The United States Pursues Energy Cooperation through International Energy Forums Designed to Meet Specific Cooperative Needs

The United States pursues energy cooperation through international  energy forums that meet specific cooperative purposes. These forums  range from formal institutions with binding obligations to regional  associations to more informal gatherings designed to facilitate a frank  exchange of information. Emerging Energy Market Issues Include Tight Markets, Growing Role of National Oil Companies, and Increased Importance of Reliable Market Information

Three key energy market issues that are important for U.S. efforts in  international energy cooperation in the oil and natural gas sectors are: a  tight energy market, growing market participation of national oil  companies, and increased importance of reliable energy market  information. Growing Market Participation of National Oil Companies Has Led to Concerns

In an energy market characterized by relatively high oil prices and  increasing energy demand, the growing participation and market influence  of national oil and gas companies—which are majority owned by national  governments—from both energy consuming and producing countries has  contributed to limited access to oil and natural gas resources in some  producing countries. Forum  efforts are also constrained by limitations in membership, consensus- based decision making, and voluntary participation. However, within these  constraints, the United States has tried to mitigate energy market  imbalances through efforts such as promoting emergency preparedness  and outreach to developing countries. This generally  means that forums focus on noncontroversial issues, like energy efficiency  and technology, according to U.S. officials. Additionally, U.S.  support for forum efforts has not benefited from consistent use of EIA  expertise, and the United States has not provided timely data submissions  to the IEA. International forums can serve another critical role by improving energy  demand and supply statistics to facilitate investment planning. Appendix I: Objectives, Scope, and Methodology

To determine how the U.S. government participates in international energy  cooperation forums, we reviewed: (1) the key international energy forums  in which the U.S. pursues energy cooperation, (2) the key emerging energy  market issues that are important for international energy cooperation, and  (3) how the United States is addressing these issues through its  participation in these forums. Our review focused mainly on the following key international energy  cooperation forums: the International Energy Agency (IEA), the Asia  Pacific Economic Cooperation (APEC) Energy Working Group, the North  American Energy Working Group (NAEWG), and the International Energy  Forum (IEF). 1. 2.
Why GAO Did This Study

Rising oil prices, resulting from growth in energy consumption by rapidly developing Asian nations and by most industrialized nations, have increased concern about competition over oil and natural gas resources. In particular, Congress expressed interest in how the United States participates in energy cooperation through international forums. GAO was asked to review: (1) what are the key international energy forums in which the United States pursues energy cooperation, (2) what are some of the key emerging energy market issues that are important for international energy cooperation, and (3) how is the United States addressing these issues through its participation in these forums. GAO's work is based on contacts with agency officials and energy experts and review of documents.

What GAO Found

The United States pursues energy cooperation through several international energy forums designed to meet specific cooperative needs. They include a formal institution with binding petroleum reserve obligations, regional associations, and informal gatherings designed to facilitate information exchange. Major forums include the International Energy Agency (IEA), the Asia Pacific Economic Cooperation Energy Working Group, the North American Energy Working Group, and the International Energy Forum. GAO identified three energy market issues that are important for U.S. efforts in international energy cooperation. First, a tighter energy market with higher, more volatile, prices has developed. This is due to (1) an unanticipated rise in energy demand and (2) constrained supply due to less spare crude oil production capacity and increased political frictions in certain supplier countries. Second, market participation of national oil and gas companies, which are majority owned by governments, has led to limitations on access to resources. Third, more reliable energy market information is needed to facilitate market stability and plan investment. The U.S. government has addressed these issues through its participation in international energy cooperation forums; however, the nature of the forums can limit their impact. Forums have restricted membership, consensus-based agendas and decisions, and voluntary participation. They generally focus on noncontroversial issues such as energy efficiency and technology. Within these constraints, the United States has tried to mitigate effects of tight markets by supporting emergency preparedness. It has not directly addressed the impact of national oil companies, but it has pursued related areas. It has sought to improve energy information, but Energy Information Administration (EIA) statistical expertise has not been consistently leveraged for purposes beyond data exchange, and U.S. data submissions to the IEA have not been timely.