Oil Giants Try to Deflect Gas-Price Fury

Facing the toughest political climate in a generation, the oil industry is using a barrage of advertisements to deflect anger over $4 a gallon gasoline prices.

Exxon Mobil has been particularly aggressive, running televised spots during the NBA Finals and network morning talk shows, and buying large print ads in the U.S. and Europe. Chief executive Rex Tillerson appears in one of the ads, which began running earlier this month, discussing the company’s goal of caring for the environment as it provides energy to the world. Ads from other oil companies hit on similar themes: investment in alternative fuels and technology required to produce oil these days.

Exxon

Exxon Mobil is countering negative images of the oil industry with an ad campaign.

Exxon’s ads are part of a growing effort by the industry to counter a political backlash against rising oil prices and global-warming worries. Oil companies have traditionally been the bogeyman for consumers during times of rising prices, with ad campaigns often employed to soften the industry’s image.

But as oil companies’ profits have soared, so has the pain felt by consumers paying more for gasoline, food and electricity. That is ratcheting up pressure on Congress, which is debating possible solutions such as issuing a windfall profits tax on oil companies in order to fund alternative-energy projects.

The oil companies’ latest ad campaign seeks to paint the industry as part of the solution to the globe’s most pressing energy and environmental problems.

While a majority of Americans still believe oil companies deserve a “great deal of blame” for energy problems, according to a recent Gallup poll, a growing percentage say supply-and-demand dynamics are responsible for high prices. People are also citing market speculators and the declining value of the U.S. dollar as culprits for rising prices. Many industry analysts agree that the heart of the problem lies in the industry’s struggle to increase supply at a time of soaring global demand.

“You’ve gone from one central villain to a number of villains,” says Dennis Jacobe, chief economist for the Gallup Organization.

As gasoline prices have risen, so has industry spending on its image. The companies and their industry associations spent $52.5 million on advertisements in the first quarter, up 18% from the same period a year earlier, according to tracking firm TNS Media Intelligence. This spending is expected to jump in the second quarter on the back of Exxon’s campaign, which has included print advertisements in the New York Times and a weeklong series of two-page ads in The Wall Street Journal.

Exxon wouldn’t disclose its advertising budget. The industry’s latest problem began in 2005 after Hurricanes Katrina and Rita prompted a sharp spike in oil prices, which infuriated Congress and the public despite the industry’s efforts to showcase how it quickly got disabled refineries and pipelines running again. It was a scary moment, says Red Cavaney, president of the American Petroleum Institute. He worried that legislators would respond with new laws that would seriously gut the industry’s profits and make it less competitive against foreign oil companies.

“People don’t have to love us,” says Mr. Cavaney. “We want them to appreciate us for the role we’re doing and respect us for getting the job done.”

But that respect was elusive. An API public-perception poll in late 2006 found the public ranked the oil industry below even the tobacco industry. “It was clear to us we had a problem,” says Bill Tanner, a ConocoPhillips spokesman. Last summer ConocoPhillips supplemented its print ads with four television ads, produced by Dallas-based Allyn, a part of Fleishman-Hillard. Another two are in the works.

Chevron launched its own series of television ads last year, emphasizing the complex global forces affecting oil prices. To underscore this, the campaign kicked off with a 2½-minute commercial featuring scenes shot in 13 different countries. Oil and the environment, says the narrator, “is the story of our time. It is definitive and all-encompassing and it leaves no one untouched.”

The Exxon ads, which began June 1 and were produced by Euro RSCG, part of Havas SA, portray Exxon as a company filled with technology whiz kids working to secure the world’s energy future. Earlier this month, Exxon also began sponsoring “Nova” — a public-broadcasting science program.

Tapping into Americans’ faith in innovation “is a tried-and-true corporate-brand approach,” says Allen Adamson, managing director of branding consultant Landor Associates.

One of the Exxon ads flashes an image of a windmill, crops and the sun, evoking a triptych of alternative energy: wind, biofuels and solar power. But not everyone is sold on the message. Considering Exxon’s past denial of alternative energy’s potential to replace fossil fuels, the ads amount to little more than greenwashing, says Kert Davies, research director in Greenpeace’s Washington office.

Write to Russell Gold at [email protected]

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