OPEC invades Hollywood!
The Heritage Foundation’s crack team of investigative journalists has done it again. After deep digging (looking at the film’s credits?) they determined that Gus Van Sant's new film with Matt Damon, "Promised Land," about oil and gas drilling and hydraulic fracturing, was at least partially funded by a firm based in the United Arab Emirates. The Heritage hacks write:
The UAE, a member of the Organization of Petroleum Exporting Countries (OPEC), has a stake in the future of the American fossil fuel industry. Hydraulic fracturing has increased the United States’ domestic supply of crude oil and natural gas in areas such as the Bakken shale formation and has the potential to increase domestic production much more in the foreseeable future. That means more oil on the market, and hence lower prices for a globally traded commodity.
And so, naturally, they’re going to spend a bunch of money to blanket the United States with propaganda, causing the public to turn against fracking, which will destroy the domestic oil industry, and we’ll continue to be forced to buy oil from those nutty Arabs. The Heritage story concludes:
All of this suggests a direct financial interest on the UAE’s part in slowing the development of America’s natural gas industry. Pop culture can be a powerful means to sway public opinion. While "Promised Land," like anti-fracking documentary "Gasland," appears to inflate the dangers of hydraulic fracturing, it may have an impact on the public’s view of the practice.
It’s a great storyline, good enough to get CNBC, Fox News and other media outlets to parrot it, no questions asked. The problem here is that the Heritage Foundation is, as usual, inebriated by its own ideology, and it’s dragging seemingly everyone else into its current binge.
I haven’t seen "Promised Land," but the trailer makes it look like Matt Damon plays the same role he played in "Syriana." Frances McDormand is always excellent and Van Sant's a great director. Surely it will be sensationalistic, will tug on the heartstrings and will be a lot of fun to watch. And I suspect that it will, like Gasland, inspire a new group of people to rally against the industrialization of the landscape, or at least post something on their Facebook page about the evils of fracking. But for the Heritage Foundation to believe that the United Arab Emirates believes that by forking out some cash for a Hollywood film it’s going to alter the world oil market, well, that’s just downright silly.
Both the Heritage Foundation and the media outlets that followed failed to mention that Abu Dhabi and Dubai are major sources of funding for quite a few international films, including those made in Hollywood. Abu Dhabi Media, whose subsidiary apparently funded "Promised Land," has its hands in a number of Hollywood ventures. Its Image Nation also produced those clearly anti-fracking, anti-American films: "The Help," "Contagion," "The Double" and "Ghost Rider". And then there’s the new Richard Gere film, "Arbitrage," produced by a Saudi Arabian. I suppose if you play it backwards it tells you to go sabotage all those North Dakotan oil wells.
Abu Dhabi Media is, well, a media company. Like just about any international conglomerate these days, it’s interested in expanding its footprint into ventures that will have the biggest payoffs. That includes films in the United States, made in Hollywood, featuring Matt Damon and the like, whether they’re about pandemics that originated in a Chinese pigsty, or African-American servants writing tell-alls about their employers. It’s about money, not oil.
It’s not just this film industry conspiracy stuff that’s based on faulty logic. It’s the whole premise that fracking here will somehow have a major impact on the United Arab Emirates. Okay, viewed through a very simplistic lens, it makes some sense: We produce more oil and natural gas, supply goes up, and prices go down. When prices go down, the UAE makes less money from each barrel of oil or cubic foot of gas that it sells. One only need look so far as the domestic natural gas market to see such a dynamic play out: We had a drilling boom, which resulted in increased supplies, and now prices are rock-bottom and natural gas producers are hating it.
But natural gas in North America is a regional commodity, so the effects of supply and demand are limited by the extent of pipelines. That may change if we start exporting LNG, liquefied natural gas, in large quantities, but that day is still a long ways away. Oil, on the other hand, is a global commodity. In order to reduce prices, U.S. drillers would have to produce enough oil to significantly affect world supplies. That’s not easy. Domestic oil production started ramping up a few years ago, and oil prices have just risen right alongside, staying above $85 per barrel for the last two years. In fact, U.S. oil imports from Saudi Arabia have increased over the last year, even as production increases at home. Though prices have faltered slightly in recent days, it’s due more to fears of the China economy slowing down than anything else. If Abu Dhabi film moguls want to keep the price of oil high, they should make commercials encouraging Americans to buy more Chinese-made goods, or urging Chinese folks to drive big American cars.
In their exposé, the Heritage Foundation does conjure up a big conundrum for domestic oil production. What happens if those North Dakota, Texas, Colorado and Wyoming shale formations really do end up producing enough oil to affect the world market? Well, prices will probably go down. And that’s the conundrum. The horizontal drilling and mult-stage fracking necessary to get to the oil in those formations is very expensive, and only makes sense when oil prices are high. According to the excellent Oil Drum site, Bakken wells are only profitable when oil is above $80 per barrel. So what happens to the domestic oil industry when they send the prices down to, oh, say, $60 per barrel? Hmmmm.... good question. Maybe someone should make a movie about that.
Jonathan Thompson is a senior editor at High Country News. His Twitter handle is @jonnypeace.