Five myths about the oil industry: particularly since September 11, global chatter keeps offering up supposedly accepted notions about oil. TIE asked an expert to address some of the confusion.

• Author: West, J. Robinson
• Position: Globalization

Since the energy crisis of the 1970s, a number of myths about the oil industry have developed in political and media circles. In the post-September 11 environment these have been raised to near gospel. At times, ideological opponents who cannot agree on most issues subscribe to these myths as if they inherently true. These myths underpin policy initiatives at the highest levels of government. Similarly, these myths fertilize the thinking of the global antiestablishment movement, whether they be anti-globalization activists or anti-war protesters seen recently around the world. The oil industry has done little to counter these legends in general although the industry spends heavily on public affairs editorials and lobbying efforts.

MYTH 1 THE OIL INDUSTRY OWNS WASHINGTON

THIS MYTH misses an important point about Washington: politicians are after votes from their constituents. Oil companies are capital intensive and are not large employers. Moreover, their investment dollars are increasingly going overseas where the real oil/gas assets are located. Yes, oil companies can help provide politicians with money to run their campaigns, but they have increasingly found that politicians will take their money and not always deliver the desired policy.

One reason is that other lobbies have far more political influence than what the oil companies can muster. Take for example the Bush Administration, supposedly the most pro-oil administration in U.S. history. The oil companies wanted three policy changes from the Administration: the right to drill offshore Florida, the removal of ethanol subsidies, and the lifting of the Iran Libya Sanctions Act (ILSA), which bans U.S. companies from investing in those nations.

On all three counts the oil companies lost. On the right to drill offshore Florida, the environmentalists and the Florida tourism industry pressured Governor Jeb Bush, the President's brother, and he appealed to the White House, which ruled against the oil companies. The farm lobby and other agro-business interests defeated the oil industry to maintain subsidies for ethanol (made from corn). And, on ILSA, the pro-Israel lobby prevailed over the oil industry.

As for investing in the Alaska tundra, the Administration has pushed for it while the oil industry has remained lukewarm. Alaskan politicians looking to create jobs and investments are pushing harder than the oil firms. The oil industry, seeking a greener image, is loath to incur more wrath from the environmentalists.

MYTH #2 THE IRAQ WAR WAS A GRAB FOR OIL BY U.S. COMPANIES

THIS MYTH, popular among anti-war demonstrators and...