Energy Coverage Heats Up as Crude Prices Rise to Record Levels

It's hard to imagine a story with more global reach and more local impact than the price of oil.

Crude, unadjusted for inflation, is at record highs, pushed there by soaring worldwide demand, the threat of supply disruptions in Venezuela and Nigeria, and a squabble between the Russian government and Yukos, that country's second-largest oil producer. At the same time, U.S. gasoline prices, having hit painful levels this spring, have fallen back to merely uncomfortable levels thanks to frantic efforts by refiners to boost gasoline inventories -- possibly at the expense of the coming winter's heating oil supply.

Readers want to know what's happening. Enter the energy-beat reporters, whose task is to interpret the movements and meanings of one of the biggest markets on earth.

"I can definitely say it's an interesting time to be covering the industry," says Brad Foss, who writes about energy and transportation from the Washington bureau of the Associated Press.

Much of what Americans know about the oil market's turmoil probably comes from Foss, whose wide-ranging reports have formed the backbone of most newspapers' recent energy coverage. Foss has indeed been busy. He wrote about crude prices as they approached and broke $40 a barrel, then $45. He's covered the economic impact the run-up has had on oil-dependent industries and the economy in general. And with crude possibly headed to $50 a barrel, there is no end in sight to his work.

The challenge for reporters like Foss is to take a story shaped by complicated and often faraway events and make it meaningful to motorists and homeowners who are feeling the brunt of the price increase. It's crucial to know who the players are, how the market works, and what determines the intricate balance of products produced by the world's refiners.

Above all, "You need to keep it simple and understand the story yourself before you start writing it," says Bob Manor of the Chicago Tribune, who recently took over that newspaper's energy-issues beat, though he's covered the topic off and on for years.

With the market as volatile as it is now, the oil-price story can take unexpected turns. During an interview, Manor noted that crude had set a new high that day partly on news of a minor fire at a refinery in Whiting, Ind. -- an event unlikely to have any effect at all on the supply of refined products. The event would be noted, as would the market's apparent oversensitivity to it. "This is the kind of thing that makes it seem as if we're hitting a peak and the bubble's ready to burst," Manor says.

Bubble or not, prices have been boosted by a wide range of market forces. That morning, the Tribune published a story by Manor quoting petroleum analysts on some of the causes, including crises in Venezuela, Nigeria, Russia and, of course, Iraq. The story also analyzed the precarious balance between worldwide supply and demand, and it concluded that even higher prices seemed likely.

Reporting stories with such breadth requires a big Rolodex full of qualified sources. "You do them the way you always do," Manor says. "You call people who study it full time and you hope they tell you the truth."

Authoritative sources are especially important when it comes to covering refiners, who have a reputation for keeping tight control over information about their product mix. Though aggregated output figures are reported to the government, refiners "don't like to get real specific about what they produce, for competitive reasons," Manor notes.

Foss and Manor know that they're covering a story that will only get hotter. In an election year, sky-high prices at the pump represent a political issue, and Sen. John Kerry has been quick to seize it -- just as the Bush administration has been eager to shoot back.

While he strives to keep his stories above the fray, Foss notes that "you can't avoid writing about it if politics gets forced into the issue. If candidates are talking about it, we'll cover it." For his part, the Tribune's Manor believes oil will top $50 a barrel before heading lower, "and that's certainly going to have political implications."

It is, and will continue to be, a story with tremendous importance to global economies and local readers alike. Covering it aggressively and responsibly is not only good journalism, but a vital service to an energy-addicted public.

Notes Manor: "The one thing that irritates people of every economic and social status is paying a lot for gasoline. The one thing that will enrage everyone is not being able to buy it at all."

From BusinessJournalism.org: Resources for Oil Coverage