Wednesday, January 25, 2012

Getting it so wrong

Yesterday, it was one of those relatively rare evenings when I watched the BBC television news, finding that the Petroplus story was lead item, with the hand-wavers hyperventilating about shortages of petrol and diesel. We got it right, I think, but if you want a greater authority, one can refer to the Wall Street Journal.

It cites a number of analysts saying that weak demand and over capacity in Europe's refining sector will likely cushion the impact in oil markets of the closure of one of Europe's largest refiners Petroplus Holdings AG.

Thus we have James Zhang, strategist at Standard Bank, saying The price of product futures barely registered the event", and: "The market reaction was quite muted". "European refinery utilisation rate is around 82 percent, so there's plenty of slack in the system to replace the lost capacity form Petroplus and distillate demand was around 250,000 barrels a day less in Europe in December because of the warm weather," he added.

The BBC story – in retailing its dire warnings of major shortages – was, therefore, totally off the wall, completely wrong in all its major aspects. Not once was there any mention of stock surpluses, weakness of demand, and over-capacity, all of which suggests that there will be no structural shortage of petroleum products.

Interestingly, the has now changed its focus to major on job losses (see illustration), although the broadcaster was by no means the only media outlet to get it so wrong.

One really does wonder though, what there agenda is here. The hacks and their editors cannot all be so stupid and ignorant that they cannot ascertain what is in fact a well-established situation in what is a long-running saga. It was reasons of over-capacity and weakness of demand that led BP to sell the Coryton plant in the first place.

As for the bigger picture, oil prices actually slipped yesterday "on revived concerns about the eurozone's debt problems and their potential to slow the global economy". But you would not have got any of that from the BBC – it would have spoiled the narrative.

The wonder is, then, that so many people still watch BBC news – and the MSM in general. Getting it wrong these days is what they do, so wrong so often that it is getting embarrassing.