Is it any wonder that many Americans remain skeptical about oil companies? Almost every other day, it seems, news accounts tell of major oil firms raking in record profits, of the US Energy Department charging companies with price violations, or of some congressional subcommittee releasing findings of price gouging and someone recommending a return to price controls.
The companies are quick to defend themselves, charging critics with not having their facts straight and putting the blame for soaring prices on OPEC and the increasing cost of crude oil. The latest example of this was a study by the House Government Operations subcommittee on commerce which said that the typical family using home heating oil will pay some $130 more this winter because of unjustified price increases by oil refiners. Rep. Benjamin Rosenthal of New York, subcommittee chairman, said the study confirmed "that US oil refiners are indeed guilty of massive ocercharges." The American Petroleum Institute, the industry trade association, responded that crude oil price hikes were the culprit and that Energy Department figures indicate that reinstituting price controls, as some subcommittee members are urging, would have reduced oil costs by only seven- tenths of a cent per gallon last winter.
The problem is the government does not have all the information it needs to either verify or refute such charges. The accuracy of the Energy Department's statistics on the oil industry has long been open to question. Now a new study commissioned by the department itself concludes that much of its information is seriously flawed. Prepared by outside economist David Schwartz, the study calls the federal government's energy data-gathering severely inadequate. It found that the energy agency relies too heavily on information from oil companies and trade groups, such as the API, and not enough on on-site checking by federal auditors.
Without reliable, independently derived figures on oil imports, consumption, and so on, government policymaking is hampered and the public is left with lingering, perhaps unfair, suspicions about how much the oil industry works in the public's best interest. The Energy Department recognizes the need for improving its data collecting, and recommendations for doing this are being drawn up to be presented to Energy Secretary Duncan early in February. Meanwhile, the department is set to launch this week a new weekly data collection system that will provide more complete, up-to-date details on oil stocks, imports, and prices than have thus far been available.
Data collectors within the Energy Department stress that the industry is just too large to send monitors to each site to verify industry figures. They note there are 450 oil importers alone. Thus use of industry figures will be unavoidable in many instances. Periodic checks to verify the information the department receives ought to be possible, however. And this should be an essential part of the department's data-gathering program. If oil companies are working as hard as their commercials say they are to earn the public's trust, reliable, accurate government data on the industry might do more to improve their image than all those millions spent on public- interest ads.