Energy Security:

Federal Responses to December 1989 Heating Fuel Shortages Were Limited

RCED-91-78: Published: Feb 20, 1991. Publicly Released: Mar 13, 1991.

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Pursuant to a congressional request, GAO examined: (1) alleged December 1989 heating fuel shortages; (2) the type of data the Department of Energy's (DOE) Energy Information Administration (EIA) collected and its analyses of heating fuel supply and demand; (3) the impact of federal agencies' delayed processing of Jones Act waivers on heating fuel supplies; and (4) the impact of interruptible natural gas contracts on heating fuel supplies and availability.

GAO found that: (1) in December 1989, the eastern U.S. coast experienced short-term heating fuel shortages; (2) two principle reasons for the shortages were increased demand due to extremely cold temperatures, and the inability of the distribution system to move heating fuel stocks from refineries and storage terminals to areas experiencing shortages; (3) EIA maintained data and prepared forecasts on distillate demand and supply, but data limitations reduced EIA ability to adequately monitor the supply shortages; (4) federal agencies took from 6 to 17 days to process Jones Act waivers that would have allowed foreign-flagged vessels to transport heating fuels between U.S. ports; (5) DOE established a new waiver process, but it was difficult to adequately determine its criteria for granting waivers; (6) in December 1989, some customers with interruptible natural gas contracts had their gas services discontinued; (7) those customers entered distillate and propane markets, reducing fuel supplies available to residential consumers; and (8) EIA began a study that would provide additional information on the impact of the interruptible gas contracts on heating fuels and supplies.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOE believes that the costs of collecting secondary inventory information will be excessively high and, besides placing a burden on many small companies, the data would be outdated before the results are disseminated. Accordingly, it will continue carrying out its responsibilities under the Jones Act by obtaining the data from state and other sources as it has in the past.

    Recommendation: The Secretary of Energy should determine the costs and benefits of collecting information on secondary inventory data, including whether those data are needed to satisfy DOE responsibilities under the memorandum of understanding on Jones Act waivers.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: DOE implemented the GAO recommendation by agreeing with Treasury that circumstances can exist in which the Secretary of Treasury may make the "national defense" finding without evidence of direct oil supply impact on defense installations or suppliers. These determinations must be based on the specifics of a particular situation.

    Recommendation: The Secretary of Energy should work with the Secretary of the Treasury to clarify, either administratively or legislatively if necessary, whether DOE will need to show that defense installations and suppliers are affected in order to satisfy the national defense criterion for granting waivers.

    Agency Affected: Department of Energy


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