The Intellectual Dishonesty of a “Consumer Watchdog”

I am having an internal debate with myself regarding which aspect Oil Watchdog I find most annoying: Their intellectual dishonesty, their reprehensible tactics, or just their plain old-fashioned stupidity. I can give lots of examples of each, but I really think it’s their dishonesty that bothers me the most. When a “consumer watchdog” stoops repeatedly to dishonesty and distortions to sell their story, it calls into question their true motivation. And when the press picks up these distortions and reports them as news, the credibility of the reporting organizations is damaged (as it should be when they don’t do their homework).

We see the tactics of Judy Dugan and her cronies all the time with politicians: One distorts the record of another, because they must win that election. Say and do whatever it takes, just get those votes. We have come to expect this from politicians. But why does Oil Watchdog employ the same kind of dishonest smear tactics? What is behind their lies, distortions, and just plain clueless statements? Let’s investigate some examples:

Reprehensible Tactics

For someone who constantly accuses Big Oil of misdeeds, Judy Dugan lives in one of the most fragile glass houses I have ever seen. Take a recent story:

Big Oil’s Big Bribes?

She starts out:

I absolutely can’t vouch for the truth of this story,

You know there’s a “but” coming. She doesn’t know if there is any truth to the story, but she’s going to repeat the smear anyway because it makes oil companies look bad:

…but it’s no wonder that people would believe it. A Bahraini publication claims that oil companies are offering Iraqi legislators $5 million each to vote for the Iraqi oil law, which would give the oil companies control of Iraq’s huge untapped oil reserves. Five million a head to a few dozen key “legislators” would be pocket lint out of this year’s record oil profits, wouldn’t it? It would probably be less than Chevron shelled out last year to sponsor Iraq”s commercial oil summit. And it would at least be more direct than the lobbying that Big Oil does in Congress, or its exclusive entree to the White House.

So there we have it. Judy Dugan – one time journalist for the Los Angeles Times and United Press International, reduced to spreading rumors. She has certainly fallen a long way.

Someone challenged her in the comments (which as I have previously reported, they now hide by default since not too many were in their favor):

Dugan should be ashamed of herself for spreading rumors. US firms are bound by the Foreign Corrupt Practices Act. It is illegal and immoral to bribe officials. Besides, one could believe a small bribe, but $5 million each? Such a large some of money would be difficult if not impossible for a public company to hide from the auditors and shareholders.

This rumor doesn’t pass the smell test.

Indeed. Shame on you, Judy Dugan. You have a lot of nerve accusing anyone else of “misdeeds.”

Intellectual Dishonesty

Here is a prime example of the intellectual dishonesty of Oil Watchdog:

Congress Must Act On Energy Prices

Santa Monica, CA — A weekly national increase of more than a nickel a gallon for regular gasoline has motorists paying a “speculative bonus” to hedge fund traders and others who have kept the price of crude oil near $100 a barrel, said the Foundation for Taxpayer and Consumer Rights (FTCR). With pump prices up nationally to $3.109 from $3.054 over the past week, at a time of year when prices are historically at their lowest, spring is all but certain to bring new record prices.

I will get to the dishonesty in a moment. But consider the previous paragraph. Gasoline prices have lagged far behind oil prices, and refining margins have been very poor as a result. The price of gasoline went up by a nickel, and the FTCR felt the need to issue a press release. What is interesting is their actions since this January 7th press release. Gasoline prices have actually fallen every week since then, and the national average is down to $2.98 as of this writing. What would you expect a non-biased organization to do after gasoline prices fell for 4 weeks in a row? Since they issued a press release when gas prices climbed by a nickel, did they issue another when prices fell by three times that amount? Answer: No, they didn’t – their press releases are anything by non-biased.

Now, here’s the dishonest piece:

“While the speculation-driven price of oil could be blamed for $3.00 gasoline in January, $4.00 gasoline in May will again be laid at the door of oil companies and refiners,” said Dugan. “Oil companies refuse to expand or even modernize their refineries, then every spring they blame their self-caused shortage of gasoline for price spikes. The economic effect of a price spike from $3.00 to $4.00 would be far more serious than a spike from $1.99 to $2.50, which seemed outlandish only a few years ago.”

I have lost track with the number of people who have commented and corrected them each time they have claimed that oil companies have refused to expand their refineries. Yet Judy Dugan, who has probably never even set foot in a refinery, continues to spout this lie. In fact, “armchair261”, who has been labeled as “a suspected shill for BigOil” and whose comments there have been censored (and reports that he was finally banned) challenged Dugan’s claim:

Ms. Dugan says that “oil companies refuse to expand or even modernize their refineries.”

