VOL. XLVII

No 14

05-April-2004

 

The US Energy Information Administration

 

By Helmut Merklein and Guy Caruso

 

The following article was written for MEES by Dr Merklein and Mr Caruso. Dr Merklein was the Administrator of the Energy Information Administration (EIA) during 1985-90, following his earlier appointment as Assistant Secretary of International Energy Affairs and Energy Security. He now is a consultant in oil and gas policies ( helmut.merklein@verizon.net). Mr Caruso is the current Administrator of the EIA. He first joined the Department of Energy in the Office of International Affairs. He has also worked at the Paris-based International Energy Agency (IEA) and at the Central Intelligence Agency (CIA). Most recently he was the Executive Director of the Strategic Energy Initiative Project at the Center for Strategic and International Studies (guy.caruso@eia.doe.gov). The views expressed in this article do not necessarily represent those of the Department of Energy or the US Government.

 

Underlying Philosophy

The energy crisis of the 1970s demonstrated the need for unified energy planning within the federal government. On 4 August 1977, President Carter signed the US Department of Energy Organization Act, centralizing the responsibilities of the Federal Energy Administration, the Energy Research and Development Administration, the Federal Power Commission and other energy-related government programs into a single presidential cabinet-level department. The new Department, activated on 1 October 1977, was responsible for long-term planning, high-risk research and development of energy technologies, federal power marketing, energy conservation, energy regulatory programs, a central energy data collection and analysis program, and nuclear weapons research, development and production. This article deals with the creation and operation of the central energy data collection and analysis program, the Energy Information Administration (EIA).

 

Not unlike the new US Department of Homeland Security, the US Department of Energy (DOE) was born out of a crisis. Both departments were created following unexpected catastrophic events. The energy embargo of 1973-74 found the US lacking in its ability to develop a coherent energy policy for the simple reason that, prior to the embargo, energy policy was a decentralized effort that was being pursued by various government agencies, none of which had a specific, exclusive, and all-encompassing energy mandate. What’s more, there was no consistent energy database, an indispensable prerequisite for the formulation of a sound national energy policy. The DOE Organization Act proposed to change that.

 

It was recognized at the outset that the formulation of a national energy policy would have to rely on a completely new database. Much of the existing database had been assembled by industry and, for that reason, was considered potentially self-serving and lacking in credibility in policy-making circles. The existing energy information would have to be screened for admissibility into the EIA database, which would have to be enlarged by expanding the data-collection effort to make the emerging database absolutely independent, reliable, internally consistent, and credible. In a political two-party system where the executive power alternates from time to time between the two parties, with similar swings in the legislative chambers, what was needed was a database that would be accepted at face value by both parties. As a former chairman of the powerful US House Commerce Committee once put it, “what the country needs is not a republican energy database or a democratic energy database, but an energy database pure and simple”. That suggested complete neutrality in outlook, total independence in collecting and analyzing energy data, and absolute prohibition for the collecting agency to develop a political agenda of its own or to become directly involved in policy formulation.

 

The DOE enabling law met the challenge by incorporating the following provisions for the proposed energy data agency. It established and named the Energy Information Administration and provided that it be headed up by an Administrator who would be appointed by the President of the United States, by and with the advice and consent of the US Senate, at a level equivalent to that of a US Assistant Secretary. The law stipulated that the Administrator of EIA be “a person who, by reason of professional background and experience, is specially qualified to manage an energy information system.”

 

The law first defined the broad functions of the Administrator, which are to collect, evaluate, assemble, analyze, and disseminate energy data and information. To assure independence and establish credibility, the law stipulated that “the Administrator shall not be required to obtain the approval of any other officer or employee of the Department in connection with the collection or analysis of any information; nor shall the Administrator be required, prior to publication, to obtain the approval of any other officer or employee of the United States with respect to the substance of any statistical or forecasting technical reports which he has prepared.”

 

In the main, this extraordinary power meant that neither the White House, nor the Secretary of Energy, nor any Official of the Administration or the US Congress could impose or prevent the publication of specific energy data, nor could anyone suggest the outcome of any analysis that the EIA was to undertake. To make sure that EIA would not deviate from this politically neutral course, the law also provided for an annual audit of its performance during its formative years.

