, because they must win that election. Say and do whatever it takes, just get those votes. We have come to expect this from politicians. But why does Oil Watchdog employ the same kind of dishonest smear tactics? What is behind their lies, distortions, and just plain clueless statements? Let’s investigate some examples:

Reprehensible Tactics

For someone who constantly accuses Big Oil of misdeeds, Judy Dugan lives in one of the most fragile glass houses I have ever seen. Take a recent story:

Big Oil’s Big Bribes?

She starts out:

I absolutely can’t vouch for the truth of this story,

You know there’s a “but” coming. She doesn’t know if there is any truth to the story, but she’s going to repeat the smear anyway because it makes oil companies look bad:

…but it’s no wonder that people would believe it. A Bahraini publication claims that oil companies are offering Iraqi legislators $5 million each to vote for the Iraqi oil law, which would give the oil companies control of Iraq’s huge untapped oil reserves. Five million a head to a few dozen key “legislators” would be pocket lint out of this year’s record oil profits, wouldn’t it? It would probably be less than Chevron shelled out last year to sponsor Iraq”s commercial oil summit. And it would at least be more direct than the lobbying that Big Oil does in Congress, or its exclusive entree to the White House.

So there we have it. Judy Dugan – one time journalist for the Los Angeles Times and United Press International, reduced to spreading rumors. She has certainly fallen a long way.

Someone challenged her in the comments (which as I have previously reported, they now hide by default since not too many were in their favor):

Dugan should be ashamed of herself for spreading rumors. US firms are bound by the Foreign Corrupt Practices Act. It is illegal and immoral to bribe officials. Besides, one could believe a small bribe, but $5 million each? Such a large some of money would be difficult if not impossible for a public company to hide from the auditors and shareholders.

This rumor doesn’t pass the smell test.

Indeed. Shame on you, Judy Dugan. You have a lot of nerve accusing anyone else of “misdeeds.”

Intellectual Dishonesty

Here is a prime example of the intellectual dishonesty of Oil Watchdog:

Congress Must Act On Energy Prices

Santa Monica, CA — A weekly national increase of more than a nickel a gallon for regular gasoline has motorists paying a “speculative bonus” to hedge fund traders and others who have kept the price of crude oil near $100 a barrel, said the Foundation for Taxpayer and Consumer Rights (FTCR). With pump prices up nationally to $3.109 from $3.054 over the past week, at a time of year when prices are historically at their lowest, spring is all but certain to bring new record prices.

I will get to the dishonesty in a moment. But consider the previous paragraph. Gasoline prices have lagged far behind oil prices, and refining margins have been very poor as a result. The price of gasoline went up by a nickel, and the FTCR felt the need to issue a press release. What is interesting is their actions since this January 7th press release. Gasoline prices have actually fallen every week since then, and the national average is down to $2.98 as of this writing. What would you expect a non-biased organization to do after gasoline prices fell for 4 weeks in a row? Since they issued a press release when gas prices climbed by a nickel, did they issue another when prices fell by three times that amount? Answer: No, they didn’t – their press releases are anything by non-biased.

Now, here’s the dishonest piece:

“While the speculation-driven price of oil could be blamed for $3.00 gasoline in January, $4.00 gasoline in May will again be laid at the door of oil companies and refiners,” said Dugan. “Oil companies refuse to expand or even modernize their refineries, then every spring they blame their self-caused shortage of gasoline for price spikes. The economic effect of a price spike from $3.00 to $4.00 would be far more serious than a spike from $1.99 to $2.50, which seemed outlandish only a few years ago.”

I have lost track with the number of people who have commented and corrected them each time they have claimed that oil companies have refused to expand their refineries. Yet Judy Dugan, who has probably never even set foot in a refinery, continues to spout this lie. In fact, “armchair261″, who has been labeled as “a suspected shill for BigOil” and whose comments there have been censored (and reports that he was finally banned) challenged Dugan’s claim:

Ms. Dugan says that “oil companies refuse to expand or even modernize their refineries.”

