Does Fox's Eric Bolling Want Hugo Chavez To Set Our Gas Prices?

Blog ››› ››› JOCELYN FONG

Fox's resident energy misinformer (and birther) Eric Bolling appeared on Fox & Friends this morning to comment on the economy and criticized the Obama administration while comparing gas prices in Venezuela ($.07/gallon) and Saudi Arabia ($.44/gallon) to those in Chicago ($4.29/gallon). In a discussion described by energy experts I contacted as "absolute and utter rubbish" and "idiotic," Bolling said people in Venezuela and Saudi Arabia pay much lower gas prices because, unlike in the U.S., they "are drawing the oil out of the ground themselves, refining it themselves":

BOLLING: Take a look at full screen we put up here. Venezuela, 7 cents a gallon. Saudi Arabia, 44 cents a gallon. Meanwhile in Chicago it's $4.29.

STEVE DOOCY (co-host): It's 7 cents a gallon to buy a gallon of gas in Venezuela?

BOLLING: 7 cents a gallon. And the point here is this -- while the Obama administration policy has helped them over there -- helped Brazil drill, give them $2 billion alone, give Colombia a $5 billion loan to refine gasoline -- countries who are drawing the oil out of the ground themselves, refining it themselves like Venezuela, like Saudi Arabia, they're allowing their people to pay 7 cents or 44 cents a gallon. Meanwhile, we're paying $4.39 a gallon. We really need to ramp up a lot of things. Number one, the EPA too, we need to get the EPA under control.

There are so many things are wrong with this.

First, the notion that the U.S. doesn't refine its own fuel is false. According to the National Petrochemical & Refiners Association, 95 percent of the fuel used in the United States is refined here.

Second, numerous energy economists -- including those who favor expanded U.S. drilling -- have explained that restrictions on oil drilling imposed by the Obama administration are not to blame for the current spike in gas prices. In addition, total U.S. production of crude oil and liquid fuels in 2011 is expected to stay near 2010 levels, which were higher than any other year in the past decade.

What's even more confounding is that Bolling obscures the main reason gas prices are so low in Venezuela and Saudi Arabia -- massive subsidies and price controls implemented through nationalized oil companies.

As BusinessWeek reported when oil prices spiked in 2008: "Since 1998, Venezuela has kept the price of gas fixed at 0.097 strong bolivars a liter, or about U.S. 3¢ (lower octane is 0.070 strong bolivars)." The article further stated:

State oil company Petróleos de Venezuela is footing an $11 billion a year bill for underwriting and subsidizing the fuel. That's nearly double its 2007 net income of $6.27 billion. The cost of that subsidy, along with money it pays to underwrite government social programs, has forced Petróleos de Venezuela to borrow billions on international markets to cover investments.

[...]

In Venezuela, cheap gas is considered more a right than a privilege. Several governments, including that of Chávez, have attempted to raise prices in the past. Those moves have often been met by riots and demonstrations, forcing successive presidents to back down.

In Saudi Arabia, the price of gasoline is set by royal decree. According to energy analyst Falah Ajibury, "In Saudi Arabia, [gas] is subsidized like food is subsidized. It's a way for the government to quiet down the people."

Al Troner, president of Asia Pacific Energy Consulting and a critic of the Obama administration's energy and environmental policies said in an email that "the comparison to Venezuela and Saudi Arabia is absolute and utter rubbish. Both countries heavily subsidize the price of retail gasoline as well as all products sold in the domestic market and the retail price to the consumer per gallon of gasoline does not even cover the cost of getting the crude oil out of the ground."

Amy Jaffe, director of the Energy Forum at Rice University's Baker Institute, also described the Fox & Friends exchange as "idiotic" and said "The fact that gasoline prices are very low in many countries around the world has nothing to do with the fact that they are producing and refining their own oil."

And that's not all that Bolling got wrong -- making it even more difficult to understand why he is presented as an economic expert on Fox News' purportedly "straight news" programs.

Bolling's claim that the Obama administration gave $2 billion to help Brazil drill and $5 billion to help Colombia refine gasoline is a distortion of actions taken by the Export-Import Bank, an independent agency established to spur foreign purchases of American products. Here are the facts:

  • No money was 'given' to Brazil or Colombia. The Ex-Im Bank offered loans and loan guarantees. As the bank states, "Ex-Im is a self-funding, independent agency which operates at no cost to the taxpayer. Ex-Im does not make grants, and charges fees and interest for the financing it provides."
  • The transaction with Brazil's Petrobras was approved by Bush appointees.
  • The President does not determine who receives financing from the Ex-Im bank. As Kevin Varney, Chief of Staff of the Ex-Im Bank, has explained, "the president does not vote, or 'back' Ex-Im transactions" and "at no time" was the White House involved in the Petrobras transaction. Reporter Kenneth Rapoza has similarly stated: "The President of the United States does not decide who gets Export Import Bank loans. The president's role is to appoint board members who are confirmed by the Senate. The board members decide."
  • $2 billion in financing is the total amount that the Ex-Im Bank "offered to consider" providing to Petrobras, not the amount that has actually been provided. According to the bank's website: "The Bank has established a $2 billion financing opportunity for Petrobras to use solely for the purchase of American-made goods and services. So far, Ex-Im has approved $300 million to finance Petrobras' purchase of U.S. oil and gas equipment and services. The funds go to American exporters as payment for their sales to the Petrobras. If Petrobras fails to award contracts to U.S. companies for the remaining amount, it will not access those dollars." Rapoza reported on March 17 that Petrobras hadn't even borrowed any of that $300 million yet.
  • The Ex-Im Bank has not provided $5 billion to Colombia. Rather, it "voted to grant preliminary approval for a $2.84 billion direct loan/loan guarantee" to support a refinery project that costs $5.18 billion. The financing has not received final approval.

Zero dollars of Ex-Im financing has been used for the projects in Brazil and Colombia so far. And even if the loans had taken place, how would that explain gasoline prices in Venezuela and Saudi Arabia? Moreover, Amy Jaffe told us that "The fact that the US might give aid to a country like Colombia for an infrastructure project is immaterial to the entire debate."

Bolling closed out the Fox & Friends segment by calling the Senate-confirmed Energy Secretary a "czar" and claiming that he could bring down gas prices if only Obama would give him a call:

BOLLING: I have to do this real quick. I'm not kidding about this. This is my phone number. I'm giving you my phone number. Mr. Obama, call me. Steven Chu, really? Experimental physicist as your energy czar? I will help for free. I kid you not. I mean it. Let's do it. I have solutions.

BRIAN KILMEADE (co-host): And you have solutions.

BOLLING: I have solutions. I'll bring gas down $1 a gallon within a year.

VIDEO:

Posted In
Economy, Environment & Science, Drilling
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