ENERGY STATISTICS MONDAY, JANUARY 21, 1974 CONGRESS OF THE UNITED STATES, The subcommittee met, pursuant to recess, at 10:05 a.m., in room S-407, the Capitol, Hon. William Proxmire (chairman of the subcommittee) presiding. Present: Senator Proxmire and Representative Conable. Also present: John R. Stark, executive director, William A. Cox, Richard F. Kaufman, and Courtenay M. Slater, professional staff members; Michael J. Runde, administrative assistant; Leslie J. Bander, minority economist; George D. Krumbhaar, Jr., minority counsel; and Walter B. Laessig, minority counsel. OPENING STATEMENT OF CHAIRMAN PROXMIRE Chairman PROXMIRE. The subcommittee will come to order. This is the second day of hearings we are holding on the adequacy, limitations, and integrity of the Government statistics affecting the energy shortage. From the evidence we have so far, the statistical information this Government has on which to base public policy is a disgrace. The country is asking: "Is there a real energy shortage?" And while many of us believe there is, there is yet no way to prove it beyond a reasonable doubt. For the most part we rely on the oil and gas industry for what figures we have. But even if these figures are reasonably accurate, there are great gaps in our information-reserves, pipline flows, inventories, refinery, and amounts in the hands of industry, dealers, et cetera. I might note that just this morning in the prepared statement submitted to us Mr. Rigg affirms that position by saying that the information we have is grossly inadequate. The American people have been asked to make great sacrifices. This they are willing to do. But on top of that they are being asked to pay very high prices for their gas and fuel oil. Gas prices have already gone up by at least 8 cents at the pump. Mr. Simon tells us they probably will go up another 10 cents, and Mr. Simon tells us they will probably go up maybe 15 or 20 cents or more and no one knows, and Mr. Simon told this subcommittee he had no plans to restrict any price increase although, of course, he would be hopeful it would not go above 70 cents. This is justified on the ground that price increases are needed as an incentive to bring forth more fuel. Since refinery capacity is limited and will continue to be limited for some considerable period of time, that argument may not be true, or only partly true. But the true test of what price we should pay or the consumers should pay—is what is the cost of the fuel and what is a big enough return to those who produce it, to encourage further production, refine it, and distribute it. So far as I can determine, unlike the rest of American industry in oil, we have absolutely no reasonable cost figures on which the price increases have been based. Further, I can find no one in the administration who appears to be interested in getting that information. While Mr. Simon was very good in his testimony to this committee on the need for factual information on production, reserves and distribution, he was very, very soft on price and cost figures. Today we continue our hearings to see if we can plumb both the gaps in our information and the answer to these questions. Our first witness is my colleague Senator Gaylord Nelson from Wisconsin who has concerned himself for a very long time with the issue of the adequacy of the official figures. Next we will hear from a panel of three experts. Mr. Julius Shiskin is the Commissioner of the Bureau of Labor Statistics and has jurisdiction over the price and employment indexes. Previously he was at the Office of Management and Budget with general supervison over the statistical programs of the entire government. From that background he will be able to provide us with numerous insights into our problems and the answers. Mr. John B. Rigg, Deputy Assistant Secretary for Minerals in the Department of Interior has jurisdiction over the most important energy bureaus in the Government-the Bureau of Mines, the Geological Survey, the Office of Oil and Gas, and the Office of Coal Research. Mr. John Hodges of the American Petroleum Institute is here today to tell us about the statistical information which the API provides, its strengths and weaknesses, and whatever answers and rejoinders he would like to make to whatever charges or criticisms have been aimed at the industry. Senator Nelson, please proceed. STATEMENT OF HON. GAYLORD NELSON, A U.S. SENATOR FROM THE STATE OF WISCONSIN, ACCOMPANIED BY RAYMOND D. WATTS, COUNSEL, SELECT COMMITTEE ON SMALL BUSINESS Senator NELSON. I have a statement that is 8 or 9 minutes long. It may be more economical to read it than to extemporize from it. Mr. Chairman, the subject of these hearings, energy statistics, has suddenly emerged as one of the most important—and emotional— topics of the country. Suddenly everyone has become aware that energy statistics are not just dry numbers in big books; they are an essential element in the world's power and wealth arrangements, a factor in every human's quality of life. Energy is the lifeblood of a modern, technological society. Its availability is, quite simply, a matter of survival. Is there any conceivable reason why the information about this critical resource should be the private preserve of a handful of powerful oil companies? The degrees of possession and use of energy separate the world's powerful from the powerless, the rich from the poor. That is scarcely a new perception, although we are all feeling it more