Big Oil Misleads With False Claims That Decreased CA Crude Oil Production Leads To Higher Gas Prices
Los Angeles, CA -- When you see deceptive Facebook and television ads spreading disinformation about oil drilling and prices, you can be sure that the Western States Petroleum Association (WSPA), the largest corporate lobbying group in Sacramento, and other oil industry groups are behind them.
That’s the case in a recent barrage of deceptive Facebook and television advertisements, where oil drillers, masquerading as the Astroturf group “Californians for Energy Independence,” are falsely claiming limiting oil drilling in California will raise prices at the pump, according to report by Consumer Watchdog.
“Californians for Energy Independence (CEI) has run ads on Facebook and cable channels in Sacramento, Fresno and San Diego blaming state policies for limiting local production and raising gas prices in an apparent effort to sway lawmakers,” the group said.
Consumer Watchdog pointed to experts and evidence that show “decreased local oil production has no impact on California gas prices.” Crude oil prices are set on a global market.
Moreover, California’s in-state oil production has been decreasing since its peak in 1985, according to the California Geologic Energy Management Division, and has little to no impact on world crude prices.
The group created a Consumer Alert video warning the public about the phony ads. “Limiting oil drilling in California has about as much impact on California gasoline prices as it does the price of tea in China,” said economist Robert McCullough of McCullough Research. “Crude oil prices are set on a world market that the level of California crude oil production does not impact.”
McCullough stated, “Since California produces a declining share of the rapidly growing world supply of oil, minor variations in its supply do not affect world prices. While the U.S. is the world's largest oil producer (20%), California is only 3% of U.S. production -- 3% of 20% is less than 6/10ths of one percent of the world supply.”
UC Berkeley economist Severin Borenstein has said even if oil is slightly cheaper to produce in-state, the price is still set at a rate competitive with product from overseas. “Consumers will not benefit from more oil production in the state and they will not be hurt by less oil production in California,” Bornstein said.
In a 2023 blog post, Borenstein wrote: “While some crude is produced in California, the marginal source (which is what sets the market price) comes from elsewhere. Once crude is on a tanker, the price doesn’t differ much whether it is being delivered to Japan, France, China, India, New York, or California… ” He cited his own co-authored 1997 academic study to that effect.
"The difference between domestic and imported crude prices doesn't register at the gas pump, but if you really want to put a number on it, US West Coast refiners' monthly crude oil acquisition costs averaged about a penny per gallon cheaper for imported crude last year," said independent consultant Greg Karras.
“The main determinant of gasoline prices has nothing to do with decreased local production of crude oil,” said Consumer Advocate Liza Tucker. “Instead, the world price of crude oil is the yardstick determining the price of oil in California and California’s long-declining production has no impact on world crude prices.”
Today only one quarter of annual oil supply to California refineries comes from in-state production because so many wells are spent, according to the California Energy Commission. “Regardless of permit activity, new wells aren’t being drilled at accelerated rates, and those new permits are tapping into fields that have little resources left to give under normal economic situations,” said Lindsay Buckley, a CEC spokeswoman.
Big Oil and WSPA’s Phony Front Groups
The oil industry claims not to be behind the ad campaign but the group “Californians for Energy Independence” sponsoring the advertising running on Facebook and cable TV channels was presented at the Washington Research Council as being “activated” by the Western States Petroleum Association (WSPA) to “contribute” to its advocacy goals in a 2014 internal presentation first made public by Businessweek. (see page 5: https://consumerwatchdog.org/resources/OilIndustryManipulationReport.pdf )
The group is one of a host of groups created to protect WSPA’s interests, according to the presentation. In the 2014 WSPA presentation, the litany of groups are broken out as designed to protect either “upstream” (crude harvesting) or “downstream” (refining) operations.
Californians for Energy Independence (CEI) is labeled as a part of the “upstream” propaganda campaign. So is another group running ads, listed under “downstream” and called Californians For Affordable & Reliable Energy.
Catherine Reheis-Boyd, President and CEO of WSPA and former Chair of the Marine Life Protection Act (MLPA) Initiative to create so-called “marine protected areas” in Southern California from 2009 to 2012, is listed as a “principal officer,” president and director at CEI, based on a 2021 IRS document, according to E&E News. The California Independent Petroleum Association’s CEO Rock Zierman is also listed as CEI director on IRS paperwork.
Chevron is a major giver to CEI dating back to 2019, according to its lobbying disclosure filings at the Secretary of State Office. Chevron donated $3.6 million to the group in 2023, according to its filing at the Secretary of State Office. Aera Energy is also a big giver. It donated $1 million in 2023, according to its filing.
CEI and Californians for Affordable and Reliable Energy (CARE) have spent a combined $4.3 million to run ads on TV and Facebook this year to influence policy, according to data provided by AdImpact to E&E. One CARE Facebook ad blames “a growing list of state-mandated programs and requirements that have rapidly increased energy costs compared to the rest of the nation—driving up costs on everyone and everything.”
