Oil Firms’ Recurring Headache: They Just Don’t Get Much Respect : Petroleum: The industry has had an image problem for generations. Critics say it’s no wonder.
Why do people hate oil companies?
Many in the industry think that it goes back to John D. Rockefeller’s notorious Standard Oil Trust, broken up by the Supreme Court in 1911.
Others blame the industry’s environmental disasters--spills from the oil tankers Amoco Cadiz and Exxon Valdez, and the oil well blowout in the Santa Barbara Channel.
Others cite television’s J. R. Ewing, political grandstanding, alarmist media reports and Americans’ innate distrust of Big Business. Or maybe it’s just filthy restrooms.
Whatever the reason, the oil business has become the industry Americans love to hate--especially when gasoline prices are soaring.
Price increases for other products rarely provoke angry charges of price-gouging and profiteering akin to those about gasoline that have rebounded from Main Street to the White House over the past month.
An increase in the price of milk doesn’t set off a round of congressional hearings. Higher coffee prices don’t inspire editorial cartoonists to uncap their pens en masse. But when gasoline prices rise, so does the public’s ire--and its dislike of the companies that sell gasoline.
“We’re the only industry in the world that, when we raise prices 6 cents, we put it on a 20-foot-high sign,” lamented one oil executive.
The oil industry’s collective feeling of public disapproval isn’t just paranoia; public opinion polls confirm it. In 23 national polls comparing various industries since 1976, the oil industry finished last in 15 of them and was ahead of only tobacco and chemicals in the others, according to the Washington-based Center for Media and Public Affairs.
Once, the oil industry had a swashbuckling image, one with a certain adventurous romance to it--hard-working men drilling holes in search of black gold.
“This business is all that’s left of the ’49 gold rush, where a few miners made a lot of money, and a lot of miners went broke or died on the trails or in saloon fights,” said Paul Hilliard, an independent oil producer from Louisiana who is chairman of the Independent Petroleum Assn.
But think of the more recent image of the oil industry in the public mind: James Dean as the rich, insufferable oilman in “Giant”; Jack Nicholson’s randy oil field roustabout in “Five Easy Pieces”; the rapacious J. R. Ewing and his clan on “Dallas”; the never-proven but pervasive rumors that oil companies had tankers full of crude oil waiting offshore for prices to rise while motorists were waiting in gas lines in the 1970s.
Many oil executives say that part of the industry’s problem is that purchasing gasoline rarely is a pleasant experience: Your gas gauge is on “E,” the kids need to go to the bathroom, the price ticks away right before your eyes.
“You can trust your car to the man who wears the star,” Texaco used to boast, but more often than not the man wearing the star--or the chevron or the tiger or the flying horse--was a greasy teen-ager pumping gas at a grimy corner filling station. Pump it yourself, and you may reek of gasoline the rest of the day.
“It’s a product that people have to have but don’t particularly like to buy,” said Herbert Schmertz, former public relations chief at Mobil Oil Corp.
The industry itself is at least partly to blame for its bad image, according to Gene Johnson, an independent public relations consultant for the oil industry in New York.
“They kind of overlooked the image-building process,” Johnson said. “Then, when prices doubled and tripled, we had gasoline lines, and the environmental issue became a stronger force. They reacted too slowly. They felt aid to the arts, like Texaco’s opera broadcasts, was enough.”
Critics of the industry are a little more blunt: “The companies have sown a lot of distrust and have sown a lot of opposition because of their own actions,” said Edwin S. Rothschild, executive director of Citizen Action, a Washington-based consumer-advocacy group.
“It’s not that people are criticizing them unjustly,” Rothschild said. “They have been guilty of violating antitrust laws; they have been guilty of squeezing out competitors . . . they have violated environmental laws repeatedly.”
Rockefeller’s Standard Oil Trust and its successors, the Seven Sisters (Exxon Corp., Mobil, Shell Oil Co., Texaco Inc., British Petroleum Co., Chevron Corp., nee Standard Oil of California, and Gulf Oil Co., now part of Chevron) fixed the idea of Big Oil in people’s minds.
Oil-state politicians such as Lyndon B. Johnson and Robert S. Kerr were perceived as protectors of the interests of the oil industry in Washington, kindling political enmity.
But oil company executives and critics alike say it was a series of environmental disasters and the oil shocks of 1973 and 1979 that permanently besmirched the industry’s image.
Public opinion analysts say Americans were enraged by reports that oil company profits ballooned to record levels following the oil crises of the 1970s (as they are expected to again as a result of the current situation). And politicians and the media stoked the public’s anger.
In 1974, the late Sen. Henry M. Jackson (D-Wash.) told CBS Television: “I want to see a reasonable profit, a fair profit, but we can’t tolerate obscene profits”--a phrase that has stuck to the industry along with its twin, “windfall profits.”
About the same time John Chancellor told NBC News viewers: “A lot of people still wonder if the shortages are for real or part of a scheme to make more money for the oil companies.”
Indeed, some observers of the industry suggest that the unwillingness to deal openly with the huge financial benefits of crisis-caused success has helped damage the image of the oil companies.
During the 1979 oil crisis, several companies tried to bury their profit figures in the back pages of their quarterly earnings releases--with no success: The news still got out. Others used fancy bookkeeping to take paper losses to offset their high incomes.
“They should grow up and . . . say, “Look, we are in the business of selling oil. If people don’t like the idea of our making money, well, we have to answer to our stockholders,’ ” Rothschild said.
As oil prices--and profits--sank in the 1980s, criticism of the oil industry ebbed. But the Exxon Valdez oil spill off Alaska in March, 1989, hit the industry with a double whammy: a well-publicized environmental disaster that most experts say was handled clumsily by Exxon and a sharp increase in gas prices in the weeks after the disaster.
Then, last winter, a record-breaking cold wave sent heating oil and propane prices soaring, touching off a new round of public criticism and congressional outrage--and setting the stage for this summer’s crisis.
A decision by OPEC in late July to raise crude oil prices was pushing gasoline prices up even before Iraq invaded Kuwait on Aug. 2. But when gas prices skyrocketed within a day of the Iraqi invasion, accusations of price-gouging began anew.
Disc jockeys and talk-show hosts called for boycotts and held contests to find the lowest gas price in town. Even some in the industry were critical of the quick increases.
“The timing is absolutely stupid--crazy,” one oil man griped as the first round of gas-price hikes was posted after the invasion.
But the loudest complaints came from Congress, a fertile source of criticism in recent years.
“This is a case of the industry trying to get ahead of the curve,” Rep. H. James Saxton (R-N.J.), complained to oil executives at a Capitol Hill hearing in August. “Do you really think that Americans don’t know what’s going on?”
Sen. Barbara A. Mikulski (D-Md.), in supporting a bill to “restrict price-gouging and profiteering,” said: “If you steal from the American people, whether you use a gas pump or a gun, you ought to do hard time.”
Even Sen. J. Bennett Johnston (D-La.), a longtime friend of the industry, said: “There did appear to be price-gouging.”
In their defense, oil-industry officials say they have heeded President Bush’s call for restraint in pricing in the wake of the Iraqi invasion of Kuwait, and indeed, gasoline prices did not rise as quickly as crude oil prices after the invasion, although the big, integrated oil companies have made a killing on the crude oil they have not yet pumped.
