US Energy Sec. Bill Richardson has told representatives of oil producing and consuming nations that "it is time to get our facts straight" on world supply-demand data.
Richardson spoke July 15 at the closing of the World Oil Market Data Conference in Madrid. The US and Spain co-hosted the meeting.
Richardson said, "It is my hope that together we can find ways to help make world oil markets more stable. And one path toward better oil markets is better data.
"It is the free market that determines price, supply, and demand. So it is crucial that buyers and sellers, producers and consumers have access to the best information possible. We ignore the power of data at our own risk.
"Today's sophisticated oil market reacts quickly to the information parade that passes before it," Richardson continued. "Good, timely data can increase efficiency, reduce volatility, and make for more accurate forecasts.
"Poor, dated information confuses markets and discourages investment. The fact is that oil consumers and producers both pay a price for unreliable data, late data, or no data at all."
Richardson said that, in his meetings with foreign oil ministers in recent months, the accuracy and interpretation of even baseline oil supply and demand forecasts were questioned.
He said, "The current extreme market volatility has roots in the miscalculation of the growth of Asian demand. A lack of timely data at the start of Asia's financial crisis led to an overestimate of demand. That collided with rising oil production, sending prices to historic lows.
"Now, demand has recovered, but production has not kept pace, sending prices up and inventories down. Again, timely data on this development could have reduced volatility."
Richardson said the US Energy Information Administration does a good job, but even its demand data lags the "real world" by 2 months. He said the International Energy Agency's estimates on production from non-Organization of Petroleum Exporting Countries nations during the fourth quarter of 1998 were off about 3 million b/d.
Richardson noted that hundreds of billions of dollars in investments will be required to meet future world energy demand.
"To attract the investment needed, the world's nations have to take a hard look at capacity and inventory needs. They have to work with the private sector and target incentives to attract necessary capital.
"In these highly competitive times, oil exploration, development, production, refining, transportation, regulation, and policies should be informed by the best market information available, and cooperation is essential."
