by Daniel J. Weiss and Jackie Weidman
The American Petroleum Institute – the lobbying arm of big oil and gas companies – yesterday announced its “Vote 4 Energy” campaign that will promote its policy agenda in key electoral states including Ohio, Pennsylvania and Virginia. This campaign will more loudly promote the Big Oil agenda of more drilling, fewer safe guards, and retention of Big Oil tax breaks.
API’s members, including the five largest public oil companies which could earn record profits in 2011, will likely provide major funds this program. These funds come from profits that are due to record high oil prices, which led American families to pay the highest average annual gasoline price ever.
These high prices pose real economic harm to Americans. According to the Associated Press:
“The typical American household will have spent $4,155 filling up this year, a record. That is 8.4 percent of what the median family takes in, the highest share since 1981.”
Adding insult to injury, American taxpayers provide $4 billion in annual tax breaks to Big Oil companies, half of which go the big five.
The bottom line: Americans are subsidizing big oil’s campaign that is designed to convince them to support policies that will ultimately increase oil company profits — at the public’s expense.
High oil and gasoline prices and oil profits go hand-in-hand. In 2011, “real” oil prices averaged $103 per barrel – the highest since 1864 back when Abraham Lincoln was president. The annual average real gasoline prices were the highest since 1949, the first year of Department of Energy data. These record prices explain why the world’s five largest public oil companies – BP, Chevron, ConocoPhillips, ExxonMobil, and Royal Dutch Shell – made over $100 billion in the first three quarters of 2011. To make matters worse, instead of investing in clean energy, companies like Exxon spent up to half of their profits each quarter repurchasing their own stock to enrich board members and investors. They could exceed $130 billion in profits for the entire 2011 when the fourth quarter profit numbers are released later this month.
Although API won’t reveal its ad campaign cost, API President and CEO Jack Gerard said on Wednesday that the group is spending “a significant amount” to ensure that oil and gas drilling is the main issue of the 2012 campaign. API intends to litter swing states with advertisements designed to promote its “drill, baby, drill” message, along with the approval of the Keystone XL pipeline for tar sands oil. Gerard explicitly threatened the president on the latter issue, noting that if he does not approve the Keystone XL pipeline, he will face “huge political consequences.”
Another major component of Big Oil’s multi-million dollar pressure campaign will likely include attempts to convince Americans that health protection and environmental safeguards stymie U.S. oil production. Gerard falsely accuses an unidentified “some” for supporting such rules.
“Some seem to be opposed to any oil and natural gas development.”
“We see it in the onslaught of regulations from a host of federal agencies that threatens to impose unnecessary costs on businesses struggling to survive.”
These nameless false attacks are really aimed at the Obama administration, but Gerard lacks the courage to say so. This baseless assault ignores the evidence that shows crude oil production has been on the rise since Obama took office at the same time new pollution reductions were adopted.
For the first time in over a decade, the U.S. produces more than half of its oil – imports are below 50 percent. Last year, API reported that the number of new drilling rigs increased by 28 percent. The Wall Street Journal reported in late August a staggering jump in total U.S. drill rigs since Obama took office. They noted a “huge surge in U.S. oil drilling, up nearly 60% in the past year and the highest total since at least 1987, when oil services company Baker Hughes Inc. began keeping track.”
API also released a study today falsely claiming that the temporary post-BP disaster deep water drilling moratorium in the Gulf of Mexico cost 90,000 jobs. In fact, a Republican witness at an October 2011 House Natural Resources Committee hearing testified that the moratorium lead to only 11,500 fewer temporary jobs over two years. While job losses are unfortunate, the actual reduction is nearly 90 percent less than API claims.
[Editor's note: The 90,000 jobs statistic is all jobs (direct + indirect + induced), whereas the 11,500 jobs statistic from the cited HNRC testimony is for direct jobs only. The Quest study from Wednesday found 22,000 direct jobs were lost in 2011 as a result of the moratorium.]
Actually, over the past five years, the big five oil companies have shed U.S. employees even while they made gigantic profits. House Natural Resources Committee Democrats determined that:
“Despite generating $546 billion in profits between 2005 and 2010, ExxonMobil, Chevron, Shell, and BP combined to reduce their U.S. workforce by 11,200 employees over that time.”
API also ignores the economic hardship for people make their living on or near the water if there were another catastrophic oil blow out. After the BP disaster, overall tourism and consumer spending in the Gulf states’ coastal economies fell by 40 percent in June 2010. The temporary moratorium – since lifted – was designed to prevent another such economic calamity.
When asked about whether API is satisfied where the administration is heading, Gerard expressed disappointment in the number of current projects:
“The lease sales as part of the current administration’s five-year plan put forward by the administration limits the activity to the Western and Central Gulf. The areas where we have been producing for 65 years… the places we need to look are places we haven’t been in the past.”
Despite Big Oils repeated complaints about the reduction in offshore oil drilling due to the Obama administration, the Associated Press determined that “by early 2012, the Gulf will have more rigs designed to drill in its ‘deep water’… than before the spill.”
At yesterday’s press event, Gerard dodged a question on how the U.S. became a net exporter of oil and gas in what the API claims is an “overly regulated political environment.” In fact, the U.S. exported 848 million barrels of oil worth $73.4 billion, and only imported 750 million barrels through October 2011, according to the Wall Street Journal.
While hitting families hard in their pocket books, the oil industry does little to develop the cleaner fuels of the future. Gerard purported to support oil industry innovation and creativity, noting:
“We believe what the American voters are saying is give us leadership. Give us leaders who share our vision of a strong and prosperous nation, which can be built on creativity and innovation specifically in the energy sector.”
Yet the Natural Resources Defense Council found that in the past five years the oil industry has spent a meager $4 billion on renewable fuel investments, compared to the $2.1 trillion in capital expenditures to find and produce more oil. For every dollar the oil industry spent on oil exploration and production, less than half a penny was spent on the clean renewable fuels of the future.
The Vote 4 Energy ads that will run alongside CNN election coverage claim to be testimonials from American citizens that support the oil industry’s agenda. In fact, participants were fed lines and “any deviation from [API’s] script was refused.”
Gerard’s most laughable claim is that the “ ‘Vote 4 Energy’ is not about a political party — it’s not even about the candidates.” In fact, Big Oil heavily favors Republicans over Democrats. Opensecrets.org determined that during the last election cycle, Big Oil spending favored Republicans by nearly 4 to 1. The 2011-12 big oil contributions are even more tilted to the Republicans, by nearly 10 to 1. It’s easy to imagine that the “Vote 4 Energy” campaign will reflect Big Oil’s partisan leanings.
API’s “Vote 4 Energy” pressure campaign simply promotes the expansion of our oil-dependent status quo policies despite their national security, economic and environmental costs. This agenda would fuel even greater profits for Big Oil companies, while removing even more cash from our wallet — the same wallets feeding the enormous profits that will pay for this campaign. API’s “new” 2012 campaign won’t be new at all; rather, it will be more of the same – gouging American families at the pump while lining the coffers of some of the wealthiest corporations in the world.
– Daniel J. Weiss is a senior fellow with the Center for American Progress Action Fund; Jackie Weidman is a special assistant for energy policy at the Center for American Progress.