CEI paid consultants Winner & Mandabach Campaigns $4 million in the first quarter of 2023 and another $2.86 million in the third quarter of 2023, according to filings with the Secretary of State Office. Winner & Mandabach is reportedly a consultant to the oil-industry backed referendum campaign to overturn California’s new law establishing a 3,200-foot setback between drilling operations and sensitive receptors from schools to hospitals and homes.
Steven Lucas, an attorney with the law and lobbying firm Nielsen Merksamer, is the committee treasurer of the ballot committee. The ballot committee has paid Nielsen Merksamer $332,000 for services during 2022 and 2023, according to committee lobbying disclosure forms. Lucas is also the registered legal agent signing state lobbying disclosure forms for CEI, CARE, WSPA (a Nielsen Merksamer lobbying client), Aera Energy and the California Business Roundtable.
“By hiding behind CEI, the oil companies hide their identities from the public and are running a shadow political campaign,” said Jamie Court, president of Consumer Watchdog. “The public needs to know when they see these ads that they are 100% by the Chevrons, for the Shells and of the Exxons.”
CARE paid $3.15 million to political strategy and communications firm Applied Paradigms and another $263,000 to Unearth Campaigns, a digital campaign and ballot initiative consultancy, in the first quarter of 2023. The filing said lobbying activity concerned “general issues regarding gasoline cost education, SBX 1-2: the legislature.” SBX 1-2 is a landmark law allowing the California Energy Commission to set a price gouging penalty on refiners ripping Californians off at the pump.
CARE members include WSPA, the California Independent Oil Marketers Association, and the California Business Roundtable, according to the Natural Resources Defense Council. Chevron is a member.
According to its third quarter filing at the Secretary of State Office, the California Business Roundtable paid CARE $2.1 million and paid Unearth Campaigns $336,000 since January 1, 2023. WSPA also paid Unearth Campaigns $62,500 in the third quarter of 2023, according to its filing with the Secretary of State.
“It’s the old Business Roundtable dodge,” said Court. “Oil companies pay the Business Roundtable, the Roundtable pays a group and washes the oil industry money clean. It’s happened over the years with insurance companies and others. Only because this isn’t express advocacy for a ballot initiative can the dodge work.”
Background: New report reveals fossil fuel's media influence as Big Oil sponsors dinners, awards for journalists
For years, I have covered the capture of media outlets, journalists, politicians, regulators and environmental NGOs by the fossil fuel industry in California and the West.
I have documented how WSPA and the oil companies wield their power in 8 major ways: through (1) lobbying; (2) campaign spending; (3) serving on and putting shills on regulatory panels; (4) creating Astroturf groups; (5) working in collaboration with media; (6) sponsoring awards ceremonies and dinners, including those for legislators and journalists; (7) contributing to non profit organizations; and (8) creating alliances with labor unions, mainly construction trades.
I was very pleased when Drilled and DeSmog, in collaboration with The Intercept and The Nation, recently released a startling new report: Readers for Sale: The Media's Role in Climate Delay,” exposing the media’s role in promoting Big Oil disinformation on a global level.
"As the business model for media has faltered, the fossil fuel industry has increasingly weaponized weaknesses to its benefit," the report begins.
The report, coming out as the ongoing COP28 climate summit continues to generate controversy, goes into detail on how much money some of the biggest media companies in the world are taking in from fossil fuel, and where exactly the money is being spent.
“Reuters is one of at least seven major news outlets that creates and publishes misleading promotional content for fossil fuel companies, according to a report released today. Known as advertorials or native advertising, the sponsored material is created to look like a publication’s authentic editorial work, lending a veneer of journalistic credibility to the fossil fuel industry’s key climate talking points,” wrote Amy Westervelt and Matthew Green in the Intercept on Dec. 5.
“In collaboration with The Intercept and The Nation, Drilled and DeSmog analyzed hundreds of advertorials and events, as well as ad data from MediaRadar. Our analysis focused on the three years spanning October 2020 to October 2023, when the public ramped up calls for media, public relations, and advertising companies to cut their commercial ties with fossil fuel clients amid growing awareness that the industry’s deceptive messaging was slowing climate action,” the authors wrote.
“All of the companies reviewed — Bloomberg, The Economist, The Financial Times, The New York Times, Politico, Reuters, and The Washington Post — top lists of most-trusted news outlets in both the U.S. and Europe. Each has an internal brand studio that creates advertising content for fossil fuel majors that range from podcasts to newsletters, videos, and advertorials, and some allow fossil fuel companies to sponsor their events. Reuters goes a step further, with marketing staff creating custom industry conferences explicitly designed to remove the “pain points” holding back faster production of oil and gas.”
Read the Intercept article here: https://theintercept.com/2023/12/05/fossil-fuel-industry-media-company-advertising/
And view the full report here: https://www.documentcloud.org/documents/24183641-drilleddesmog_mediagreenwashingreport
You will rarely see deep reporting on Big Oil regulatory capture by journalists in the MSM and “alternative” media. The new report by Drilled and DeSmog, in collaboration with the Intercept and The Nation, is very welcome news in a time of increasing collaboration between media and Big Oil.
