Oil War: The ad battle between ‘Big Oil’ and DNC, Part 2

at 03:05 PM ET, 03/30/2012

Under President Obama, domestic oil production is at an eight-year high. So why is Big Oil attacking him? Because he’s fighting to end their tax breaks. He’s raising mileage standards and doubling renewable energy.” -- Narration from Democratic National Committee ad, March 29, 2012

When you see this ad, remember who paid for it and what they bought.’” -- More narration from DNC ad, March 29, 2012, showing an image of Mitt Romney

The Democratic National Committee quickly rallied to the president’s defense after the American Energy Alliance aired its attack ad. The group released a video of its own that references the commercial and tells viewers to remember “what they bought” as an image of GOP presidential candidate Mitt Romney appears.

DNC chair Rep. Debbie Wasserman Schultz (Fla.) teamed up with Democratic Party communications director Brad Woodhouse to push some rhetoric of their own in a news conference.

We’ve already examined the DNC claims that deal with a rise in oil production and with so-called oil subsidies, but we’ll do it again. We also looked into the issue of whether “Big Oil” or the American Energy Alliance somehow bought Romney.

The Facts

U.S. domestic oil production has indeed reached an eight-year high, according to data from the Energy Information Administration. In addition, the U.S. drilling-rig count is “higher than any year since the early 1980s,” as The Washington Post noted in an article earlier this month.

But these facts are not particularly impressive considering that production has been relatively static since 2003 -- it is only slightly higher now than in previous years. We pointed this out in an examination of the president’s State of the Union address, citing an Energy Information Administration graphic that shows production levels well below the rates from 1951 through 2002.

It’s also important to note that the Department of the Interior works with five-year lease plans for extraction. The last program, which came from President George W. Bush, ended just this year, meaning the production increase is mostly attributable to Obama’s predecessor. The ad states that production has risen “under President Obama.” This is technically true but misleading.

As for the DNC press conference, Wasserman Schultz said at one point that the oil industry has a “hypocritical stance on subsidies for other energy sources. Their position is ‘subsidies for me, but not for thee.’”

The chairwoman is treading on thin ice there. We explained in a previous column that reasonable minds disagree about whether it is appropriate to use the term “subsidies” to describe what are really just oil industry tax breaks. That’s because the average person understands the term “subsidy” to mean actual cash investments, the likes of which the Obama administration has given to alternative energy companies like the now-bankrupt solar-panel manufacturer Solyndra.

Technically speaking, the government has allowed only tax deductions to help oil companies recover the cost of doing business -- this is standard in virtually all industries. No money from the U.S. Treasury goes to the oil industry, so it’s a stretch to describe the tax breaks as literal handouts like Solyndra received. There is no hypocrisy on the part of the industry in this sense.

Admittedly, we’re talking about a semantics issue here. But we can’t understand why the DNC and Obama continue to use the word “subsidies” in such a questionable way, especially when the term “tax breaks” is more accurate and indisputably true. (The actual ad, to its credit, uses the proper terminology on tax breaks.)

As for the notion that the Big Oil and the American Energy Alliance somehow bought Romney, we found little evidence of that.

First, the American Energy Alliance can’t contribute a penny to political campaigns, because the group is a nonprofit. Second, the ad from that organization never mentioned Romney or supported him. It simply criticized Obama’s energy policies.

The Supreme Court’s Citizens United decision allowed nonprofits to make statements opposing candidates, but it can’t be the group’s “primary activity.” It’s interesting to see how the American Energy Alliance walks the thin line between campaigning against the president and simply suggesting that voters “tell Obama we can’t afford his failing energy policies,” which is the technical equivalent of saying “write to your congressman” about a given issue.

Washington Post campaign-finance reporter Dan Eggen wrote an insightful story in February about how this sort of thing works with nonprofit groups.

In terms of Romney’s campaign contributions from the oil and gas industry, he has received $598,000 so far during this election cycle. That’s less than one percent of the $74 million he has raised altogether. Obama has brought in about $131,000 from the industry, so it’s not like the president’s hands are entirely clean in this regard.

Billionaire businessmen David and William Koch, who have heavy ties to the oil industry, donated $2,000 to the Romney campaign and $250,000 to the pro-Romney super PAC Restore Our Future respectively. But the DNC can’t cite the latter contribution as evidence that Big Oil has bought Romney himself, because candidates are forbidden to coordinate directly with super PACs on deployment of resources -- meaning there’s no direct tie between Romney and any spending on the American Energy Alliance ad.

The DNC pointed out that the American Energy Alliance is partially funded by the Koch brothers, but that doesn’t prove a connection with Romney. The committee dragged him into its fight with the American Energy Alliance simply because of his limited contributions from the oil industry and the fact that he supports tax breaks for oil companies.

DNC national press secretary Melanie Roussell had this to say about the matter: “It is no secret that Mitt Romney and his super PAC have received significant support from the oil industry. Just last week he held a fundraiser at the Petroleum Club in Shreveport, La. And what do these oil industry executives get in return for their support? Mitt Romney’s protection of tax breaks for oil companies and attacks on increased fuel efficiency standards and alternative energy investments.”

The Pinocchio Test

We found nothing factually incorrect about the DNC comments regarding domestic oil production or oil industry hypocrisy, but the claims were misleading. As for the notion that Big Oil bought Romney, only a small percentage of the GOP front-runner’s campaign money has come from that industry — which has contributed to the president’s campaign, as well. Beyond that, the DNC provided no proof that Romney had any connection with the American Energy Alliance ad.

The DNC gets kudos for an impressively quick response to the American Energy Alliance ad, but overall its video deserves three Pinocchios.

Three Pinocchios

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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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