THE MIDEAST CRISIS: ASSESSING THE DAMAGE;MIDEAST CRISIS THROWS FUEL ON FIRE OF OIL FIRMS' IMAGE PROBLEM

By Bruce Horovitz
August 8, 1990

"Iraq's invasion of Kuwait should really help the cleanup efforts in Alaska," wise-cracked comedian Jay Leno. "Exxon will be up there now squeezing the oil out of every one of those rocks."

You probably haven't heard that zinger yet. Leno wrote it late Tuesday and said he plans to tell it during his "Tonight Show" monologue tonight. Surely the disparaging way Leno jokes about the oil industry is much the way the public at large feels.

Industry executives and consultants say that with the recent spate of oil spills and price hikes, the public perception of oil companies has rarely been so low. So who is to blame? Most say the oil companies themselves.

"It comes across as if the oil companies really don't care," said Ronald Rogers, president of the Los Angeles crisis management firm, Rogers & Associates. "For years they've fought every type of environmental legislation. Then, they raise prices even though the consumer knows that what happens in the Middle East shouldn't affect prices at the pumps for months. Most consumers are just throwing up their hands and saying: There they go again."

The oil industry's credibility problems have plagued it for the past two decades. In 1973, there was harsh criticism that the price hikes and gasoline lines were the result of a crisis manufactured by the oil companies themselves. And in 1979, when prices rose sharply again, these same criticisms were leveled by consumers and politicians.

New complaints about the oil industry's sensitivity to environmental concerns were heard in March, 1989, when the Exxon Valdez ran aground in Prince William Sound and spilled nearly 11 million gallons of oil. Exxon also was criticized when gasoline price hikes resulted later. In February, a BritishPetroleum-leased tanker spilled 394,000 gallons of crude oil that marred beaches across Orange County. And late last month, some 500,000 gallons of heavy oil spilled into Galveston Bay after a tanker collision.

The oil industry image is so poor that even top executives are speaking out against industry colleagues. "There has been a deafening silence by most oil companies," said George Babikian, president of Arco Products Co., the refining and marketing division of Atlantic Richfield Co. "I think they feel the price hikes are too difficult to explain, so they're not even trying."

But Babikian says Arco is so concerned about the current image problems that are haunting the company and the entire industry that its public relations staff has assembled a so-called white paper to try to explain the reasons behind the recent price hikes. That paper, expected to be completed Friday, will be available to anyone who requests it.

No new Arco advertisements are planned, however. "I don't think they'd be believed at this point," said Babikian. "We have a credibility problem to overcome."

An outspoken critic of how oil firms are dealing with this image problem is one of the oil industry's former public relations wizards. "The oil companies are doing themselves and the public a disservice by not speaking out on the issues," said Herb Schmertz, former vice president of public affairs at Mobil Oil Co. Besides explaining the recent jump in gasoline prices, the companies should also try to explain why America is still so dependent on foreign oil - and what policies need to be changed, said Schmertz, now a public affairs consultant in New York.

"The public is entitled to this information," said Schmertz, who helped create some of the editorial-type ads that Mobil ran on the opinion pages of several major newspapers. "The oil companies should use all communication techniques available - including paid and unpaid media."

At least some consultants agree. "If the oil companies want to avoid a major backlash in public opinion, they need to be considering some paid advertising to break through the clutter," said Peter B. Necarsulmer, president of San Francisco-based PBN Co., a crisis management public relations firm that specializes in advising oil companies. After the Orange County oil spill, PBN advised British Petroleum on its actions.

Besides paid advertising, Necarsulmer says, oil companies should also distribute information on the current price hikes at service stations and in credit card billings. "They have a legitimate story to tell," he said. "They just need to get the facts out on the table."

But some experts say that no matter how the oil companies try to explain the price hikes - or improve their images - it won't work. "I don't think there will ever be a way for big oil companies to be understood," said William C. Adams, former public relations director for Phillips Petroleum Co. and now associate professor of mass communications at Florida International University in North Miami. "How can they win in the court of public opinion with so much going against them?"

Actually, most oil companies would probably like to improve the public's perception of them, said Bari Harlam, assistant professor of marketing at Columbia University. "But I'm not sure they have any idea how to do it."