 

Finally, the EIA Administrator was required, under this enabling law, to provide any information or analysis in his possession to any office within the Department of Energy and to the public in a form and manner easily adaptable for public use. The one exception is the publication of individually identifiable corporate data, which EIA withholds. This practice was tested in the 1990s, but EIA prevailed. In 2002, the practice was encoded by law.

 

EIA’s mandate to publish its information originally gave rise to the publication of a number of energy reports. At the peak of this cycle, in the late 1980s and early 1990s, EIA published nearly 300 hard-copy issues of 86 individual titles, from weekly, monthly, quarterly and annual periodicals to one-time reports, including statistical and data reports, directories, and studies containing analyses and projections. Many of these reports have by now been replaced, or are in the process of being replaced, by postings on the EIA web site (http://www.eia.doe.gov). Given their popularity at home and abroad, EIA publications and its web site will be discussed in some detail later in this article.

 

Following the definition of the EIA Administrator’s general privileges and duties, the DOE enabling law becomes quite specific as to the tasks to be performed. These are too numerous to list here. Suffice it to point out that the law mandates that, in addition to energy production, reserve, and marketing reports, EIA identify and designate major US energy producing companies and that it produce financial reports of such companies on an annual basis, including company revenues, profits, cash flows, investments and similar information. In doing so, EIA is required to follow accounting practices consistent with those of the US Securities and Exchange Commission. In addition, EIA is to regularly conduct and publish the results of a survey of energy consumption in the manufacturing industries, as well as energy consumption surveys in the residential and commercial sectors. These consumption surveys are done regularly on an alternating cycle. The manufacturers energy consumption survey is to specifically cover fuel consumption, energy expenditures, fuel switching capabilities, and the use of renewable energy. A specific mandate on electric utilities requires the collection of data on demand-side management. Other mandates deal with utility conservation programs, expanded fuel-use surveys, and energy efficiency and load-management programs. The overall data collection effort is to be done so as to maximize the amount of useful energy information, while minimizing the reporting burden of small business establishments, using reliable statistical sampling techniques.

 

EIA Operations

The transition from a legislative mandate to working reality is never easy. It was particularly complex in the United States, where the energy sector is about as complicated and diverse as it can possibly get. For example, rather than the five or ten oil companies that characterize the oil and natural gas sectors in most countries, there are over 20,000 active US producers extracting oil from some 520,000 wells in 44,000 fields, and 391,000 natural gas wells. The average production rate of the oil wells is roughly 10 b/d per well. Similarly, there are about 145 operating refineries in the US, not counting 419 natural gas liquid plants. In addition, at the end of 2002, there were some 8,985 power generators at US electric utilities with a name-plate capacity of 597GW, plus an additional 4,100 generators with a nameplate capacity of 308GW that are operated by independent power producers. Combined heat and power producers contribute another 75GW to the total. Furthermore, there are more than 180 intrastate and interstate natural gas pipeline companies transporting 63.7bn cu ft of gas per day through about 270,000 miles (430,000km) of pipelines, and approximately 1,400 local distribution companies delivering the gas to end-users. Finally, some 1,450 coal mines produced over a billion short tons of mostly bituminous and sub-bituminous coal in 2000.

 

Needless to say, an energy sector of that size and diversity requires a substantial commitment in money and personnel to adequately assess it and to keep track of its ever-changing physical, financial, and operational environment. The 2003 EIA budget was $80.1mn, with a federal staffing level of 374 professionals. About 48% of the budget was dedicated to paying for the federal staff. Another 39% of the budget was scheduled to fund 250 support service contractors that are used to help EIA design and run its energy data and analysis systems. The final 13% of the budget paid for office space and other administrative expenses such as telephones and office supplies. As will be discussed later, most countries, and especially most oil-producing countries, can achieve equivalent efficiencies in building a credible energy database at considerably lower cost, given the relative simplicity of their energy industry structure.

 

There is no way to list here in any detail exactly how US and relevant international energy data are collected in such a huge and complicated market, nor is the collection methodology of any particular interest to the average data user. The current EIA organizational diagram as it has evolved over the 26 years since the creation of the agency is shown below.

