Oil Lobby Reaches Out to Citizens Peeved at the Pump
Friday, May 9, 2008
Faced with a national outcry over the high price of gasoline and soaring profits for energy companies, the oil and gas industry is waging an unusually pricey campaign to burnish its image.
The American Petroleum Institute, the industry's main lobby, has embarked on a multiyear, multimedia, multimillion-dollar campaign, which includes advertising in the nation's largest newspapers, news conferences in many state capitals and trips for bloggers out to drilling platforms at sea.
The intended audience is elected officials and the public, with an emphasis on the latter. The industry is trying to convince voters -- who, in turn, will make the case to their members of Congress -- that rising energy prices are not the producers' fault and that government efforts to punish the industry, especially with higher taxes, would only make pricing problems worse.
"We decided that if we didn't do something to help people understand the basics of our industry, we'd be on the losing end as far as the eye could see," said Red Cavaney, the institute's president.
Despite the efforts, Democratic congressional leaders this week again proposed an energy plan that would strip oil companies of billions of dollars of tax breaks and impose a tax on windfall profits. Also, the Democratic presidential candidates routinely pronounce "big oil" as if it were a one-word epithet, said former Oklahoma senator Don Nickles, an energy lobbyist.
Still, the oil lobby thinks it has made significant progress with consumers and will make even more as it continues to spend heavily on public relations. Allied industry groups such as coal and natural gas are also increasing their efforts to curry favor with the public, hoping to improve citizens' sometimes poor opinion of them.
The campaign has stirred outrage among consumer groups. They complain that the industry is using its outlandish profits to make even more money, and that its advertisements use statistics selectively. "It's basically deceptive advertising that dulls the natural and proper reaction of the public," said Mark N. Cooper, research director of the Consumer Federation of America.
Oil company profits have soared lately, bolstered by record crude oil prices. This month, Exxon Mobil reported a first-quarter profit of $10.89 billion, up 17 percent from a year ago, which provoked new congressional complaints. Shell and BP also posted sharp quarterly profit increases. Gasoline prices, meanwhile, have risen to a national record of nearly $3.65 a gallon, and crude oil has hit a new peak of nearly $124 a barrel.
Cavaney will not disclose how much his institute is spending on its campaign, except to say that it is less than $100 million a year, which was roughly the size of the "Got Milk?" ad blitz that featured famous people with milk mustaches.
The price tag for issue-oriented campaigns that lobbies routinely sponsor is huge, said Bill Replogle, an advertising executive at Qorvis Communications.
"A typical issues ad-spend in D.C. might be $2 million to $3 million for a significant campaign," he said. "This dwarfs that, and many national ad buys."
The oil and gas industry has long been considered a powerhouse in Washington, thanks to its big spending inside the Beltway and quietly extensive ties to influential lawmakers from the oil patch. The industry is the third-largest campaign contributor among major industry groups and the fourth-largest buyer of lobbying services, according to the nonpartisan CQ MoneyLine.
The industry has lobbied Congress intensively in the past few years, institute officials said. But such insider connections were insufficient to hold back an anti-industry tide that rolled into the capital after Hurricane Katrina struck in 2005. Energy prices spiked then, prompting a spate of congressional hearings that focused on oil company profits and led to attempts to pass a windfall profits tax.
"That was a wake-up call," Cavaney said. His organization began to research public opinion about, and knowledge of, the industry and found it extremely low. In response, it began a national advertising and public relations drive that has become among the largest of its kind.
This has been especially visible to residents of big cities this year, with prominent ads appearing in major newspapers and commercials during public affairs television.
This week, for example, the institute bought full-page ads explaining what goes into the cost of gasoline (predominantly crude oil and taxes) in USA Today, the New York Times, the Los Angeles Times, The Washington Post and seven other large newspapers.
But a lot of the oil lobby's outreach has been directed at smaller markets, where its press events have gotten prominent and positive coverage. State capitals have been a favorite venue for what the institute calls its "tech tour," an interactive exhibit, including video games, that highlights technological advances that allow companies to extract oil and gas cheaper -- and to burn it cleaner -- than in the recent past.
In March 2007, the tech tour exhibit spent time in Lansing, Mich., the state capital. A year later, it visited West Virginia's capital, Charleston. Local television stations aired prominently placed, upbeat 30-second news segments after each visit.
The lobby has started courting online journalists as well. In November, the institute said it invited bloggers to Shell's facilities in New Orleans and then took them to visit the offshore platform Brutus. The same month, the institute also brought bloggers to Chevron's offices in Houston and its Blind Faith platform under construction in Corpus Christi, Tex. There are more tours in the works.
Coal companies, and the users and transporters of the commodity, are also trying to improve coal's image with a $45 million-a-year campaign, and Oklahoma billionaire Aubrey K. McClendon is spending millions through a foundation to promote natural gas.
R. Skip Horvath, president of the Natural Gas Supply Association, said energy companies are reacting not just to higher prices and profits but to the three-year, $300 million "We" campaign launched in March by former vice president Al Gore urging a reduction in greenhouse gas emissions to combat climate change. "The need to get information out there to explain how energy relates to the environment is key," Horvath said.
But Cavaney of API is not promising instant results. He said that his group's efforts have produced "a very different conversation" about energy, but that the job is not nearly finished.
"There's no expectation that the public will end up loving the oil and gas industry," he said.