Unresolved Issues Remain Concerning U.S. Participation in the International Energy Agency

ID-81-38: Published: Sep 8, 1981. Publicly Released: Sep 8, 1981.

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GAO reported on U.S. participation in the International Energy Agency (IEA). IEA, established in 1974 and composed of 21 oil-consuming countries, is a multilateral organization created to facilitate responses to short-term energy disruptions and long-term supply problems. The IEA Emergency Sharing System is the mechanism available to respond primarily to short-term interruptions. As the principal proponent of IEA, the United States contributed 25 percent of the agency's budget for fiscal year 1981. IEA also serves as an energy policy coordinating forum for consuming nations. It has improved member countries' understanding of the oil market and provided them with a better sense of what needs to be done on an international and national level during a period of continuous supply uncertainty.

Although the intentions of IEA are praiseworthy, GAO concluded that there are several areas that merit attention. Recent events, such as the Iraq-Iran war, have shown that the Emergency Sharing System is flawed, and GAO questioned the System's viability in an actual emergency. Furthermore, GAO found that, in a majority of supply disruptions, the United States would have to divert its oil supplies to other IEA countries. GAO also stated that, since U.S. participation in IEA reflects a dichotomy between the operational role of the Departments of State and Energy and the regulatory role of the Department of Justice and the Federal Trade Commission, decisions stemming from the interagency antitrust clearance process should be explained. Finally, GAO found that foreign reaction to U.S. antitrust monitoring of U.S. industry involvement in IEA activities was negative. GAO concluded that the success of IEA in a rapidly changing market environment depends greatly on the willingness of participating countries to support its basic objectives of (1) sharing supplies in an emergency; (2) developing a comprehensive oil market information system; (3) establishing a long-term cooperation program emphasizing import controls, accelerated development, and use of alternative fuels; and (4) improving consumer-producer relations.

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