This has been a big year for capture of the media and journalists by the Western States Petroleum Association in California and the U.S., as I have documented in my articles.
WSPA sponsors dinners and awards ceremonies for journalists
In one of the clearest examples of the collaboration between Big Oil and the media, the Western States Petroleum Association, the largest corporate lobbying group in California and the West, sponsored a “media dinner” on Tuesday, February 28 this year in Sacramento as part of #BizFedSactoDays.
The flyer for the event stated, “Journalists who play an outsize role in shaping narratives about state politics and holding lawmakers accountable will join business leaders to pull back the curtain on how they select and tell stories about California policies, policy and power.”
Featured speakers at the program included Coleen Nelson of the Sacramento Bee, Laurel Rosenhall of the Los Angeles Times, Kaitlyn Schallhorn of the Orange County Register and Dan Walters of Cal Matters.
In a tweet, Catherine Reheis-Boyd, President of the Western States Petroleum Association (WSPA) and former Chair of the Marine Life Protection Act (MLPA) Initiative Blue Ribbon Task Force to create “marine protected areas” in Southern California, gushed:
“One of our favorite times of year is #BizFedSactoDays- when @BizFed helps amplify the presence and power of business in California. And we're honored to host the Media Dinner and featured media speakers! @DanCALmatters @LaurelRosenhall@ColleenMNelson @K_Schallhorn”
Then on March 16, the Sacramento Press Club announced in a tweet that WSPA was the new “Lede Sponsor” of the Sacramento Press Club's Journalism Awards Reception that was held on March 29: “Thank you to our new Lede Sponsor @officialWSPA! WSPA is dedicated to guaranteeing that every American has access to reliable energy options through socially, economically and environmentally responsible policies and regulations. Learn more more at http://wspa.org”
In response to this tweet, investigative journalist Aaron Cantu tweeted back on March 20, “As the recipient of @SacPressClub ’s environmental award last year, it’s concerning to see fossil fuel industry talking points passed off uncritically here. WSPA becoming lede sponsor happened in the context of a global PR turn as the climate crisis worsens.”
Unfortunately, Cantu is the only journalist other than me with the integrity to contest the sponsorship of the Sacramento Press Club’s Journalism Awards Reception by WSPA.
Even more unfortunately, there is no doubt that WSPA and Big Oil have for years worked closely with media outlets.
In 2015, I wrote this article about how LA Times and the California Resources Corporation (formerly Occidental Petroleum) teamed up on a propaganda website: https://www.dailykos.com/story/2015/10/30/1442947/-LA-Times-and-Big-Oil-team-up-on-propaganda-website. Fortunately, the Times is no longer managing and running that website.
In another example of media collaboration with Big Oil, Catherine Reheis-Boyd, WSPA President, was on the "short list" of nominees for the LA Times "Inspirational Women Awards” held on October 18, 2022.
Can you guess who was one of the sponsors of the LA Times awards? Yes, you guessed right — WSPA was a sponsor.
According to a tweet from @OfficialWSPA, "Today @latimes acknowledged a woman who is already well known in our industry as a trailblazer and inspiration to tens of thousands of women. Congrats to our fearless leader @WSPAPrez for being recognized as a shortlisted nominee for the Inspirational Women Awards."
In addition, four LA Times reporters received the “Courage in Journalism” award from the Sacramento Press Club in 2022. Yes, the Western States Petroleum Association was one of the sponsors of these awards last year also.
In addition to sponsoring journalism events in California, the Western States Petroleum Association has expanded its campaign to influence journalists nationally. WSPA and the controversial waste management firm Veolia North America sponsored events at this year’s Society of Environmental Journalists (SEJ) conference in Boise, Idaho, according to a report from DeSmog: scq.io/...
“The agenda for the conference, which is being hosted in Boise, Idaho, shows that the Western States Petroleum Association (WSPA) and the waste management company Veolia North America are sponsoring two of the “beat dinners” hosted on Friday, April 21 — the third day of the event,” the article by Sam Bright reported.
Fortunately, WSPA and Veolia’s sponsorships of the SEJ conference spurred condemnation by at least one group, Fossil Free Media.
“There’s no excuse for these sorts of conflicts of interest,” Jamie Henn of the campaign and communications group Fossil Free Media told Bright. “By letting the fossil fuel industry sponsor events, groups like SEJ lend credibility to bad actors” that are attempting to “influence coverage and maintain their social license by pretending to be well-meaning supporters of the free press.”
In response to the condemnation of the WSPA and Veolia North America sponsoring “beat dinners,” Mark Schleifstein (mschleifstein [at] theadvocate.com), countered that “SEJ had 11 beat dinners sponsored by a variety of organizations, including environmental groups and journalism organizations. The purpose is provide access to all sources of information: https://conference.sej.org/agenda/.”
When so called journalism organizations are tainted by the toxic stench of Big Oil money — and very few “environmental” and “climate” organizations have any problem with this — you know that were are in a really dark time in human history.
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