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What The Media Tell Americans About Free Enterprise

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May 1996


Networks Pump Up Gas-Price Story
Reporters Ignore Past Prices, Government Burden

Given how closely tuned the media antennae are to the political world, it's no surprise that the recent bump in gasoline prices was big news. Politicians in both parties tried to make political hay out of the price increase. Few reporters questioned their rhetoric by pointing out that gas prices, by historical standards, are not high and that they would be even lower if it weren't for taxes and regulations.

CBS saw a capitalist conspiracy behind the price hike. Dan Rather sounded the alarm on the April 30 CBS Evening News: "It's the question every American driver is asking with every trip to the pump. Why is the price of gasoline going up and up and up? Is it the free market at work, the law of supply and demand? Or, is it greed, or possibly even something more sinister?"

CBS economics correspondent Ray Brady suspected the latter. After an industry soundbite defending the price hikes, Brady reported that "critics say those high pump prices come from gouging, [that] the industry deliberately let supplies drop." Brady also blamed Americans for "driving longer distances to work in popular gas guzzlers. And speeding; no more 55-mile-an-hour federal speed limit."

Curiously, in the very next story, CBS didn't hint at conspiracy when Clinton moved to keep beef prices high. According to Rather, "President Clinton is giving some election-year help to America's ranchers and farmers. The President took action today to try to boost cattle prices, which have fallen to their lowest level in ten years."

The other networks were a little more calm about the gasoline price hike. ABC's Brian Rooney, on the April 24 World News Tonight, blamed "a combination of unrelated events" for the higher gasoline prices. Rooney pointed out that "crude oil traders were predicting that the United Nations would partially lift the ban on Iraqi oil, which would have put more and cheaper oil on the market. When that didn't happen, the rush to buy from other sources drove the price up." Rooney also informed viewers that the long Northeastern winter contributed to the higher prices.

Over at NBC, Tom Brokaw said, on the April 30 Nightly News: "We don't have to tell you tonight that gas prices are still stuck at very high levels." Of the government investigation, correspondent Pete Williams said: "Some government economists are skeptical the investigation will turn up anything illegal." He also pinned blame on the weather: "They say prices are up because the severe storm from last winter drove up demand for heating oil, leaving less crude oil for making gasoline."

Rooney and Williams were correct, as far as they went. But were gas price really "at very high levels"? John Merline, in the May 7 Investor's Business Daily, looked at history for an answer. "After controlling for inflation," he reported, "a gallon of gas today costs 27 percent less than it did in 1949, and 23 percent less than a gallon did as recently as 1985." He pointed out that "even at the high pump prices posted at the end of April, the average national gasoline price is about the same as it was in June of last year."

Merline spotted the real story, that "today's prices would be lower still were it not for the substantial added cost imposed by government." Neither Brady, Rooney, or Williams mentioned, as Merline did, that "today, the combined federal-state tax is 37 cents a gallon. The federal tax stands at 18 cents a gallon, and the median state tax is 19 cents."

"At today's prices," he added, "taxes alone account for more than a quarter of the pump price." Merline also explained that government regulations raise the price of gasoline at least four cents a gallon.

While Rooney and Williams at least didn't get the story wrong, they still didn't get the full story. Many network news viewers still may not know how much government adds to the price of gasoline.


Rich Noyes


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