The figures below, from the Energy Information Administration, prove otherwise.

Note the drop in 2005 due to loss of capacity caused by Hurricane Katrina. By 2006, the oil industry had repaired much of that lost capacity and delivered a record volume of gasoline to the market. This does not sound like an industry that’s trying to maximize profits by reducing capacity. That figure was then exceeded in 2007, which saw the highest annual gasoline production on record.

U.S. Annual Finished Motor Gasoline Production (Barrels)

2000: 2,993,802,000
2001: 3,011,960,000
2002: 3,058,104,000
2003: 3,083,493,000
2004: 3,220,735,000
2005: 3,152,527,000
2006: 3,227,532,000
2007: 3,279,465,000

Your comments, Ms. Dugan? In particular, could you address the recovery in refinery capacity and increased gasoline production immediately following Katrina? Refinery capacity grew from around 70% after the hurricane in late August to around 90% by the end of the year. This is not consistent with your claims in this article.

Thank you.

Stupid Press Releases

The integrated oil companies – specifically those that both produce oil and refine it – had a very good 4th quarter. The reason for that is specifically that world oil prices were very high in the 4th quarter. Refining margins were terrible, but the high price of oil was enough to offset weak margins. Shell had a good quarter, but they did come in short of estimates due to their poor refining margins. Naturally, Oil Watchdog weighed in with their typical uninformed opinion by making the following press release:

Shell’s Record Profit Is a Thumb In the Eye of Recession-Wracked Nation, Says Group

The first thing I noted was the story tags, which included “Cash Register Politics, Greed, Influence, Misdeeds, Price Gouging, and Profiteering.”

The story starts out in their typical hysterical style:

The record run of 2007 oil profits, which came as the U.S. economy slid into recession and consumer debt soared, portrays an industry run amok, said the Foundation for Taxpayer and Consumer Rights.

For those who don’t know, the Foundation for Taxpayer and Consumer Rights (FTCR) is the parent entity of Oil Watchdog. Continuing on:

While Shell may have slightly “missed analysts’ estimates,” it’s profit figures show that integrated oil companies continue to find ways to increase profits even as the economy falls. In Shell’s case, the company replaced the refining profits of recent years by escalating income from selling crude oil, often to their own refiners, said the nonprofit, nonpartisan FTCR.

Nonpartisan? In what way? Politically? They are certainly partisan when it comes to oil companies. They scream when oil and gas prices are rising, and then when prices are falling they just find something else in the oil industry to scream about. As shown above, they even stoop to spreading rumours to further their agenda.

And, they conclude with the need for more federal oversight:

FTCR has called for oversight of unregulated electronic energy trading markets and of oil company refining operations, including investment in new capacity and updating of aged, unreliable refineries.

One wonders what the point of that news release actually was. They left the implication that Shell was complicit in these high oil prices. They even tagged the article with “misdeeds.” The article blamed the housing collapse on higher energy prices. Thus, Shell is at fault and more regulation of refining operations is required? You read that release and it just looks like nothing more than a hatchet job by a political operative. No point, other than smear – plus a continued demonstration of ignorance for thinking that Big Oil controls the price of oil. OPEC controls about 40% of the world’s oil supply. ExxonMobil, the biggest of Big Oil controls 3%.


Of course I could go on and on with examples like this. And I haven’t even mentioned Oil Watchdog’s multiple personalities: Complain about oil company greed, but if oil companies donate money, complain that they are “greenwashing” and trying to buy off universities. It is just incredibly ironic to me that a group staffed with former journalists would constantly accuse oil companies of misdeeds, when their own reporting misdeeds would get them fired pretty quickly from any reputable newspaper. Of course, we know who is paying the bills there, so rest assured that people like Judy Dugan – and apparently her ethics – are bought and paid for.

11 thoughts on “The Intellectual Dishonesty of a “Consumer Watchdog””

  1. Nice work… I also really enjoy Dugan’s deceptive spin on hot fuel (check out her Pole-Axed post and see comments). Really shameless, National Enquirer stuff. It’s surprising though that this outfit is actually quoted in the media. I guess they want “balance.” As if the science editor, after visiting an astronomy convention, interviews a flat-earther for the other side of the story.

    I’m curious, does the esteemed Oilwatchdog staff visit this blog?

  2. I love how they always quote either FTCR studies or the author (themselves) as sources for their quotes and data. What a farce.

  3. FYI – we are required to attend both an in person lecture by the Foreign Corrupt Practices Act (FCPA) attorney, and to take a computer based training course. We also must annually certify in writing that we are in compliance with FCPA personally and are not aware of anyone else who may have violated the act. Failure to certify or non compliance is grounds for immediate dismissal. Just wouldn’t be worth it. Even a corporate executive wouldn’t put his/her career and benefit package at risk in something as stupid as an attempt to bribe an elected official in exchange for a vote.

