Social Media: Who Uses it for Information About Energy?

by Tanya Andrien

The American Petroleum Institute (API) recently launched a new nationwide campaign, “Vote 4 Energy,” to encourage voters to make energy a more important election issue (see The campaign does not support specific candidates, but focuses on issues around securing affordable and reliable energy sources, and creating jobs through domestic resource development. API’s president, Jack Gerard, noted that the communications effort for the campaign will encompass social media to extend beyond people it has already reached.

While I am a proponent of the campaign and the need to highlight energy as an important election issue, I was curious about the use of social media as a tool to reach new audiences. Who will API most likely reach via social media?

The University of Texas at Austin Energy Poll asked consumers multiple questions about whether they used social media sites (Facebook, Twitter, YouTube, LinkedIn) for news and information about energy issues. The detailed responses from more than 3,400 consumers indicate that approximately 29 percent currently use social media for news and information about energy.[1]

 * Gender: Men (33%) are more likely than women (26%) to use social media for energy.
 * Age: Consumers aged 18 to 24 years are most likely to use social media for energy information, and usage figures generally declined as the respondents increase in age.
 * Income (greater or less than $50K): Did not have an impact on usage.
 * Education (high school, some college, university or higher): Respondents with more than a high school education were more likely to use social media for energy information than those with a high school degree or less, but there was not a significant difference between those who held university degrees (or higher) and those who only had some college experience.
 * Political Affiliation: Democrats (35%) are more likely than Independents (27%) and Republicans (25%) to use social media for energy information.

Going beyond basic demographics, consumers who self-reported as knowledgeable about energy production and usage were much more likely to already use social media for information about energy (36%) than those who reported themselves as unknowledgeable about energy (22%). Finally, consumers who described themselves as active/passive environmentalists (43%/31%) were more likely to use social media than non-environmentalists (26%).

Based on my review of the data, API’s use of social media will most likely reach young educated males, many of whom already consider themselves knowledgeable about energy and concerned about the environment. However, because young people 18-24 are the age group least likely to vote, API also may want to include the importance of voting as part of its social media campaign messages for maximum effectiveness.

Tanya Andrien is an Associate Director with the Energy Management and Innovation Center at McCombs School of Business. Prior to this position, Ms. Andrien spent more than a decade providing business and litigation consulting services to corporations, law firms and government agencies.


[1] Social media (or new media) includes Facebook, YouTube, Twitter, LinkedIn, blogs, podcasts, RSS feeds and news apps.

Does Politics Make Us Stupid?

by Sheridan Titman

In our inaugural University of Texas at Austin Energy Poll, we asked participants to identify the factors influencing energy pricing. Of the approximately 3,000 respondents, 36% thought that the pricing power of energy companies and/or electric utilities had the most impact on prices, 21% thought that global politics had the most important impact, government regulation was next at 18%, while demand (15%) and supply (9%) were viewed as having the least impact.

These poll participants, who represent a broad representative cross-section of the U.S. population, have it exactly backwards. The supply and demand for oil, natural gas and electricity are the most important determinants of energy prices.

Recent events in Asia, as well as the United States, illustrate how supply and demand factors influence energy prices. The past decade has seen a substantial increase in demand for transportation fuel in developing markets like China and India. This increase in demand, combined with a diminishing supply of cheap and easy-to-produce oil, has led to an increase in oil prices, which has in turn led to an increase in more difficult, and more expensive, oil production from oil sands, shale rock, and offshore deep water drilling.

The dynamics of the natural gas market have been very different. During the past four years we have seen a substantial increase in the supply of natural gas extracted from shale, and because of this, a substantial decline in natural gas prices. This decline in natural gas prices, in turn, leads to relatively inexpensive electricity prices.

In comparison to supply and demand, regulation and the pricing power of energy companies have only modest effects on prices.

While regulation is sometimes misguided, it can potentially influence prices because of its effect on supply. However, thus far the effect seems to be relatively modest. If regulation encourages offshore drilling in the Gulf of Mexico, or off the coast of Florida or California, this will increase supply, which may reduce the price of oil. However, oil is a large global market, and the increase in supply from the U.S. is likely to have a modest effect on total global supply and be somewhat offset by supply cuts in other parts of the world. Similarly, the supply of natural gas is currently constrained by low prices rather than regulation. However, there is the potential for draconian regulations on hydraulic fracturing, which I think are unlikely, to have an important influence on natural gas prices, particularly on the East Coast.

