Lesson Prep for Plugin #3 "Detailed":
The Price of Oil in Norway
NOTE TO TEACHER
This page is the follow-up to the class-wide "Detailed" FNF Plugin investigation of claim->evidence->reasoning analysis of a Federalist article's claim that the then-White House Press Secretary Jen Psaki was a "Lying Liar who Lies" about oil prices.
In order to evaluate the evidence and reasoning of other articles and arrive at an understanding of what's going on (or was going on in May, 2022) in the oil and gas markets, this page is for individual, jigsaw, and "numbered heads together" study. This concept building is the first part of a two-part lesson.
The second half is individual (or paired, per teacher) investigation of a selected article that explores these markets from a particular interest (not only bias, but stake in the outcome). It would be better to have students save those "page checks" in mid-stream (and then copy-paste the saved responses into the form again for homework) than to rush either the investigation or this exploration / concept building phase.
Part 1: Watch and Read Together (10 minutes)
Watches this video together as a class, with pauses perhaps for clarification or playbacks. The vocabulary in blue below is used during the video.
Movie Vocabulary (from the Library of Congress)
Price benchmarks are used in the oil and gas industry to give buyers a way to value the commodity based on quality and locations. The main benchmarks are:
Brent Blend, is the most common, internationally used oil benchmark. It is based in London, traded on the InterContinental Exchange (ICE), and consists of light, sweet crude oil from offshore drilling in the North Sea.
West Texas Intermediate (WTI) is used for light and sweet oil in the United States, specifically, crude oil that comes from land-locked wells in Oklahoma.
Dubai/Oman is used for heavier oil with a higher sulfur content from the Persian Gulf to the Asian market.5
Henry Hub is the benchmark for North American natural gas and global liquefied natural gas (LNG), based off of the Henry Hub natural gas pipeline in Louisiana.6 Markets with no natural gas pipelines use crude oil as a price proxy,7 but that is changing.
Countries and international organizations like the United Nations influence the price of oil and natural gas both domestically and abroad through the use of tariffs, embargoes, and subsidies.
Tariffs are additional taxes on imported goods.
Embargoes or sanctions ban trade with a commodity or whole country.
Subsidies are money from the government to an industry in order to keep prices on commodities low.
Part 2: Individual Study (10 minutes)
Read the piece below, study the graph, and check some of the links. Goal: understand that on top of post-pandemic inflation, the additional hikes in oil (and related gas) prices are not only problematic for people, but also a convenient political football in advance of midterm elections.
The Federalist article said Psaki claimed price increases were caused by Russia invading Ukraine. The article claimed that instead, the price hikes were the result of President Biden's "inaugural orders [to] shut down the Keystone XL pipeline and unilaterally [suspend] new oil and gas leases on public land."
Factors given so far:
Russia invading Ukraine
Biden threatening to cut off oil extraction and limit distribution.
But then, the evidence given (a government graph of oil prices) showed that prices had been rising long before Biden took office. So... there's that.
What did Jen Psaki actually say? This Newsweek Article, which includes videos and transcripts, reported Psaki saying that the early March 2022 gas price spikes (and those to come) were "a direct result of the invasion of Ukraine." In other words, the Russians are to blame. Peter Doocy, Psaki's Fox News antagonist, replied :"[W]eren't gas prices going up anyway because of post-pandemic supply chain issues?" Factors so far:
Russia invading Ukraine (an opinion shared by many, including the White House)
Biden threatening to cut off oil extraction and limit distribution (The Federalist)
Post-pandemic supply chain issues: people suddenly need more oil than they can get. (Peter Doocy, Fox News)
However, most Americans do not distinguish between oil prices and gas prices, nor do they understand how each set of prices are set (by whom, based on what, with what goals). So in order to really understand why the prices of oil and gas went up (and why the price of gas stayed up, even after the price of oil went down), we need to learn some things.
Oil Price Graph
This graph begins with a price "peak" at the March 7th press conference described by The Federalist. A second press conference was held on March 16th, at the "valley", about a gap between oil and gas prices (which stayed high).
Part 3: Jigsaw (10 minutes)
In groups of three, take 5 minutes explore the three sections (and links) of the portion below, and then 5 minutes to report back to the group.
Note to Teacher: if time permits, this would be an excellent opportunity for the Numbered Heads Together protocol to follow.
1) The Story Since Then
Nine days later, Jen Psaki gave another press conference and spoke again about oil and gas prices (right). One YouTube comment was telling: "People doing nothing to fix anything questioning people trying to fix everything. Need a chart for oil so the stupid can understand. She's always on point. Facts are facts."
But what did she say this time? For a moment, it seemed that oil prices were decreasing but gas prices were not. As President Biden's press secretary, she shared his claim (see the tweet below the video at right) that gas companies were "price gouging" - charging more than the price of oil required them to. Gas companies call this the "Rockets and Feathers" phenomenon.
But even if oil prices shot up again soon after, Biden had a point: high oil prices turn into big oil company profits however they are justified or driven, and rather than use the profits to pull levers to increase supply, the companies bought back stock and paid dividends to their shareholders (Washington Post).
2) A Deeper Look
The situation gets more and more complicated the deeper one looks, and if the person telling the story has skin in the game (oil companies, publications funded by oil companies, American presidents) they spin it differently. Here's an energy expert's take (Gizmodo):
“There’s never been a time when the divorce between hype and reality in oil and gas has been greater."
From the US Government's Energy Information Administration:
3) Biden Takes Aim
Part 4: Article Selection (5 minutes)
This is preparation for the third individual FNF Plugin application, for individual consideration of claim=>evidence=>reasonining support.
Articles Signup List
The image links to a Google Doc.
TEACHER: make a copy of and then share with students, with edit permissions, so they can sign up for one.
Students are here given an opportunity to preview the articles and decide based on the level of language and interest.
There are two columns so that students in another class section can also sign up. Add additional columns for other sections.
If desired, students may "pair up" on this challenging investigation.