Review of Accounting Practices in the Oil and Gas Industry
Highlights
The role of GAO in providing Congress with critical analyses of government options, policies, and proposals to assist Congress in considering new legislation is reviewed. The Energy Policy and Conservation Act conferred upon GAO a large responsibility and affected GAO's oversight work at the Federal Energy Administration (FEA). The Federal Energy Administration Act required GAO to monitor and evaluate FEA. GAO was called upon to help the Securities and Exchange Commission to develop accounting practices for crude oil and natural gas producers. The Commission is authorized to rely upon standards developed by the Financial Accounting Standards Board. GAO's role is to insure that the accounting practices in the oil and gas industry will permit a reliable energy database to be compiled for public purposes. In addition, GAO has underway about 90 studies concerning energy supplies and conservation. GAO has been asked to assess the consequences that would result from natural gas curtailments and the impacts that would result if the price of interstate natural gas were deregulated. The possibility of deregulation must be carefully weighed against other alternatives. Although GAO supports the extension of FEA as a temporary agency, GAO supports the establishment of a Department of Energy and Natural Resources.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| FEA permanent energy policy responsibilities should be combined with the Energy Research and Development Administration's energy research and development policy responsibilities into a new agency called the National Energy Administration. FEA regulatory responsibilities could be transferred to the Federal Power Commission. FEA should be strengthened to make it a more credible and objective focal point for federal energy data efforts. Energy conservation should be accorded a higher priority in the national energy policy. FEA should be required to report annually to Congress on current national energy conservation activities and federal plans and needs in the conservation area for the upcoming year during a period of 5 years. This reporting requirement will give a centralized picture of the government's overall conservation efforts, enable more accurate judgments of its effectiveness, identify conservation plans for the coming year, and provide a basis for assessing the merits of further voluntary efforts and ascertain the need for mandatory efforts. This also will provide Congress with a base of information upon which to take future legislative actions, such as establishing mandatory automobile mileage standards. | Please call 202/512-6100 for additional information. |