Sen. Byron L. Dorgan Holds a Hearing Eia Oil and Gas Price Forecasts

Political Transcript Wire › August 27, 2009

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Sen. Byron L. Dorgan Holds a Hearing Eia Oil and Gas Price Forecasts

SENATE COMMITTEE ON APPROPRIATIONS, SUBCOMMITTEE ON ENERGY AND WATER DEVELOPMENT HOLDS A HEARING ON EIA OIL AND GAS PRICE FORECASTS

JUNE 25, 2008

SPEAKERS: SEN. BYRON L. DORGAN, D-N.D. CHAIRMAN SEN. ROBERT C. BYRD, D-W.VA. SEN. PATTY MURRAY, D-WASH. SEN. DIANNE FEINSTEIN, D-CALIF. SEN. TIM JOHNSON, D-S.D. SEN. MARY L. LANDRIEU, D-LA. SEN. DANIEL K. INOUYE, D-HAWAII SEN. JACK REED, D-R.I. SEN. FRANK R. LAUTENBERG, D-N.J.

SEN. PETE V. DOMENICI, R-N.M. RANKING MEMBER SEN. THAD COCHRAN, R-MISS. SEN. MITCH MCCONNELL, R-KY. SEN. ROBERT F. BENNETT, R-UTAH SEN. CHRISTOPHER S. BOND, R-MO. SEN. KAY BAILEY HUTCHISON, R-TEXAS SEN. WAYNE ALLARD, R-COLO. SEN. LARRY E. CRAIG, R-IDAHO

WITNESSES: GUY CARUSO, ADMINISTRATOR, ENERGY INFORMATION ADMINISTRATION

[*] DORGAN: I'm going to call the hearing to order. This is the hearing of the Appropriations Subcommittee on Energy and Water Development, an oversight hearing on the Energy Information Administration's F.Y. '09 budget request, as well as a discussion of forecasts on oil and gasoline prices.

Mr. Caruso, the administrator, we appreciate your being here. I know that from watching the news reports you have been in Saudi Arabia for the meeting that was held, called by the Saudis, I think involving people from around the world.

And we know that you have traveled a lot of miles recently and are perhaps weary, but we appreciate nonetheless your coming to this discussion.

The Energy Information Administration is a very important agency and department. And the president has requested increased funding for the EIA. The EIA, as you know, produces reports and information that is quoted by sources all across this country on the issue of energy supply, energy demand, energy price, and many related matters.

So what you do, and say, and think, and evaluate is very important in this country. You make short-term forecasts of energy prices. These are presumably to be benchmarks as to the direction of critical energy resources and their relationship to our economy.

And I want to go through some charts today. And the purpose of calling you here is not to pass judgment on your agency. I think your agency is enormously valuable and important.

I will say to you, Mr. Caruso, we have had the opportunity to sit across the dais from each other in the Energy Committee at hearings you have attended, and I know what you think, by and large, of what's happening in the marketplace. You know what I think. But I want to go through a series of charts, and I'm going to ask questions of you following your statement and the recognition of others who will wish to make statements.

But I do that because, as we begin a discussion about the EIA and what has happened at the EIA recently, I want to describe the, at least, beginning point for me of what I try to understand is happening in the marketplace.

The price of oil and gas has skyrocketed. The last 12, 14 months, the price of oil has doubled. I can't see anything in the fundamentals of the supply and demand or the acknowledgement of what might or might not happen or be necessary in the future, with respect to India and China, two large potential consumers in the future, I see nothing that has fundamentally changed or altered things sufficient so that it would justify a doubling of the price of oil.

That being the case, I want to go through a few charts. And I'll do this very briefly. This chart describes in graphic form what has happened to the price of oil nearly doubling in a year, pretty startling when you think about it, that the price of oil would double in a year.

And the question is: What has happened in the construct of this graph? What's happened in the middle of that, that would encourage or support, from a fundamental standpoint, the doubling of the price of oil?

Go on to the next one.

This is a chart -- I went back and took a look at what the EIA has predicted in each case. And this is a very interesting chart, and it's not meant to say, "I told you so at all," but it is, based on what I could find, what the EIA has predicted would happen.

May 7th last year -- excuse me, May '07, last year, oil was about $65. And that line on the bottom is where you thought oil would go. July 7th, that's where you thought oil would go. September, that's where you thought it would go. And you go right up the line.

And, in fact, take a look at the red line, which is where the price of oil has actually gone. And we will see that, for whatever reason -- I assume the EIA is looking at the fundamentals, supply, demand, all kinds of things in the marketplace, and evaluating, what do you think ...

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