    I really find the story impossible to believe. People must think J. R. Ewing runs “big oil”. These are public companies, with all sorts of internal controls and accountants looking over your shoulder.

    You would think that if “big oil” were this diabolical and brilliant we could find a way to make a much better return on equity!

  4. I meant to say that we have an FCPA compliance officer who is in our legal department. This person gives the lecture and is responsible for writing the policies and implementing compliance procedures.

  5. There sems to be an abundance of loonies on the oil frontier. Look at TOD, in addition to the Oil Watchdog.
    But check out today’s oil markets. Oil looks dead.
    Let’s see: Production is hitting all-time records, while demand is faltering.
    Might we see $60 oil? $40?

  6. I’m thinking, I’d almost like to see $40 oil, just to read what Dugan has to say about it all. My guess is that $40 oil would mean a career change for the Oilwatchdog crew…. but I’m sure they’ll find other consumers to protect!

  7. Armchair–

    A little OT, but check out this clip from a story on the re-do of the iconic UN tower in NYC:

    “Through better insulation, including a brand new glass curtain wall made from state-of-the-art materials, and more efficient equipment, officials are confident that the United Nations will cut its annual energy consumption by at least 40 percent.”

    This is what I have been saying. Buildings in the US will use less, not more, energy in 20 years. About 2/3rds of US built space will be rehabbed or built new in the next 20 years.

    The price signal is a wonderfully effective mechanism. IN the case of energy, it takes time. Demand is inelastic for a few days, semi-elastis for a few months or years, but elastic after that.

    Then it becomes inelastic on the upside. In other words, the UN building will use less energy forever, even if prices go back up.

    We could see gluts.

  8. Oh, I don’t know Benny. Sure there are lots of energy saving measures being taken and there will be lots more. But will it outweigh demand growth? Populations are going up, and so are standards of living. All those billions of people in the developing world want Western lifestyles. So I don’t really know how it’s all going to take shape.

    I’m sure there’ll be perceived gluts in the future. I doubt that the oil industry has become immune to business cycles. But for me I think it’s too early to call a few years’ data a trend. Let’s wait and see.

    I suspect though that it’s going to take a lot higher prices than $3.00 gasoline to have a serious impact. The average suburban commuter may burn up about 40 gallons per month in his commute (40 miles/20 mpg x 20 days). I suspect the average guy would shell out an extra $2-3 per gallon, an extra $100/mo or so, or maybe even more, before he’d seriously consider a bus. Or calling strangers and forming a carpool. I think it would take significantly higher prices, or long waits in gas lines, before people would start radically changing their energy habits.

  9. Oh and for the record, it’s true that Oilwatchdog has banned me. It’s true that they have censored a lot of my posts, and have even deleted some several days afterwards (I’m thinking maybe Dugan didn’t understand them). However, the good news is that I have passed the baton on to my colleague ermchair261. And if for some reason he’s all tied up, I know a lot of other guys who have volunteered to help. 🙂

  10. I completely agree that Dugan & the FTCR have their collective heads up their collective heinies. But that said, it does strike me that the large US oil companies are to some degree being hoist by their own petard, as it were. I’m old enough to remember when the majors spent a lot of money and effort promoting brand consciousness. While it’s striking to me the degree to which advertising for retail gasoline has largely vanished (NASCAR sponsorship aside), I think at least part of the image problem for oil companies is how effective they were at promoting themselves.

    Quick trivia quiz, for those of us of a certain age:
    – “You can trust your car to the man who wears the star – the big white _____ star!”
    – “Come to _____ for answers” (tied to their giveaways of yellow “answer books”)
    – “_______ – Action Gasoline!”

    (answers below; and I’ll bet anyone else much over 40 can think of more)

    My point is, for decades, the majors went out of their way to promote their brands. And how many people outside the industry are aware of how few e.g. Exxon stations are actually owned by ExxonMobil? If you’ve got a huge Exxon sign and piles of Exxon-branded products at the very place where people are now feeling the painful effects of their choices (SUV? House way out in the burbs?), and then said people hear in the news about Exxon’s record profits, who do you think they’re going to blame? Themselves? Or the convenient evil corporate scapegoat?

    I will grant you that the FTCR and their ilk are doing a huge disservice by clouding the public debate. But I do think that the recent public casting of the majors as villains is, to at least some degree, the chickens (of decades of advertising & brand-building) coming home to roost, as it were.

    (answers: Texaco, Shell, Sunoco)

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