Will Media Uncritically Repeat Sarah Palin's Economically Illiterate Take On Gas Prices?

March 16, 2011 11:30 am ET by Jocelyn Fong

In her latest Facebook post, Fox News contributor Sarah Palin claims that President Obama's "anti-drilling mentality" and "war on domestic oil and gas exploration and production" are to blame for the recent rise in gasoline prices. Media outlets that find Palin's Facebook postings newsworthy should note that this allegation has zero basis in economic fact.

I recently asked several economists and energy experts if there was any truth to the claim that the Obama administration's drilling policies are responsible for the recent surge in gas prices. Not a single expert I consulted said that the claim is valid, including those aligned with the oil industry. Here's a sample of the responses I received:

• "Absolutely No Merit To This Viewpoint Whatsoever." Chris Lafakis, economist at Moody's Analytics and expert in energy markets, said: "I received your question about whether or not federal drilling policies are responsible for the current rise in gas prices. There is absolutely no merit to this viewpoint whatsoever. Near-term fluctuations in
  gasoline prices are determined by two primary factors: crude oil prices and
  seasonality. Since the deepwater drilling delay applies only to exploration and
  production, it would take years, maybe a decade to get any amount of crude oil
  out of the ground and into our gas tanks. In the meantime, global crude oil
  supply is exactly the same as it would have been if the government were giving
  away permits like candy."
• "It's Not Credible To Blame The Obama
  Administration's Drilling Policies For Today's High Prices." Michael Canes,
  research fellow at the Logistics Management Institute and former chief economist of the American Petroleum Institute disagrees with Obama's drilling policies. Still, he said: "It's not credible to blame the Obama Administration's drilling policies for today's high prices because of the relative scales involved." He further stated that "world oil prices are determined in a market of around 85 million barrels per day of production and consumption, while the consequences of domestic drilling, particularly in the Gulf, likely would be more in the range of several hundred thousand to one million barrels per day, and most of that production would not occur for a number of years."
• "Gasoline Prices At The Pump Would Be
  Higher Either Way."
  Lou Crandall, chief economist of Wrightson ICAP LLC said:
  "Higher oil prices today are a global phenomenon, and the additional supply from increased drilling by the U.S. would not alter the global balance of supply and demand greatly.  Gasoline prices at the pump would be higher either way.  The only difference is that a somewhat larger share of the revenue would accrue to domestic interests (governmental and private) rather than to foreign suppliers."

Most Americans don't have the time to fact-check the talking points they're bombarded with so we look to the news media to get to the truth, rather than just repeat what politicians say. Let's hope they're up to the task. Early indications are not good.

UPDATE:

You won't believe who stepped up to fact-check Palin's claim that Obama's policies are to blame for the spike in gas prices. Fox News' very partisan financial analyst Stuart Varney explained this morning that "we would still have $4 gas no matter what we do in the Gulf because higher gas prices are the result of an expanding global economy and turmoil in the Middle East."

http://mediamatters.org/blog/201103160011

Wholesale prices spike on steep rise in food, oil

Wed Mar 16, 9:42 am ET

WASHINGTON – Higher energy costs and the steepest rise in food prices in nearly four decades drove wholesale prices up last month by the most in nearly two years. Excluding those categories, inflation was tame.

The Producer Price Index rose a seasonally adjusted 1.6 percent in February, the Labor Department said Wednesday. That's double the 0.8 percent rise from the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January's 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.

Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs.

David Resler, an economist at Nomura Securities, said the jump in prices is likely temporary, echoing remarks made by the Federal Reserve on Tuesday. Much of the increase in food prices was due to winter freezes in Florida, Texas and other agricultural areas, Resler said. Turmoil in the Middle East is a major reason that motorists are facing higher gas prices.

"Both food and gasoline prices are going to stop rising so rapidly," Resler said.

But John Ryding, an economist at RDQ Economics, disagreed, noting that consumers will feel the impact for some time.

"We do not buy the Fed's reassurance that these pressures will be temporary and we believe the public, seeing these strong increases in food and energy ... will not be marking back down their inflation expectations," Ryding said.

Gas prices spiked in February and are even higher now. The national average price was $3.56 a gallon Tuesday, up 43 cents, or 13.7 percent, from a month earlier, according to the AAA's Daily Fuel Gauge. Rising demand for oil in fast-growing emerging economies such as China and India has pushed up prices in recent months. Unrest in Libya, Egypt and other Middle Eastern countries has also sent prices higher.

