2000.06.05
I didn't want to let this pass without mentioning it. Last week,
The Houston
Chronicle reported that Schlumberger and Baker Hughes, the world's number
one and number two oil service companies, have reached a tentative agreement
to spin off and combine their exploration seismic units into a single company
to be named Western Geco. Together, Western Geophyscial and Geco Prakla are
probably responsible for half of all seismic acquisition activities around
the world.
It's estimated that the merger will save between $100 million and $150 million.
Gulp.
I've known for some time that the seismic exploration industry was
less than healthy. But I guess I didn't appreciate just how marginalized it was
until the reporting of this event. To date, this deal has not received any
mention in the Wall Street Journal, although the Dow Jones newswire put out a
bulletin.
And although it was reported
by both the Houston Chronicle
and the Oil and Gas Journal,
neither publication listed the story as one of the top energy or exploration
stories for last week.
2000.06.01
The press has really failed miserably at explaining the recent spike in gasoline
prices. This spike in not about OPEC production levels and the price of a barrel
of oil -- at least, not entirely. It's also about patents.
Here's a few quotes from today's Wall Street
Journal (access requires a subscription):
"Exxon Mobil is one of six companies that has failed in court to overturn
Unocal's first patent, which was awarded in 1994. In March, a U.S.
appeals court upheld a judgment awarding $69 million to Unocal from
the companies -- including Atlantic Richfield Co., Chevron Corp.,
Texaco Inc. and Shell Oil Products, a unit of Royal Dutch/Shell Group --
for violating a Unocal patent when they made lower-emissions gasoline
for California drivers in 1996.
"Starting Thursday, about one-third of the gasoline sold in the U.S. will
have to meet new federal environmental standards similar to those
mandated in California."
"Lee Raymond, Exxon Mobil Corp.'s chairman and chief executive officer ...
said refiners are expending extra effort to make gasoline that doesn't infringe
on a Unocal patent. That effort is reducing refiners' flexibility to make a new
lower-emissions gasoline and likely is having "a negative impact on total
volumes [of gasoline] available to market."
BTW, I am not, in general, against patent rights. I do think the U.S. Patent
Office has recently been increasingly guilty of awarding frivolous and overly
broad patents, but I don't know whether that's the case here. Unocal's patents
may be specific and well-deserved. If so, then it is entitled to profit by
exercising its patent rights.
My gripe is that the news media, in its rush to exploit popular anti-OPEC (and
anti-Arab) sentiments, is failing in its responsibility to educate the American
public. And in the case of the price of gasoline, it's a damned important
responsibility. I don't think I'm exaggerating when I say the average American is
willing to start a war over higher gasoline prices.
The energy industry is a complicated business, but the average citizen has no
appreciation of those complexities. For instance, most people are totally unaware
that when the price of oil rises, gasoline refiners typically make less
money, not more.
It's the job of a reporter to explain complicated situations concisely and simply.
In this case, though, the media is just distorting a complicated situation by
over-simplifying it.