 

As shown below, EIA is organized into eight working components:

 

1.   Oil and Gas;

2.   Coal, Nuclear, Electric, and Alternate Fuels;

3.   Energy Markets and End Use;

4.   Integrated Analysis and Forecasting;

5.   Statistics and Methods;

6.   Information Technology;

7.   Resource Management; and

8.   National Energy Information Center

 

 

Use And Usefulness Of EIA Data

The types of data that any energy information agency needs to collect depends on the agency’s mission. As mentioned, the DOE enabling law mandates EIA to carry out a central, comprehensive, and unified energy data and information program which is relevant to the adequacy of resources to meet the nation’s energy needs in the near and longer term future. In other words, the principal objective is to create a database for the purpose of facilitating the development of energy policies. The information so collected and the analyses and projections performed under this mandate are to be made available to all government agencies and to the general public.

 

Given its focus on the nation’s energy needs, the data collected by EIA are primarily related to domestic reserves, production and consumption. However, in the current environment where energy flows know no borders and where more than half the nation’s crude and oil products come from abroad, a substantial amount of international data is collected and analyzed as well. Thus, foreign energy analysts and foreign governments will find the EIA data, analyses, forecasts, and especially its published and fully documented computer models, fertile sources of information to assist in their own energy policy planning.

 

EIA has essentially four types of information products: Energy data, analyses, projections, and descriptive information about its products. Many of the products, such as the Petroleum Supply Monthly, deal with specific industries. Of particular value to a broad range of analysts are products that contain data on all fuel types presented in an integrated manner. Some key releases of integrated information are the Monthly Energy Review, the Annual Energy Review, the Short-Term Energy Outlook, and the Annual Energy Outlook. All of these publications are available free of charge on the EIA web site.

 

1. Most of EIA’s energy data are collected by EIA staff. This involves the design and fielding of statistical surveys to energy producers, users, transporters, and certain other energy-related businesses. Companies generally report directly to EIA, but the Agency also collects energy data from other sources, such as trade associations and other government agencies. Where household information is sought, a survey is designed for a contractor’s data collection.

 

a.    A highly abbreviated list of liquid petroleum data would include estimates of proved reserves of crude oil and natural gas liquids in the US, monthly statistics for the production, imports (in total and by company), exports, and changes in inventories of crude oil and petroleum products, petroleum refinery capacity and throughput data (in the aggregate and by refinery), price and volume statistics on crude oil and petroleum products at the national, regional, and State level, oil field equipment and operating costs (these data were used as the basis of a recent MEES article on cost estimates for restoring Iraqi crude oil production), as well as international data on production and reserves.

 

b.    Natural gas data include reserves, information regarding the supply and disposition of natural gas, equipment and operating costs of natural gas leases, exports, imports, underground storage, and prices. Storage data are plotted in relation to past seasonal consumption patterns, where they provide an early-warning system for impending shortages, especially if presented in conjunction with projected winter weather patterns.

 

c.     Coal is an important energy resource in the US. No less than 50% of electricity production comes from coal. EIA’s data collection in the coal sector includes the number and type (surface or underground) of mines, mine-mouth prices, productivity, employment, recoverable reserves, productive capacity, consumption, distribution by transportation from suppliers to consumers, and stocks. Other coal data include coal quality, carbon dioxide emissions, productivity, employment, productive capacity, and recoverable reserves.

 

d.    EIA provides statistical data on the US uranium industry’s current marketing activities including purchases of uranium and enrichment services, enrichment feed deliveries, uranium fuel assemblies, contracted and unfilled market requirements, and uranium inventories.

 

e.     Solar and renewable energy data include energy consumption and electricity generation from renewable resources, as well as manufacturing activities for solar thermal collectors, photovoltaic cells and modules, and geothermal heat pumps. Renewable energy resources include biomass, wood, wood waste, municipal solid waste, landfill gas, ethanol, and other waste, as well as wind, solar, solar thermal and photovoltaic, and hydropower.

