Thursday, November 18, 2010

New York Times still Parotting CERA

Heavens - the New York Times is an awfully slow learner.  There is a piece in there by Clifford Krauss (who has occasionally done better than this), which is a completely one-sided puff piece that reads as though it was written by a PR agency for a major oil company, backed up by the usual quotes from CERA.  It's full of stuff like this:
THREE summers ago, the world’s supertankers were racing across the oceans as fast as they could to deliver oil to markets growing increasingly thirsty for energy. Americans were grumbling about paying as much as $4 a gallon for gasoline, as the price of crude oil leapt to $147 a barrel. Natural gas prices were vaulting too, sending home electricity bills soaring.

A book making the rounds at the time, “Twilight in the Desert,” by Matthew R. Simmons, seemed to sum up the conventional wisdom: the age of cheap, plentiful oil and gas was over. “Sooner or later, the worldwide use of oil must peak,” the book concluded, “because oil, like the other two fossil fuels, coal and natural gas, is nonrenewable.”

But no sooner did the demand-and-supply equation shift out of kilter than it swung back into something more palatable and familiar. Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation.
First of all, it's just not the case that Twilight became conventional wisdom.  In particular, the New York Times spent the entire period running calming articles full of CERA quotes about how oil prices would go back to normal real soon now, even as they continued to climb higher and higher - almost to $150/barrel - only finally going down when the global economy almost collapsed in a financial crisis.

Secondly, this:
Yet, the outlook, based on long-term trends barely visible five years ago, now appears to promise large supplies of oil and gas from multiple new sources for decades into the future.
is just not true with respect to oil.  Nothing has materially changed in the fundamentals of oil supply from three years ago except the shaky prospect that Iraqi supply will increase considerably in the future.  Other than that, we have a few million barrels/day of spare capacity in OPEC, and whenever the global economy finally recovers sufficiently from the financial crisis, that will be used up in short order and then oil prices will go stratospheric again.

Presumably, having noted that the IEA is now acknowledging peak oil, this is the NYT's response (since they failed to even mention the IEA discussion of the issue).

I guess the thing that bothers me is this: the piece reads to me as deeply and intentionally deceptive, while being skillfully crafted to avoid saying anything verifiably untrue.  The constant mixing of oil and gas as though the two situations are the same.  The cherry picked and misleading comparisons.  For example, "oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia." - Saudia Arabia has never been a large direct supplier of oil to North America - and so this is an irrelevant example intended to mislead someone who isn't intimately familiar with the stats.  Clifford Krauss knows perfectly well that CERA has always said that oil will be plentiful and moderately priced in the near future.  There is nothing new about this in the last three years.  He knows that their track record of prediction in the 2005-2008 oil shock was dreadful.  But he says nothing to clue his readers into any of this context.

And whatever happened to at least nominal adherence to the rule of journalistic balance?  There isn't even one quote from anyone who would dissent from the cornucopian point of view peddled in the article.  According to him, it became "conventional wisdom" that the age of cheap oil was over, but he can't find anyone to talk to who would still defend that view?

I have no idea what motivates the New York Times to publish this kind of dishonest propaganda masquerading as journalism, but it is extremely unhelpful.

11 comments:

Frozen in the North said...

The imbalance you speak of, will again tilt against buyers in 2011, as demand exceeds 88bbd. The issue is not North America, but Asia where demand (now half the world demand) is growing at a rate of 14% p.a. - when these guys were 10% of world demand their impact on world demand/supply was irrelevant.

The issue is not that there is no oil left, rather that if production is 87bbd and demand is 88bbd price will rise.

BTW the oil off the coast of Brazil is a huge find, as is the natural gas in the US, but this stuff is not cheap to extract. Brazil's new oil fields are so far off shore they cannot be reached by helicopter, and they are deep, each platform will cost in excess of $1billion, and Petrobras will need a fleet of them. As for Gas in America it will only be economical at twice the current price.

risa said...

One of NYT's roles (though they are more skillful in hiding it than the WaPo) is that of the beat cop in the early stages of the horror movie: "Nothing to see here; move along." Given the flows of money in our world -- and money has no ethical markers in itself -- what did we expect?

Stuart Staniford said...

Frozen:

Agreed on all points, except that I'm less certain on the timing, since I'm not sure how the debt crisis in Europe is going to play out, and if that were to worsen, it could plunge demand again.

As to natural gas, I'm generally in agreement that there does seem to be plenty of that for some time to come (hence it's not a major focus of mine).

Mike Aucott said...

Krauss's article was appalling. Last night I sent off this letter to the Times:

"Wednesday's Special Energy Section article "There Will Be Fuel" states that gas and oil have a "fraction" of the carbon-burning intensity of coal. But for gas that fraction is about 3/5s; for oil, it is about 4/5s. This hyperbolic statement is only one of many in this breathlessly rosy article. Ignored is the fact that since the early 1980s the world has consumed more crude oil each year than has been discovered. Ignored is the strong possibility that global production of crude oil has already peaked, as recently reported by the IEA. The article provides no evidence that new discoveries can offset declining production in major oil fields around the world. A closer look at the data will very likely make it clear that energy independence for the U.S. is not remotely possible without a much stronger effort to develop renewable sources and conserve energy."

kjmclark said...

I gave up on the NYTimes a few months ago. I used to have it as one of Firefox's startup pages, but decided it wasn't really worth the time anymore. I had a bit of withdrawal for a few days, but I don't feel like I'm missing anything now. Anything really useful shows up in the blogosphere, and I don't have to get my blood pressure up over Jad Mouawad's utter nonsense about peak oil anymore.

On the demand side, you have to wonder about China. I think you covered the possibility of China being a kind of bubble a while ago, Stuart. Now that they're raising interest rates to deal with inflation (brought on by their renminbi policies and our QE2), we may know soon if their economy will crash too. That would change the energy picture for a while.

James said...

The silver lining in all this is that blogs like yours, Stuart, are providing more and more competition for the NYTimes and her like. There are some incredibly good blogs around (e.g., Calculated Risk), though of course most people are still reading the MSM.

I definitely think that Early Warning is part of the solution.

Stuart Staniford said...

Personally, I do still like the NYT and read the website (at least quickly) every day, and would even pay to subscribe if they ever go down that road. That's why their terrible coverage of oil issues bothers me so much.

I do agree that blogs like Calculated Risk, Econbrowser, etc, have led to a vast improvement in how informed it's possible to be, relative to ten years ago.

jdl75 said...

Truly amazing, thanks for the post.

One can wonder if there are really some pressure behind such an article, or if it is mostly plain denial and grasping at "obligation to be optimist" from the author

jdl75 said...

What is your view on this ? Do you think that there is a discussed "editorial line" defined within the NYT (and whomever) regarding energy/peak oil, or is it just this journalist point of view ?

KLR said...

Thanks for this, I laughed out loud. Spike in the fuel price? Have you tried a recession to cure what ails you, kid? Oh, of course the price crashed because of those discoveries, too. Cars can be powered by Petrobras press releases, don't you know?

Bad as it was it was leagues ahead of Ray Learsy.

Stuart Staniford said...

jdl75: Obviously, I'd be speculating wildly as to what is going on inside the NYT. However, very similar articles have appeared under several bylines (Jad Mouawad being the most notorious)