As reported on Bloomberg.com on October 6, the Energy Information Administration (EIA) will issue a series of reports on the effects of the financial markets on energy prices, according to Richard Newell, the EIA’s director. The date for the issuance of these reports has yet to be determined.
Beyond assessing the impact of financial markets on energy prices alone, these reports will examine energy prices comprehensively, factoring in variables such as storage capacity, physical inventories and geopolitical factors.
Created by the Congress in 1977, the EIA is the statistical agency of the U.S. Department of Energy, whose mission is "to provide policy-neutral data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy and its interaction with the economy and the environment." By law, the EIA’s products are prepared independently of Administration policy considerations.
For the first time, the EIA’s energy outlook published bands of potential prices based on options investing on the New York Mercantile Exchange. According to Newell, the agency is trying to get a handle on the impact on markets and the range of potential future prices for energy products.
The EIA said today’s outlook concluded oil will average $72.42 a barrel in 2010, with the 95% lower and upper confidence limits for the December 2010 futures contract at $32 a barrel and $168 a barrel.
Newell added that the EIA is trying to gather more information about what exactly moves energy prices after lawmakers sought explanations for prices that reached $147.27 a barrel in summer 2008. The EIA will evaluate information regarding storage capacity and physical inventories from terminals and pipelines, as well as other land-based storage facilities.
According to Newell, the Energy Department currently collects information from refineries, but not other storage facilities. Next month, it will seek public comment on what types of intelligence it should collect (i.e. things like storage of energy products in ocean tankers, etc.) Companies would be required to complete these surveys; however, the government would not share the information publicly.