 

f.     The US electric sector has undergone profound changes over the last few years, away from a regulatory environment towards greater reliance on competition in the market place. Keeping track of the many changes of this ever more complex market has made the electric sector arguably the most difficult to monitor. This has translated itself into a very complex data collection system. Some of the topics that are being monitored by EIA include existing and proposed generating units owned and operated by electric utilities and non-utilities (co-generators, small power producers, and independent power producers), demand-side management, financial information of utilities (income statements, balance sheets, earnings, taxes, depreciation, amortization, and operating revenues), as well as information on power marketers, fuel types, fuel origin, and quantity and quality of fuel from non-utilities. It may come as a surprise that the US is the largest producer of nuclear power in the world, with 104 operational generators with a nameplate capacity of 104.9GW.

 

2.      EIA’s analyses are technical reports and articles that analyze issues about energy including economics, technology, energy production, prices, distribution, storage, consumption, and environmental effects. They are generally done at the request of the Secretary of Energy, the White House, the Congress of the United States, or at the EIA Administrator’s discretion. They usually deal with the impact of pending or proposed legislation on energy prices, supply, demand, the environment, etc.

 

a.      The EIA web site lists 27 analysis reports for the petroleum sector that were published in 2000-03. The topics range from price studies on gasoline and other petroleum products to petroleum-related environmental assessments, financial analyses of petroleum companies, risk management in the energy industry, assessments of US and foreign oil reserves and productive capacities, and various petroleum market analyses.

 

b.      No less than 73 analyses, published over the same period 2000-03, deal with natural gas issues. They run the gamut from reserve assessments, analyses of global LNG markets, production and price forecasts, domestic and foreign gas market analyses, including spot markets, storage estimations, assessments regarding the adequacy of current and projected natural gas pipeline capacities, evaluations of the impact of new natural gas legislation, reliability analyses, and others.

 

c.       Similar analyses have been done and are available on the EIA web site for the coal, nuclear, solar and renewables, and electric sectors.

 

d.      Other analysis reports deal with international issues. Among them are Annual Chronologies that report major world-wide energy events. The Iraq Energy Chronology 1980-2002, the World Oil Market and Oil Price Chronology 1970-2002, and the Nuclear Chronology 1996 to Present stand out as particularly appealing to foreign energy analysts. EIA’s Country Analysis Briefs currently cover 119 countries or regions. Other international reports include EIA’s Exchange Agreements with foreign governments (notably the agreement with China which is listed on the web site), the highly informative International Energy Data Fact Sheets (among the 26 listed on the web site, the reader may wish to look up the OPEC Fact Sheet, the Non-OPEC Fact Sheet, the OPEC Revenues Fact Sheet or the Persian Gulf Oil and Gas Exports Fact Sheet), International Energy Finance Reports, showing US energy investments abroad and foreign energy investments in the US, and reports on Energy Security.

 

e.       EIA also produces what it calls Service Reports. These are generally narrower in scope than the EIA analysis reports. They are prepared in response to specific requests (senators, representatives, others). The Service Reports deal mainly with new or pending legislation whose impact on prices, supply, the environment, etc., are to be determined. EIA publishes about 12 to 15 such Service Reports every year.

3.      EIA’s projections cover all energy types, and include future looks at supply, consumption, prices, and other important factors. The Agency does a short-term forecast that goes out 12 to 24 months in the future, and a longer term forecast that goes out 20 years. Some of EIA’s forecasting models are available on its web site.

 

4.      Other products are descriptions of information products to help analysts find what they need. These products include directories of all EIA survey forms, lists of its publications, electronic products and models, a guide to energy education resources, and a list of energy data contacts (whom to call at EIA to resolve specific energy questions).

 

The EIA Web Site

Nowhere has the progress of EIA activities been more pronounced and more visible than in its dissemination of energy data. In the era before the advent of Internet dissemination and access, the number of people receiving EIA’s printed reports never exceeded 20,000 in any year. In 1995, EIA launched a major effort to replace printed reports with a comprehensive web site containing all of EIA’s public-use information, which is refreshed with up-to-date material virtually every day. Today, the EIA web site contains over 100,000 pages of data, analyses, and forecasts, and hosts an average of about 1.3mn user sessions each month. These user sessions are extended work sessions, as opposed to simple hits, which EIA no longer counts. A dedicated web team maintains the site and improves its structure and usability based on continuous customer feedback. Over the few years of its existence, the EIA Web site has garnered its share of awards: Government Executive Magazine declared it to be one of the top 16 Government sites; the Dow Jones Business Directory rated EIA high in content; and the Chicago Tribune said: “The general rule is to go to the EIA site, and stop wasting your time elsewhere.”

