The Department of Energy Could Make Better Use of Existing Data To Monitor the Crude Oil Spot Market

EMD-80-95: Published: Aug 21, 1980. Publicly Released: Aug 21, 1980.

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As the world price of crude oil more than doubled in the last 2 years, spot crude oil prices rose even higher. Spot market activity appeared to increase to unprecedented volumes. The significance of the spot market lies not only in its size and price trends, but in its relationship to the far larger contract market. Both oil-exporting and oil-importing countries pointed to the spot market when contract prices dramatically increased. It is alleged that the spot market created an illusion of scarcity, artifically inflated demand and racheted crude oil contract prices to higher levels than they would have otherwise climbed. By mid-1980, the spot market appeared to be stabilizing, but conditions underlying its volatility remain.

Four separate Department of Energy (DOE) systems collect valuable information for monitoring and analyzing the crude oil market, including the spot market. However, their reports are not sufficiently current; some important information is lacking concerning the linkages between contract and spot sales, prices, and other conditions relating to the spot market. The Department's most systematic and timely data on U.S. oil company involvement in the spot market is not shared because of the proprietary nature of the raw data. DOE can greatly improve the quality and timeliness of monitoring and analyses by providing for better information sharing among the offices collecting and using the information.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should assure timely sharing of data from existing formal and informal information systems between the Office of Special Counsel for Compliance and the Office of International Affairs, while providing adequate protection for that data which is proprietary. He should define the term spot market on the Transfer Pricing Report. The Secretary should require companies to identify information on linkages between contract and spot sales in the Foreign Oil Supply Agreement Report. He should use the data, in properly aggregated form, from the existing crude watch information system to meet U.S. requirements of any future International Energy Agency quick response information system.

    Agency Affected:

 

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