Jay Hakes, the former head of the Energy Information Administration, says the US once again has failed to learn from its energy shortages.
Hakes, who was EIA administrator for nearly 7 years, quit in June to become director of the Jimmy Carter Presidential Library and Museum. EIA is an independent data-collecting bureau in the US Department of Energy.
Hakes said price spikes for heating oil in New England last winter and gasoline in the Midwest this summer resulted in the "old kind of fingerpointing on all sides that confuses the public.
"We're sort of back in the position that every little crisis is dealt with as a unique event, and when it's over, the general public doesn't know any more than when it started."
Hakes applauded the fact that the crises did not prompt calls to limit the free market. "As a nation, we've become much more mature in our understanding of markets. I think everyone realizes that price controls would be counterproductive."
More numbers
Hakes said, "EIA can be very, very helpful in these kinds of situations, in providing information that is trusted by all sides of the debate."
But he said the agency could do more with more funds. Hakes said in nominal dollars, EIA's budget is less than it was in 1995.
"EIA has done a great job of continuing to upgrade a lot of its systems, but a lot of things are needed, like modeling regional fuel situations, that the budget doesn't permit."
He said the world badly needs better energy supply and demand data, especially regarding Asia.
"That would be helpful to producers as well. For instance, everybody got spooked by the dropoff in Asian demand back when the prices tanked, and to the extent that our data and information systems get that information quickly to producers, they're able to adjust more quickly."
Suggestions
Hakes said counter-cyclical measures could limit price volatility in the US.
For instance, he said the US could buy oil for the Strategic Petroleum Reserve when the price is low and sell it when it is high.
"I'm not necessarily advocating that, because it's difficult to implement and there are some legitimate points about bringing a political process into the market. But if operated by an independent body, like the Federal Reserve Board, that's the type of thing that should be discussed."
Hakes said investors need a better perspective of the industry. "If the investment community could accept that the future price of oil is likely to stay in a range, you'd get more steady investment in drilling."
Hakes said the US should have performed a cost-benefit analysis of other options before creating a distillate reserve in New England. He said transportation was the problem last winter, so it might be more cost-effective to add icebreakers or improve harbor dredging.
Hakes praised the oil industry for a "brilliant job of using advanced technology and adjusting to complex environmental rules."
He said, "Its a story that the American public doesn't understand very well and [about which] the industry should do more bragging."