 

Part of the popularity of EIA’s web site is due to an appreciation of its content, of course. However, part is undoubtedly due to its user-friendliness. For all the complexity and diversity of the materials it offers, this award-winning site is surprisingly easy to navigate. The easiest way to acquaint the reader with the EIA web site is to look up a few of its postings. Three of the publications cited earlier, the Country Analysis Briefs, the OPEC Fact Sheet, and the US (EIA) - China Protocol for the Exchange of Energy Information, will serve as examples.

 

To go to the home page, enter http://www.eia.doe.gov . That site lists energy information “By Geography”, “By Fuel”, “By Sector”, and “By Price”. Alternatively, it offers data and reports categorized on the basis of four specific subject areas: Process, Environment, Forecasts, and Analyses. The site asks: “How do you want to access energy information?” The user does not have to, but he will find it easier to click the line below that says: “Click for a text menu”. That option will show the various major categories and their sub-categories simultaneously.

 

To find the Country Analysis Briefs, click that label under the “By Geography” heading, and a world map will come up, along with an alphabetical listing of the countries for which an energy analysis has been prepared. To choose Iraq, for example, either select the country from the pull-down menu with the heading “Individual Country Briefs” or click “Middle East” and then “Iraq” on the map to bring in the Iraq report. Readers will probably prefer the map approach, since under the Middle East Map, they will see at a glance what other Country Analysis Briefs are available in the Region, and when they were last updated.

 

All Country Analysis Briefs follow basically the same format, with some variations depending on country characteristics, resource availabilities, etc. There is some general background information on the country, followed by sections dedicated to the oil, natural gas, and electric power sectors. A section on general energy information provides additional details on the country at large, its economic sector, its energy and environmental sectors, and useful data on the country’s oil and gas industry. Almost as important as the information in the Country Analysis Briefs themselves are the many links to other sources. These include links to other EIA publications on the subject country, other US Government links (including public data from the CIA World Factbook), and non-US government links. There are 28 such links at the end of the Iraqi Country Analysis.

 

To find the OPEC Fact Sheet, again choose the map route described above to go to the Middle East, click the pull-down menu “Individual Special Topics” and click “OPEC Fact Sheet”.

 

If the reader has no clue where to look, but knows that EIA has signed a data exchange agreement with the Government of China, the best way to find the agreement is through the EIA search engine. For example, specifying “china agreement” will produce 459 finds, in the order of relevance. Number five on the search result is the China/US energy data exchange agreement.

 

Energy Data Centers In Other Countries

This article serves a dual purpose. It is a description of the EIA data collection, analysis, and dissemination system, but it is also meant to be a reference source for Energy Ministries and similar government institutions that wish to establish energy information agencies of their own. EIA provides a service to foreign countries, often culminating in formal arrangements that are intended to “improve the quality and timeliness of energy statistics, such as energy consumption, production, prices, inventories, etc, and other energy-related information.” Such arrangements provide assistance in the development of programs that concentrate on statistical and analysis techniques, and Internet publishing and dissemination. After international and legal approvals, Agreements are established with foreign entities such as Bangladesh, the Philippines, South Africa, China, and Russia.

 

The first task in setting up an energy data system is to define the purpose the system is intended to serve. It could be meant as a policy-analysis tool, as is EIA, or as a regulatory tool, in which case the emphasis would be on detailed cost structures. Alternatively, the database could be set up as an operational data management tool, as within a state oil company, where it could be used to develop digitized field or well location maps or down-hole equipment records, to give just two of an infinite variety of examples for the oil and gas production sector. Finally, the database could serve as a crisis management tool capable of rapidly allocating scarce resources in an unpredictable and fast-moving environment, where real-time data become eminently important.

