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Former US energy chiefs say EIA budget cuts to increase price volatility

06/14/11

Washington (Platts)

Three former US energy secretaries and other industry leaders urged Congress Tuesday to rethink funding cuts to the US Energy Information Administration, arguing the smaller budget could exacerbate market uncertainty and price swings.

"It is universally acknowledged that the reduction of price volatility requires enhanced transparency," said former Department of Energy chiefs Spencer Abraham, Samuel Bodman and Bill Richardson. "Decreasing investment by our government in information and transparency sends the wrong signals to other governments whose lagging efforts to improve data and transparency have unwanted consequences for consumers in the US and elsewhere in the world."

The letter to the Senate and House appropriations committees was signed by 27 other energy leaders, including William Reilly, former head of the Environmental Protection Agency and co-chairman of the BP Deepwater Horizon oil spill commission; retired General James Jones, former national security adviser; and Daniel Yergin, chairman of IHS CERA.

In April, Congress cut EIA's budget 14% to $95.4 million for fiscal 2011. The statistical arm of DOE announced a month later it would have to scale back or eliminate several publications and programs, including an investigation into the influence speculators have on the oil market.

Tuesday's letter said government agencies and businesses depend on EIA's "unbiased, comprehensive, timely data and analysis on US and global energy markets and industry trends."

The group said the cuts come at a critical time, as turmoil in energy markets poses great risks for the country.

"While each of us appreciates the need to make difficult decisions and cut spending, the last thing consumers, businesses, and investors need now is for us to turn off the headlights and drive blindly in today's energy market," the letter said. "The cost of failing to invest adequately in the EIA could be very high to American economic and national security interests -- and ultimately to consumers."

Also signing the letter were Robert Graham, Florida's former governor and co-chair of the oil spill commission; John Hofmeister, Shell's former president; former Senator J. Bennett Johnston of Louisiana; Betsy Moler, former chairwoman of the Federal Energy Regulatory Commission; and Guy Caruso, former EIA administrator.