now. What is a new perception, for many, is that the possession or nonpossession of knowledge about energy-of energy statistics also separates the powerful from the powerless, the rich from the poor. It is incredible-but true-that in a society premised on freedom and equality we have permitted public energy statistics to become so bad and have allowed many vital energy statistics to become the monopolized property of a privileged few. It is incredible-but true-that today's energy crunch finds much of the public disbelieving its reality and demanding of the Government, "Show me!", and finds the Government not having the means to "show" the public to its satisfaction. Seven months ago, I introduced the Mineral Fuels Reserves Disclosure Act as a proposed amendment to the Alaskan pipeline bill. Senator Proxmire and a number of other Senators cosponsored the amendment. Its purpose was to end one main part of the unbelievable state of affairs then and now existing; namely this: Our public data on mineral fuel reserves come almost entirely from unverified private sources, sources whose interests are often opposite to the public interest. That amendment was withdrawn with assurances by Chairman Jackson of the Interior Committee that the Interior Committee would conduct hearings on the proposal when Congress convened early in 1974. Senator Jackson and I have cooperated in rewriting and greatly expanding the Mineral Fuels Reserves Disclosure Act. It is now the Energy Information Act, S. 2782, which I introduced on December 6, with Senator Jackson as the first of a present total of 14 cosponsors including Senator Proxmire. This bill is designed to provide a means for ending the present mess our energy statistics are in. That is an essential step toward ending the mess our present total energy situation is in. There are two things that are most wrong with energy statistics today. First, there are too many of them in too many different places and in a form that makes much of the information unuseable. They are too complex, too voluminous, and too contradictory. Second, in many vital respects they are incomplete. Let me first discuss the problem of volume and complexity, and then the problem of insufficiency, incompleteness. The General Accounting Office has identified 64 different offices within the various departments and agencies of the Federal Govern ment that are dealing with energy in one way or another and therefore collecting and generating energy statistics. There are, in addition, innumerable private statistical sources and services and agencies, and still other energy statistics sources in the State and foreign governments. As a result, we have things like this occurring: A Federal Trade Commission staff official says that the numbers being reported to and by the Federal Power Commission about natural gas reserves are in some cases as much as 1,000 percent low-that some companies' actual reserves are 10 times greater than their reported reserves. During a single month last fall, the White House estimate of U.S. dependency on Arab oil changed from 1.2 million barrels a day on October 12 to 1.6 million barrels on October 20 to 2.0 million on October 24 to 2.5 million on October 30. In November, the Defense Department changed the estimate to 3.0 million barrels per day. The Bureau of the Census, in its quinquennial Census of Mineral Industries, has to explain-or, more accurately, note without really explaining the fact that its numbers provide different answers to the same questions than the numbers published for the same year by the Bureau of Mines. In this kind of a statistical world, even the most dedicated and expert policymakers need help that is not now available to make sense out of these mountains and jungles of numbers. So the first purpose of the Energy Information Act is to provide that help. I shall explain how in a minute, but let me first describe the other problem. The second thing that I mentioned is wrong with energy statistics is that they are incomplete in vital respects. That deficiency is due, first and foremost, to corporate secrecy and to a government policy that condones and protects corporate secrecy. The incompleteness is also due to another Federal policy—a policy of not having the Government find out for itself what it owns in the way of energy resources. It is simply astounding that, in the middle of an alleged energy crisis, we do not really know what our energy resources are, because the Government has not taken inventory of the fuel reserves and other energy resources in the public lands, and because it permits the reserves in private ownership to be, to substantial extent, secret. The Energy Information Act deals with both these major problems by establishing a National Energy Information System. The job of that System will be to pull together in a systematic way the information that we have and to ferret out in a systematic way the information that obsolete policies and practices have kept us from having. The bill sets up the National Energy Information System within a new Bureau of Energy Information in the Department of Commerce. When hearings on the bill start next month, on February 5, one of many issues up for discussion will be whether Commerce is the best place in the Federal Government to put the System. That is where it is placed in the current draft legislation, but there are many arguments for possible other locations. The System will have three main jobs: |