Insight: How to cover over a trillion dollar industry

Transitioning from drug coverage to energy news does not seem that simple, but one reporter said switching beats was easier than you might think.

Sergio Chapa began covering energy news for the San Antonio Business Journal in December after six years covering the Mexican drug war for a CBS affiliate in Texas, and he said making the shift from drugs to energy news was fairly pain free, especially since the two topics would often overlap.

“There’s a transition there, but it’s not completely out of left field, I mean this career change,” Chapa said. “When I was covering the drug cartels, they were hijacking tanker trucks that were full of oil and gasoline, they were tapping into pipelines stealing gasoline and oil.”

“There’s a big multimillion dollar racket for these drug cartels, and covering that was dipping your toe in the water so to speak as far as covering energy.”

Fluctuating markets

This date last year WTI crude oil opened on the commodities market at $92.89 per barrel; today it opened at $56.34. The past year has seen a dramatic drop in oil prices, some of the largest drops happening in just the past three months.

“At the time I applied oil was at like 80 or 90 bucks a barrel, and these towns were still booming, but the day I took the job oil was at $60 a barrel and then it plummeted to below $50 about a week or so later,” Chapa said.

As someone new to the energy beat, Chapa said he was originally worried his boss would let him go for lack of stories since it seemed like the oil business was tanking, but for Chapa the stories were just beginning.

“This downturn is showing the character and resolve of the people in the oil industry, and I really admire them because a lot of them are veterans and they’ve been through worse,” he said. “This is nothing compared to the 1980s in Texas. This is the easiest downturn they’ve ever experienced, I think.”

Chapa said as he continues to learn his beat he is keeping himself occupied writing stories about developments and technology within the industry. He said as the downturn persists companies are searching for new ways to save money and make their operations more efficient.

Chapa is not the only energy reporter who has seen an uptick in his coverage.

Eric Yep covers both regional and international energy news for The Wall Street Journal and is based in Singapore. He said in a recent email to Talking Biz News the recent chaos of the energy markets has profoundly affected his coverage.

“The volatility in energy markets has been driven by some of the most historic changes in the global energy landscape, and it’s impossible to cover an energy story accurately without understanding the impact of these changes,” Yep said.

“The U.S. shale revolution, the unwinding of the gigantic Chinese economy and the rapid pace of urbanization in every corner of Asia are global forces of change that won’t just affect the energy sector, but also the rest of the world.”

For Yep the constant change in his beat is what makes it so enticing.

“No energy reporter or expert can claim to know everything about this beat,” Yep said. “There is always something new to learn and re-learn.”

“I’ve covered different aspects of the energy sector for about five years now, and I still come across something new every day that intrigues me. The expansive nature of this subject makes covering this beat interesting and challenging at the same time.”

Knowing your industry

Chapa and Yep agree there are many factors they keep their eyes on in order to assure their coverage provides the most complete picture.

Yep said he tries to stay up to date on the daily oil prices of Nymex WTI crude or ICE Brent crude along with the prices of natural gas, petroleum products like gasoline and diesel, global currency exchange rates, GDP and other economic data of the largest economies, coal and electricity prices, shipping and freight rates, share prices of energy companies and the import and export volumes of energy commodities.

While keeping up with all these different factors is a lot of work, Yep said he has to do it because if one experiences a sudden change then the “underlying fundamentals can affect the whole energy market.”

Loren Steffy, a former columnist for The Houston Chronicle and now writes a column for Energy Voice, said understanding the underlying factors of the energy industry are important for a reporter to know in order to accurately cover issues in his or her reporting.

“The biggest challenge in covering the oil industry if you’re writing for a general audience because most people don’t understand energy, it’s a very complex market, it’s a global market, the economics are different from the way most other things work and they don’t understand how it works,” Steffy said.

“They expect to go to the gas pump and fill up for $2.50 a gallon, but they don’t understand what it takes to accomplish that.”

He said fracking is an example of Americans not getting an adequate picture of the issue.

“I just did a guest column for the Chronicle pointing out the Iranian nuclear deal came about because of fracking,” Steffy said.

“If we had not had the increase in US oil production that we did thanks to fracking we would never had been able to get the Iranians to the table, and we would have never been able to do a deal that the Saudis or people from Israel didn’t support, so it’s really changed the whole dynamics of international politics and diplomacy. But that’s not a story that gets told very often.”

Steffy also said covering oil companies creates an interesting dynamic because the companies are not use to being highly scrutinized by the public unless something bad happens.

“Most oil companies don’t have direct contact with consumers and even if they do they are one of the majors that has a retailing arm, you’ll still find most of the company is focused on exploration and stuff like, and they don’t do a really good job of dealing with the public in most cases,” Steffy said.

“And so unlike a company, like airlines or consumer electronics, that are use to having more of that public face, it presents special challenges when you’re reporting because the companies are in many cases their first reaction is just to not say anything.”

Throughout his career Steffy has seen that dynamic subtly change as oil companies become more and more responsible to the public.

“It’s gotten much more corporate,” he said. “Now you see a lot more people coming up through the ranks from example the finance side of the business, so there are a lot more controls and there’s a lot more corporate structure there than there use to be.”

“And companies are conducting themselves like we expect large public companies to conduct themselves, so there really has been a maturity in the corporate structure of the industry.”

How to explain a deep water well

The thing Chapa, Yep and Steffy have in common beside their beat is that they each feel a responsibility to take the jargon and complicated insights of the oil industry and make it readable and relatable for their readers. In order to do this though they often rely on those within the industry for help.

“I would personally like to write more about the human element of energy production and consumption,” Yep said. “Every aspect of the energy supply chain heavily involves people, and their life stories are as interconnected with energy flows as corporate revenues.”

Chapa said it is important for new reporters to integrate into the oil industry and make connections early whether it is through social media or in person.

“The folks here are really friendly, and they are all in networks and once you jump in the network you’re part of it,” Chapa said.

Steffy also stressed the importance of relationships with those inside industry adding that they can make a difficult topic very simple to understand.

“You have to really find the people in the industry that will help you understand how it works,” Steffy said. “You have to recognize that it is very complicated and there are a lot of snap judgments out there.”

“One thing I have found particularly interesting about covering the oil industry is that many people in the industry tend to be skeptical of the public when you first approach them about a topic, but when you show them that you’re really interested in learning about what they do they’re actually extremely helpful. They will spend hours and hours sitting with you and walking you through how a deep water well is drilled or that sort of thing.”