Read IHS’s response to this article here.

Two weeks before the Nov. 6 election, industry groups backing Republican Mitt Romney distributed a new report asserting that robust oil and gas drilling will support 3 million jobs and raise $111 billion in tax revenue by the end of the decade. Amid renewed economic anxiety because of weak company earnings, the report argued that oil and gas are a waiting answer to some of the nation’s worst problems.

Ordinarily such a report wouldn’t attract much attention given its funders–the American Petroleum Institute, the US Chamber of Commerce and chemical and natural gas associations known for their Republican leanings. Yet it commanded the top of the op-ed page of The Wall Street Journal on Oct. 23. The Associated Press featured data from the report in a big-picture look at the oil and gas trend. And on Oct. 24, The New York Times quoted the report’s senior adviser in an examination of the boom in the context of the presidential election.

Why the unusual splash? Look no further than the writer of the Journal article and the senior adviser in the New York Times piece–Daniel Yergin, vice chairman of IHS and probably the world’s sole celebrity oil expert. Rare in the field of energy, Yergin’s stature extends into the broad sphere of literary scholars, and confers bona fides onto IHS that none of its rivals can match. Yergin’s credibility—and his panache for attracting media attention and invitations to speak and write in prominent fora—flows from his seminal work, The Prize, which won a 1991 Pulitzer and is the standard history of oil. Two decades after publication, it is still a brisk seller.

In recent years, Yergin has morphed into the go-to consultant for high-brow research backing up the main political objectives of the oil industry. If the subject sits at the broiling center of politics, all the better. Last year, Yergin helped apply pressure on President Barack Obama to lift the moratorium on drilling in the Gulf of Mexico. In the Nov. 6 election, Yergin has made the case for one of Romney’s central planks—that he will put Americans back to work first and foremost by opening up more of the country to oil and gas drilling. “We’re very interested in tackling what we see are major, major policy issues around energy, whether it’s renewable, whether it’s conventional hydrocarbons, or unconventional hydrocarbons,” John Larson, a vice president in IHS, said in an interview. “Because we think these are critical issues for the nation, and our desire is to bring what we believe to be our fact-based insights to the table to allow that dialogue to take place.”

Every March, the 65-year-old Yergin headlines a week-long Houston conference that is the oil industry’s event of the year, attended by former presidents, oil CEOs from around the world, and hundreds of other private and public dignitaries. Last year, he published a well-received sequel to The Prize, called The Quest. But Yergin’s main paying job is as an industry consultant.

The Quest

Yergin and his spokesman did not reply to emails. But he joined IHS in 2004, when it bought a firm he founded, Cambridge Energy Research Associates, for about $31 million. One way to look at IHS is as a new strain in the tradition of research houses underpinning US political movements. Since the early 1980s, non-profit think tanks such as the Heritage Foundation, the American Enterprise Institute and the Cato Institute have incubated research that transformed into central political themes, such as the Reagan revolution and the climate change movement. IHS is a twist in which a for-profit, publicly traded research firm has assumed a similar role, providing intellectual cover for vilified oil and gas drillers, and turning their political objectives into a gigantic, patriotic act that all right-thinking people should embrace.

In July 2011, IHS dove into the Gulf of Mexico drilling debate with a report called Restarting the Engine–Securing American Jobs, Investment, and Energy Security. At the time, Obama was the target of a fierce push by the oil industry and Republicans to lift a drilling moratorium he ordered after the 2010 BP oil spill. The White House’s position was a go-slow approach in order to preclude any new accident. Yergin’s report, commissioned by the Gulf Economic Survival Team, a coalition of energy and business groups opposed to the moratorium, took the side of the oil industry. It called for “swift action” to accelerate Gulf drilling permits, cataloging job and production losses attributable to the drilling stoppage, and what could happen were work resumed.

The same day, the report’s sponsors and Obama critics sprung into action. The Republican-run House Oversight Committee released an embargoed copy of the report, with committee chairman Darrell Issa blasting Obama for “systematically blocking energy production in the Gulf of Mexico.” Rep. Doc Hastings, chairman of the House Natural Resources Committee, linked to the report in a press release in which he rebuked Obama for his “burdensome regulatory process.”

The administration pushed back. Michael Bromwich, then-director of the US Bureau of Ocean Energy Management, Regulation, and Enforcement, whose agency was singled out in the report, wrote a public letter calling it “flawed.” Bromwich asserted that its writers displayed a “greater interest in trying to fit the facts within a pre-determined narrative rather than allow the facts to determine the narrative.”

The Prize

Still, that clash was over a single act of government policy, the Gulf drilling stoppage. IHS’s Oct. 23 report plunges into politics with far higher stakes. It fit into a stream of recent research, arguing that shale oil and gas drilling will put millions of Americans to work over the coming two decades, and pay a trillion dollars into government coffers. Already, the report said, this production had knocked $70 billion off the nation’s 2012 trade deficit.

The flashy rollout was vintage Yergin. It began with an email blast to reporters, a five-minute promotional interview with Yergin, and a conference call with IHS’s Larson for the media. The Chamber of Commerce posted a three-minute pro-boom video on its website, and the American Petroleum Institute (API) put out a press release (as did the report’s two other industry sponsors, the American Chemical Council and the Natural Gas Supply Association).

In his bylined Wall Street Journal article, Yergin summarized the report. Among other things, he said cheap natural gas could help rehabilitate US manufacturing. “When I was in China recently,” he said, “I heard much talk about how China’s historical advantage in cheap labor (which is becoming less cheap) could in the years ahead be offset by cheap energy in the US.”

From there, the API and the Chamber of Commerce linked his report to their own political agenda. As a policy, neither explicitly urges Romney’s election Nov. 6. But the thrust is clear in language that aligns with the Republican’s platform. In battleground states, where analysts believe the presidential election will be decided, the two groups urge voters to support the candidate likeliest to favor vigorous oil and gas production.

Larson said at the news conference—and repeated in an interview with Quartz—that there was no political timing to the report. He said work on it began in June, and that IHS had actually wanted to finish and release it earlier but did not manage to. He said IHS conceived of the idea, then obtained sponsorship from the eventual funders.

Perhaps all that is true. But even so, IHS’s role represents a powerful instrument of influence for the energy industry within the American political process. Not only can companies now fund politicians to an almost limitless degree thanks to last year’s Citizens United ruling in the Supreme Court; they can also pay the energy world’s most prestigious research outfit to make their case to the public.

Steve LeVine is Washington correspondent for Quartz, a new kind of business publication, where this article first appeared. LeVine is also an adjunct professor in Georgetown University’s Security Studies Program in the Graduate School of Foreign Service and a Schwartz Fellow at the New America Foundation.

Oil Man

Nov 21, 2012