U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585

FOR IMMEDIATE RELEASE
September 9, 2009

EIA Launches Energy and Financial Markets Initiative

EIA’s new Administrator, Dr. Richard Newell, today launched an Energy and Financial Markets Initiative to improve understanding and analysis of what drives energy prices.

“EIA’s traditional coverage of ‘fundamentals’ such as energy consumption, production, inventories, spare production capacity, and geopolitical risks is essential, but moving forward EIA must also assess other influences, such as speculation, hedging, investment, and exchange rates, as we seek to fully understand energy price movements,” stated Dr. Newell. “The initiative I am launching today will help improve energy market transparency, support sound policy and efficient markets, and increase public understanding — activities that are central to EIA’s mission.”

Dr. Newell has formed an Energy and Financial Markets Analysis Team to supplement EIA’s strength in fundamentals analysis and serve as the focal point for activities under the Initiative.  Key actions are already planned in four main areas:  (1) Collection of critical information on factors affecting energy prices; (2) Analysis through in-depth studies of energy market behavior; (3) Outreach to solicit feedback from a broad range of experts on the interrelationship of energy and financial markets; and (4) Coordination with other Federal agencies engaged in energy market information collection and analysis.

Collection of Critical Energy Information to Improve Market Transparency

• EIA already collects significant energy information, but additional data would further improve market transparency.  By November 2009, EIA will publish a Federal Register notice seeking input to identify the best data for understanding relationships among physical inventories, prices, and market activity.  In addition, EIA will expand its collection of commercial oil and refined products storage capacity data beginning in early 2010 (EIA already tracks natural gas storage capacity).  Similar data collections were specified in the American Clean Energy Leadership Act of 2009 (S. 1462), adopted earlier this year by the Senate Committee on Energy and Natural Resources.  
• EIA will seek market data from other Federal agencies, including from the Commodity Futures Trading Commission, to analyze the influence of futures and related financial market activity on energy prices in the context of other energy market factors.
• Over the next year, EIA will provide a comprehensive assessment of remaining energy information gaps in physical and financial markets, and it will develop a strategy to obtain the necessary data. 
• By October 2009, EIA will publish its semi-annual report, Market Assessment of Planned Refinery Outages, which will identify regions where planned refinery outages may affect supply and prices this winter.  In November, EIA will publish its assessment of the need to collect any additional data in the future to examine the impacts of planned refinery outages.

Analysis of Energy and Financial Market Dynamics

• EIA will develop analytical reports that identify the many factors potentially influencing oil and other energy prices — including consumption, production, inventories, spare production capacity, geopolitical risks, speculation, hedging, investment, and exchange rates — and describe the relationship of these factors to prices, the timeframes over which these relationships tend to hold, and the mechanisms underlying them. Initial analysis will pay particular attention to the recent period of price volatility and will be the starting point for identifying gaps in information and analysis, which will form the basis of EIA’s longer-term analytic agenda.
• Beginning in October 2009, EIA’s short-term crude oil and natural gas price forecasts will better reflect the volatility and uncertainty surrounding these prices. The Short-Term Energy Outlook will publish a quantitative measure of price uncertainty in the form of confidence intervals around crude oil and natural gas futures prices, based on information from futures and options markets.

Outreach to Experts and the Public

• EIA will establish a panel of experts from industry, financial institutions, and academia to review and provide independent advice on reports, analyses, and other products developed under the Energy and Financial Markets Initiative. 
• EIA will host workshops to discuss its analyses, seek input on future analyses, clarify information gaps, and identify products EIA could provide to increase transparency, market efficiency, and understanding of energy markets.

Coordination with Other Federal Agencies

• EIA will seek to improve its information and analyses through input from other Federal agencies, including the Commodity Futures Trading Commission, the Department of the Treasury, the Federal Energy Regulatory Commission, the Federal Reserve, the Federal Trade Commission, the Securities and Exchange Commission, and other offices in the Department of Energy.

About EIA
Founded in 1977, EIA is charged by Congress and the President to collect, analyze, coordinate, and disseminate energy information to promote sound policy making, efficient markets, and public understanding of energy and its interaction with the economy.  

Dr. Richard G. Newell was sworn in on August 3, 2009, as EIA’s new Administrator. For biographical information visit http://www.eia.gov/abouteia/richard_newell.cfm. 

EIA Press Contact: Jonathan Cogan, (202) 586‑8800

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