But economists expect the earthquake in Japan to lower oil prices for the next month or two, which should temper increases in wholesale prices in coming months. Japan is a big oil consumer, and its economy will suffer in the aftermath of the quake. But as the country begins to rebuild later this year, the cost of oil and other raw materials, such as steel and cement, could rise.

Oil prices fell sharply Tuesday as fears about Japan's nuclear crisis intensified. Oil dropped $4.01, or 4 percent, to settle at $97.18 per barrel on the New York Mercantile Exchange.

Prices rose 1 percent for apparel, the most in 21 years. Costs also increased for cars, jewelry, and consumer plastics.

There was little sign of inflationary pressures outside of food and energy. Core prices have increased 1.8 percent in the past 12 months.

Separately, the Commerce Department said Wednesday that home construction plunged to a seasonally adjusted 479,000 homes last month, down 22.5 percent from the previous month. It was lowest level since April 2009, and the second-lowest on records dating back more than a half-century.

The building pace is far below the 1.2 million units a year that economists consider healthy.

http://news.yahoo.com/s/ap/20110316/ap_on_bi_go_ec_fi/us_economy

Pentagon tries to buy entire print run of US spy expose Operation Dark Heart

Chris McGreal in Washington
guardian.co.uk, Monday 13 September 2010 21.17 BST

Officials at the Pentagon are scrambling to buy the whole 10,000 print run of Operation Dark Heart – and then pulp them.

It's every author's dream – to write a book that's so sensationally popular it's impossible to find a copy in the shops, even as it keeps climbing up the bestseller lists.

And so it is for Anthony Shaffer, thanks to the Pentagon's desire to buy up all 10,000 copies of the first printing of his new book, Operation Dark Heart. And then pulp them.

The US defence department is scrambling to dispose of what threatens to be a highly embarrassing expose by the former intelligence officer of secret operations in Afghanistan and Pakistan, and of how the US military top brass missed the opportunity to win the war against the Taliban.

The department of defence is in talks with St Martin's Press to purchase the entire first print run on the grounds of national security.

The publisher is content to sell the books but the two sides are in a grinding dispute over what should appear in a censored version and when it should be released.

Now St Martin's Press says it will put the partly redacted manuscript on sale next week whether or not the defence department likes it – and there doesn't appear much the authorities can do.

The army had cleared the book by Lieutenant Colonel Shaffer, about "black ops" in the Afghan war when he was based at Bagram in 2003, for publication after relatively minor changes.

But when the intelligence services and defence department officials saw it they were alarmed.

They said it contained highly classified material including the names of American intelligence agents and accounts of clandestine operations, and demanded the book be withdrawn on the grounds it "could reasonably be expected to cause serious damage to national security".

The Pentagon is using Shaffer's status as a reserve officer to block him from speaking to the press, but a source close to the publication of the book said that some of the sensitive material had been removed but the defence department was still seeking to purge it of other information that is 20 years old or even in the public domain.

For that reason, there is suspicion that the defence department is less concerned with the nitty gritty of classified material than its broader story of intelligence forays in to Pakistan and his claim that top US military leaders blew an opportunity to win the war years ago.

Shaffer describes in the book how he was part of the "dark side of the force" that operates outside the usual constraints of the military system. He led a group that called themselves the Jedi Knights and specialised in "black ops" including "striking at the core of the Taliban" inside Pakistan. He says that US forces were gaining the upper hand until the military brass involved itself, curbing operations in Pakistan and permitting the Taliban to strengthen again.

Shaffer, who used the pseudonym Christopher Stryker, fell foul of his superiors several years ago after claiming that an intelligence programme he was working with identified Mohammed Atta as a terrorist threat to the US before he led the attacks on 9/11. He was later sacked by the DIA over alleged violations of rules and excessive expense claims.

Joseph Rinaldi of St Martin's Press said that it had offered to sell the first print run to the Pentagon but the details are still being worked out. The Pentagon may yet regret wading in at all. Its plan to pulp the book has provided the kind of publicity that advertising cannot buy and the redacted but still unpalatable version of Operation Dark Heart is charging up the best seller lists even before it is released.

http://www.guardian.co.uk/world/2010/sep/13/pentagon-afghanistan-spy-book-pulp