 

One idea that foreign governments generally find difficult to accept is the need for an agency’s independence in collecting, analyzing and disseminating information. Independence comes in degrees. As will be seen later, there are constraints even on EIA. In judging the need for independence, it is to be kept in mind that the principal reason for it is to achieve credibility where it counts. EIA needs credibility in policy-making circles. Hence its independence means primarily freedom from political interference. That is by and large true for a regulatory database as well. If the database to be established is operational in nature, as for an oil company, credibility within the corporation essentially means accuracy and reliability. Politics is not (or should not be) part of the oil-company data equation.

 

The one thing all systems have in common is that they collect, store, and disseminate energy data. Outside of a centrally controlled economic system of the type that is becoming increasingly rare in the world, the collection of energy data requires that the collecting agency be properly empowered to request such data and to enforce its requests if necessary. That sounds disarmingly simple. However, given the occasional reluctance of private-sector enterprises to respond to data requests, especially in economies in transition from central controls towards market orientation, this is a far more difficult task than might at first be thought. In the case of EIA, reluctant respondents can be subpoenaed through appropriate court action to deliver such data. Having subpoena power is generally enough to achieve the required collection. EIA has not used its subpoena powers in the last two decades. Be this as it may, appropriate data-collecting authority needs to be vested in the data agency to assure its success.

 

A word of caution is in order here. If the energy data agency does have collection enforcement powers, that power needs to have some outside constraint to prevent it from being abused. Abuse, in the data arena, generally means putting large bureaucratic burdens on respondents for data of marginal value. Broad constraints are imposed by the budget that will prevent the expansion of the data agency at will. To prevent collection abuse in specific cases, EIA must get approval from the Office of Management and Budget before it can field new data collection forms. A similar approval mechanism needs to be put in place in designing new data collection centers elsewhere in the world.

 

Once the purpose of the energy data agency has been clearly defined, the data to be collected must be identified and the mechanism of collecting them must be specified. It would be a mistake for most countries to look at EIA and attempt to simply duplicate its procedures. Such an approach could prove to be prohibitively burdensome and costly, especially in developing economies.

 

There are ways around some of the more burdensome collection efforts, and they should be investigated prior to implementation. For example, detailed consumption surveys are very expensive, given the wide dispersion and disparity of the respondent population. That is why EIA collects energy consumption data on staggered multi-year cycles, but it is quite conceivable for new entrants with limited budgets to dispense with them altogether. Aggregate consumption can often be obtained by inference from supply data. A case in point is aggregate gasoline consumption, which is equal to total gasoline production plus net imports, after inventory adjustment. However, aggregate data will not provide answers to some of the issues that policymakers might wish to address. There is a trade-off between the policymakers’ needs (real or imagined) for more precise and more detailed data, and the burden on the economy of developing them. The resolution of that dilemma requires some soul-searching at the very outset of designing an energy data system. To achieve efficiency in data collection, attention needs to be paid to where, in a complex maze of energy flows and counter-flows, certain node points exist that lend themselves as focal points in the collection process.

 

While the heart and soul of an energy data system is the information it collects, assembles, stores and disseminates, the system needs tools to accomplish this task. This article has not dealt with the EIA computer system, for reasons of space limitation. Suffice it to say here, that it is state-of-the-art and, of course, fairly complex. However, the type of computer support needed for a small data system, can be quite modest. Such a system could be built with off-the-shelf hardware and software. A PC-based system with a client/server architecture will generally respond to the data-collection needs of a modest but effective system. Simplicity of design, reliability in service, and ruggedness in performance are the primary demands placed upon such a system, especially in an environment where the power supply is unreliable.

 

If properly designed and presented, such a system might qualify for technical assistance through one of various unilateral or multilateral foreign aid institutions. An example that comes to mind is a basic but functioning energy data system that was installed in a developing country in the Caucasus Region. The system involved tying twelve existing free-standing computers and ten new PC’s in the country’s Ministry of Energy into a local area network system using two network servers. A communication server established access to remote locations and to the Internet in general. The system was supported in full by a US technical assistance agency, which allowed for funds to be used in training Ministry personnel to develop data expertise and to manage the computer system. The latter task included a one-year contract to manage the system while training system personnel.