The pricing powers of energy companies and utilities probably have the least important influence on prices. In short, the oil and gas industries are extremely competitive, and the individual firms have very little influence on prices. Indeed, the profits of these firms, which are quite large because they are very large firms, are not particularly large as a percentage of the oil and gas that they produce. Some electrical utilities are monopolists in their regions and therefore have pricing power; however, they are regulated and cannot get away with overcharging their customers. It should also be noted that while some mistakes during the deregulation process opened opportunities for price manipulation, such as in California at the turn of the millennium, I am not aware of any evidence of pervasive manipulation.

So where do these misperceptions about energy prices come from?

A closer look at the data reveals significant differences in the opinions of Democrats and Republicans. They are equally misinformed, but misinformed in very different ways. Democrats tend to believe that the pricing power of energy firms has the most important impact on energy prices while Republicans tend to believe that regulation has the most impact. Beliefs about the lack of importance of supply and demand considerations seem to enjoy bi-partisan support.

It’s not surprising that Democrats tend to distrust large corporations and that Republicans tend to think that regulation does more harm than good. However, a casual evaluation of the recent political discourse suggests that politicians, in their pandering to the world view of their base, slant information in ways that reinforce misperceptions. Democracy requires an educated and informed electorate. A political process that encourages misinformation can’t be a good thing.

For more information on oil and gas prices, please see my interview with Deloitte personnel regarding the dynamics of oil and gas prices and implications for the U.S. economy.

Please click here to download the source data, chart and cross tabs.

Sheridan Titman is a professor of finance at The University of Texas at Austin and a research associate of the National Bureau of Economic Research. He was recently elected Vice President of the American Finance Association and is incoming President in 2012. He has also worked in Washington D.C. as special assistant to the Assistant Secretary of the Treasury for Economic Policy.

Energy Issues Influence Voting Behavior

With election season heating up, voters are interested in candidates’ positions on a wide range of issues. The University of Texas at Austin’s Energy Poll asked respondents about how candidates’ positions on specific energy policies might influence voting behavior.

The majority of respondents (56%) were somewhat or much more likely to vote for candidates who would expand tax exemptions for companies engaged in sustainable forms of energy. The survey was conducted after the announcement of Solyndra’s bankruptcy, so despite that incident, people remain interested in some form of government subsidies for renewable energy.

Providing tax incentives for efficient vehicles received the next highest support from voters, followed by increasing offshore drilling and lastly, increasing spending on public transportation infrastructure. Notably, increasing offshore drilling had the greatest percentage (26%) of respondents who would be LESS LIKELY to vote for a candidate who supported this activity.

If you were to vote in the next election in 2012, would you be more likely or less likely to vote for a candidate who supports each of the following?

If we break the voting behavior down by political affiliation, we see the following responses in terms of being much more, or somewhat more likely to vote for a candidate endorsing these policies.

More Democrats support tax exemptions for renewable energy companies than Republicans, while more Republicans favor offshore drilling than Democrats, and responses from Independents always land in the middle. Those are probably not surprising findings. However, almost half of Republicans (48%) would be more likely to vote for a candidate who expands tax exemptions for renewable energy companies, and almost one-third of Democrats (32%) would be more likely to vote for a candidate who advocates increased offshore drilling. These percentages suggest that each energy policy may attract more bi-partisan interest than people might expect.

On the flipside, the Poll queried respondents about whether they would be less likely to vote for candidates supporting the various policies. Offshore drilling prompted the largest negative response from Democrats (37%) and Independents (29%), while Republicans reacted most negatively to increasing public transit (29%).

Please click here to download the source data, chart and cross tabs.

Poll Respondents Speak Out on Energy Issues

“The US has some of the largest oil reserves in the world yet we let the green people run us over. The trees will be ok. Just drill.”

“The most important energy issue facing the U.S. as a nation is lack of education to its citizens. All citizens should be well educated about the adverse impact of the energy crisis. A good way to do this is to set up programs administered by the Department of Energy incentivizing households based on the amount of reduction seen in their utility bills. The energy issue should be addressed locally starting first with individual households and then advance to state and federal levels. This is based on the premise that people generally do NOT have the initiative to reduce unless they see MONEY. This would benefit our nation’s energy initiatives tremendously.”

“Because of the state of the economy, energy prices are negatively affecting everyone. I think we need to depend on our own sources of oil instead of foreign countries.”

“The United States uses way too much energy compared to the other nations around the world. Since it seems like we cannot reduce our consumption, we need to find alternatives.”

“Why are the oil companies buying refining and then sending our oil, gas, etc. to foreign countries?”

“It is my impression that the energy cost issue is being controlled by Government and Corporate lobbyists. Research and development is working on new solutions very well but the prices for the technology and implementation are held high by existing corporations (ie: petroleum coal nuclear).”

“The fed government wants to TAX energy. The state government wants to curb energy use. Industry has cowered to the environmentalists (gone green). The consumer has had to pay ALL the bills.”