Oil Company PR Men Under Fire


WHAT does it take to be an oil company public relations manager? ``You have to be somewhat of a masochist because you're on the defensive, it seems like, all the time,'' says Jere Smith, director of media relations for Phillips Petroleum Company, in Bartlesville, Okla.

In normal times an oil company spokesman would be preoccupied answering seemingly endless environmental criticisms, or dispelling the notion that ``the oil companies'' bought the patent to a fuel efficient engine to keep it off the market and protect gasoline sales. (``No, there is not a 300-mile-per-gallon carburetor sitting out here,'' the Phillips spokesman says. That old myth ``still pops up.'')

Times have not been normal for oil's public relations officials since Iraq invaded Kuwait Aug. 2. The cost of gasoline and oil company earnings jumped dramatically and then moderated, bringing new accusations: price gouging and windfall profits.

``Will we once again allow the multinational oil companies to profiteer at the expense of our constituents?'' Rep. Paul Kanjorski of Pennsylvania asked last month in introducing a bill to tax ``undeserved war gains.''

Profiteering is ``a pretty nasty thing to be accused of,'' says Larry Shushan, manager of media relations for Chevron Corporation in San Francisco. It means ``gleefully and intentionally taking advantage'' of people who are in a bind, he says. ``That certainly isn't the case at all.'' The real case, according to oil industry PR men, is this:

Market forces beyond the control of oil companies drove up the price of oil, and therefore company profits. The same forces have driven prices down again.

1989's fourth quarter was one of weak earnings for oil companies, made worse for some by colossal one-time expenses: Exxon, $800 million for the Valdez oil spill; Chevron, a write-down of $1.2 billion mainly spent to develop an oil field that regulators won't let produce. Even an ordinary 1990 fourth quarter would have compared very favorably.

During the 1980s, when other United States industries had a 14 percent rate of return, oil had a 10 percent return. Shushan says that Chevron's earnings are back up to the level of 10 years ago.

But the earnings look smaller to a company that has grown by 60 percent in that time, especially since inflation has eroded their value by 30 percent.

Oil is one of the least concentrated industries. No oil company has more than a 9 percent share of the US gasoline market. ``It's probably the most competitive industry in the world,'' says Douglas Elmets, director of media and public affairs for ARCO in Los Angeles.

Oil companies don't set gasoline prices, individual dealers do. Mike Thompson, the director of corporate media relations at Amoco Corp. in Chicago, passes by two company service stations every day. Although they pay the same wholesale price for gasoline, the stations charge prices that sometimes differ by seven or eight cents per gallon.

This is now the third time a crisis in the Middle East has boosted oil prices and oil company profits. Compared to 1973 and 1979, the media are doing a good job of explaining the factors at work, the PR executives agree. But initial television coverage was flawed, they say.

``People are very emotional about gasoline,'' Shushan says. When prices first went up, he adds, TV spent too much time thrusting microphones into consumers' faces and asking for a reaction, and not enough time on explanation and analysis - a ``grave disservice to the public.''

For instance, gasoline would cost less than before the invasion if the price didn't include new taxes, Shushan says.

``Good luck getting reporters covering the story of gasoline prices to include that, as important a detail as that is, in a story on the air. You sit here and watch in frustration as they do their minute and 30 seconds on the air'' and leave that detail out, Shushan says.

The PR men fault all journalists for taking at face value the comments or questioning the motives of the oil industry's ``professional critics,'' the environmental and citizens interest groups. Journalists ought to challenge statements they know to be ``simply hogwash,'' says Bill Smith, senior media officer for Exxon Corp. in Irving, Texas.

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