International Forums Contribute to Energy Cooperation within Constraints
GAO-07-170: Published: Dec 19, 2006. Publicly Released: Dec 19, 2006.
Rising oil prices, resulting from growth in energy consumption by rapidly developing Asian nations and by most industrialized nations, have increased concern about competition over oil and natural gas resources. In particular, Congress expressed interest in how the United States participates in energy cooperation through international forums. GAO was asked to review: (1) what are the key international energy forums in which the United States pursues energy cooperation, (2) what are some of the key emerging energy market issues that are important for international energy cooperation, and (3) how is the United States addressing these issues through its participation in these forums. GAO's work is based on contacts with agency officials and energy experts and review of documents.
The United States pursues energy cooperation through several international energy forums designed to meet specific cooperative needs. They include a formal institution with binding petroleum reserve obligations, regional associations, and informal gatherings designed to facilitate information exchange. Major forums include the International Energy Agency (IEA), the Asia Pacific Economic Cooperation Energy Working Group, the North American Energy Working Group, and the International Energy Forum. GAO identified three energy market issues that are important for U.S. efforts in international energy cooperation. First, a tighter energy market with higher, more volatile, prices has developed. This is due to (1) an unanticipated rise in energy demand and (2) constrained supply due to less spare crude oil production capacity and increased political frictions in certain supplier countries. Second, market participation of national oil and gas companies, which are majority owned by governments, has led to limitations on access to resources. Third, more reliable energy market information is needed to facilitate market stability and plan investment. The U.S. government has addressed these issues through its participation in international energy cooperation forums; however, the nature of the forums can limit their impact. Forums have restricted membership, consensus-based agendas and decisions, and voluntary participation. They generally focus on noncontroversial issues such as energy efficiency and technology. Within these constraints, the United States has tried to mitigate effects of tight markets by supporting emergency preparedness. It has not directly addressed the impact of national oil companies, but it has pursued related areas. It has sought to improve energy information, but Energy Information Administration (EIA) statistical expertise has not been consistently leveraged for purposes beyond data exchange, and U.S. data submissions to the IEA have not been timely.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: In the face of rising oil prices accompanying the rapid growth in Asian economies and their increased energy consumption, Congress expressed interest in how the United States sought to advance energy security through international energy cooperation forums. In December 2006, GAO reported on U.S participation in international energy cooperation forums and found that tightened markets and the need for substantial investment in the oil and gas sectors increased the importance of more reliable oil and natural gas market information. We found that the Department of Energy's Energy Information Administration (EIA) had not consistently leveraged its statistical expertise to improve international energy data. GAO recommended that DOE emphasize the priority of improving energy information efforts within international energy forums by examining how EIA expertise can contribute to international forum data efforts. In response, EIA has taken several actions aimed at improving international energy data by its continued engagement in international forums. According to EIA, ongoing since 2008, EIA has met with and/or contributed to energy data efforts of the International Energy Agency in Paris (IEA), the Asia Pacific Economic Dialogue (APEC), the United Nations (UN), the Joint Oil Data Initiative (JODI), and the Latin American Energy Organization (OLADE). EIA's actions have included advising IEA on proposed methodology changes, sharing best practices with member and non-members, and holding annual video conferences between IEA's statistical program and EIA's questionnaire respondents. For example, EIA participated in a panel on data gaps at a 2009 IEA conference to share best practices on developing and using energy indicators. As an active member of APEC's Expert Group on Energy Data and Analysis, EIA has helped strengthen the quality of member data reporting by making presentations and sharing best practices at annual data workshops and full meetings, including hosting a meeting in Honolulu in 2008 and presenting information at the 2009 Kuala Lumpur meeting on EIA's efforts to collect energy consumption data. EIA has consistently advised the UN and JODI on their data collection efforts, and played an active and integral role in UN International Recommendations for Energy Statistics (IRES) by sharing knowledge and suggesting energy definitions to make reporting consistent and non-burdensome on all members; the UN Statistical Commission approved and adopted the final IRES report in February 2011. EIA has engaged and met with representatives of OLADE in Washington to share best practices, and has regularly shared expertise to help improve OLADE's data quality.
Recommendation: To enhance the impact of international cooperation for improving energy statistics needed for market stability and investment, the Secretary of Energy should emphasize the priority of improving energy information efforts within the international forums, particularly by examining how EIA expertise can contribute to international forum data efforts.
Agency Affected: Department of Energy
Status: Closed - Implemented
Comments: As a result of the recommendation, EIA has examined ways to improve its data submissions to IEA in a timelier manner. However, according to EIA, the agency will be unable to meet IEA's data submission deadline because IEA?s deadline does not align with EIA's survey schedule.
Recommendation: To enhance the impact of international cooperation for improving energy statistics needed for market stability and investment, the Secretary of Energy should emphasize the priority of improving energy information efforts within the international forums, particularly by examining how U.S. data submissions to the IEA can be made more timely.
Agency Affected: Department of Energy