The figures below, from the Energy Information Administration, prove otherwise.

Note the drop in 2005 due to loss of capacity caused by Hurricane Katrina. By 2006, the oil industry had repaired much of that lost capacity and delivered a record volume of gasoline to the market. This does not sound like an industry that’s trying to maximize profits by reducing capacity. That figure was then exceeded in 2007, which saw the highest annual gasoline production on record.

http://tonto.eia.doe.gov/dnav/pet/hist/wgfrpus2w.htm

U.S. Annual Finished Motor Gasoline Production (Barrels)

2000: 2,993,802,000
2001: 3,011,960,000
2002: 3,058,104,000
2003: 3,083,493,000
2004: 3,220,735,000
2005: 3,152,527,000
2006: 3,227,532,000
2007: 3,279,465,000

Your comments, Ms. Dugan? In particular, could you address the recovery in refinery capacity and increased gasoline production immediately following Katrina? Refinery capacity grew from around 70% after the hurricane in late August to around 90% by the end of the year. This is not consistent with your claims in this article.

Thank you.

Stupid Press Releases

The integrated oil companies – specifically those that both produce oil and refine it – had a very good 4th quarter. The reason for that is specifically that world oil prices were very high in the 4th quarter. Refining margins were terrible, but the high price of oil was enough to offset weak margins. Shell had a good quarter, but they did come in short of estimates due to their poor refining margins. Naturally, Oil Watchdog weighed in with their typical uninformed opinion by making the following press release:

Shell’s Record Profit Is a Thumb In the Eye of Recession-Wracked Nation, Says Group

The first thing I noted was the story tags, which included “Cash Register Politics, Greed, Influence, Misdeeds, Price Gouging, and Profiteering.”

The story starts out in their typical hysterical style:

The record run of 2007 oil profits, which came as the U.S. economy slid into recession and consumer debt soared, portrays an industry run amok, said the Foundation for Taxpayer and Consumer Rights.

For those who don’t know, the Foundation for Taxpayer and Consumer Rights (FTCR) is the parent entity of Oil Watchdog. Continuing on:

While Shell may have slightly “missed analysts’ estimates,” it’s profit figures show that integrated oil companies continue to find ways to increase profits even as the economy falls. In Shell’s case, the company replaced the refining profits of recent years by escalating income from selling crude oil, often to their own refiners, said the nonprofit, nonpartisan FTCR.

Nonpartisan? In what way? Politically? They are certainly partisan when it comes to oil companies. They scream when oil and gas prices are rising, and then when prices are falling they just find something else in the oil industry to scream about. As shown above, they even stoop to spreading rumours to further their agenda.

And, they conclude with the need for more federal oversight:

FTCR has called for oversight of unregulated electronic energy trading markets and of oil company refining operations, including investment in new capacity and updating of aged, unreliable refineries.

One wonders what the point of that news release actually was. They left the implication that Shell was complicit in these high oil prices. They even tagged the article with “misdeeds.” The article blamed the housing collapse on higher energy prices. Thus, Shell is at fault and more regulation of refining operations is required? You read that release and it just looks like nothing more than a hatchet job by a political operative. No point, other than smear – plus a continued demonstration of ignorance for thinking that Big Oil controls the price of oil. OPEC controls about 40% of the world’s oil supply. ExxonMobil, the biggest of Big Oil controls 3%.

Summmary

Of course I could go on and on with examples like this. And I haven’t even mentioned Oil Watchdog’s multiple personalities: Complain about oil company greed, but if oil companies donate money, complain that they are “greenwashing” and trying to buy off universities. It is just incredibly ironic to me that a group staffed with former journalists would constantly accuse oil companies of misdeeds, when their own reporting misdeeds would get them fired pretty quickly from any reputable newspaper. Of course, we know who is paying the bills there, so rest assured that people like Judy Dugan – and apparently her ethics – are bought and paid for.