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What The Media Tell Americans About Free Enterprise

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Friday, June 30, 2000

Volume 8, Number 13

Networks Let Government Slide Off the Hook In Gas Price Run-Up

The government’s fingerprints were all over the recent astronomical price increases in gasoline in Milwaukee and Chicago, but you wouldn’t necessarily know that from watching national TV news coverage of the issue. In recent days, the networks have contentedly repeated assertions from the Environmental Protection Agency that its new clean air regulations — the ones which took effect immediately before the surge in prices — had little to do with the price increases.

The national networks had hardly touched the story when EPA officials began pointing fingers at the oil industry in mid-June, but CBS’s Cynthia Bowers told viewers what was really going on. She reported on the June 7 Evening News that "new EPA guidelines went into effect last week requiring 16 cities with poor air quality to sell cleaner-burning reformulated gas. It costs more to produce, and with supplies tight, prices are soaring."

By the time Bowers had filed her report, the EPA’s role was well known locally in Chicago and Milwaukee, where the rising cost of gas had been a huge story for weeks. In late May, Wisconsin officials had requested that the EPA grant their state a waiver from the reformulated gas requirement, an appeal which the EPA rejected (and would later reject again in mid-June when prices were even higher).

With Midwestern tempers flaring, the EPA made a stab at damage control on June 12, insisting that their rules shouldn’t account for more than a few cents per gallon. EPA spokesman Robert Perciasepe landed soundbites on all three evening news broadcasts. NBC Nightly News showed him saying that "we see no good explanation as to why these differential prices exist in the Midwest and particularly Milwaukee and Chicago," while both ABC’s World News Tonight and the CBS Evening News quoted Perciasepe saying that "our analysis shows adequate supply and the cost of producing the fuel doesn’t, isn’t anywhere near the costs, the prices we’re seeing at the pump."

After that, the big three national networks — encouraged by a government bureaucrat — turned their attention toward Big Oil, dropping terms like "price gouging" and "profiteering," while ignoring independent experts who argued that the clean air rules were too onerous.

The numbers tell the story: From June 1 to June 12, the ABC, CBS, CNN and NBC evening newscasts ran four stories which spent more than 30 seconds discussing the EPA’s rules as a probable cause. From June 13 to June 26, those same newscasts aired only two such stories, compared with 16 that promoted the government’s idea that "price gouging" was at fault.

The networks began portraying the EPA as the price police, not the pollution police. "The EPA wants to know why the price of gasoline in so many parts of the country is as high as it is," Peter Jennings intoned on June 12. "The EPA is on the case because cleaner burning gas may be an issue, but so might price gouging."

While oil industry spokesmen continued to protest their innocence in soundbites, reporters stopped suggesting that the clean air regulations were to blame and started looking for the government to find the real culprits. "The EPA suspects price gouging," ABC’s Dean Reynolds warned on June 12, "and agents were out looking for it today." In the same vein, "The White House has now put the oil industry on notice," stated CBS’s Bob Orr on June 12. "If any evidence of price gouging surfaces, regulators will come down hard."

If any evidence surfaces? There’s already quite a lot of evidence that the regulators themselves are at least partly to blame. Every day, the American Automobile Association (AAA) surveys more than 60,000 service stations to track gas prices across the nation. Here’s how the consumer group assessed the situation in their June 26 Fuel Gauge Report

"The current survey shows the Great Lakes region as having the nation's highest gas prices. Great Lakes prices have been impacted by huge supply problems. Key pipelines in the Detroit and Chicago areas have been interrupted in recent weeks," AAA reported. "Major cities mandated to use the new Phase II environmental gasoline have had the biggest run-ups in price, and other cities served by the same refiners and distributors that are supplying the new gasoline have also seen big price increases. In addition, demand for gasoline continues to be strong and is up more than four percent over last year."

In mid-June, AAA called on the EPA to suspend its clean air rules for 90 days, to provide relief for motorists and time for refiners to build up supplies of reformulated gas. Network evening news coverage of the request: zero stories.

A Congressional Research Service study released on June 21 — and rejected by the EPA — determined the clean air requirements had increased pump prices by about 25 cents per gallon in Milwaukee and Chicago, the cities required to use a unique gasoline-ethanol mixture. The report attributed another 25 cents per gallon to pipeline problems that plagued the Midwest.

The author of that study, economist Lawrence Kumins, told the Milwaukee Journal Sentinel that the problem was with the EPA-mandated gas. "It’s difficult stuff to make. There’s a limited call for it. It’s difficult to transport, and there’s a shortage of transportation capacity," Kumins told the newspaper. "Then you have to factor in a fundamentally tight crude oil supply underlying the whole situation." Network coverage: one mention on ABC’s World News Tonight, zero coverage on the other networks. (See the June 23 CyberAlert for details.)

The networks aren’t obligated to buy into the concept that the government’s regulatory schemes have contributed to consumers’ problems, of course. But viewers should have been exposed to the factual evidence — such as that provided by the CRS study and by AAA — that cast doubt on the government’s storyline.

But, as another critic of unnecessary and counter-productive government regulation, Jerry Taylor, the director of natural resource studies at the Cato Institute, put it in a recent report, "Demonizing the oil industry, however, always pays more dividends than telling the messy and complicated truth about how policy chickens come home to roost."

Rich Noyes


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