AMERICAN STATISTICAL ASSOCIATION

SPRING 2008 MEETING OF THE

AMERICAN STATISTICAL ASSOCIATION

COMMITTEE ON ENERGY STATISTICS

WITH THE

ENERGY INFORMATION ADMINISTRATION

Washington, D.C.

Wednesday, April 9, 2008

2

1 PARTICIPANTS:

2 COMMITTEE ON ENERGY STATISTICS:

3 NAGARAJ K. NEERCHAL

Department of Mathematics and Statistics

4 University of Maryland

5 EDWARD A. BLAIR

University of Houston

6

BARBARA FORSYTH

7 University of Maryland

8 DEREK R. BINGHAM

University of Michigan

9

CALVIN A. KENT

10 Marshall University

11 MOSHE FEDER

Research Triangle Institute International

12

WALTER W. HILL

13 St. Mary\'s College of Maryland

14 JOHN WEYANT

Stanford University

15

EDWARD CHARLES KOKKELENBERG

16 SUNY Binghamton

17 MICHAEL TOMAN

RAND Corporation

18

19

20

21

22

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1 OTHER PARTICIPANTS:

2 GUY CARUSO

HOWARD GRUENSPECHT

3 STEPHANIE BROWN

JANICE LENT

4 SHAWNA WAUGH

NICHOLAS JOHNSON

5 PHILLIP TSENG

ALETHEA JENNINGS

6 COLLEEN BLESSING

GLEN SWEETNAM

7 JOHN DELEY

ALETHEA JENNINGS

8 JOHN STAUB

LAUREN MAYNE

9 MARK GIELECKI

STAN FREEDMAN

10 RUEY-PING LU

CAROL JOYCE BLUMBERG

11 TOM BROENE

HOWARD BRADSHER-FREDRICK

12 LOUISE GUEY-LEE

LAWRENCE STROUD

13 THOMAS FOX RUTHERFORD

MELINDA HOBBS

14 SCOTT SITZER

ROBERT BUTCHIK

15 ROB MERRIAM

JOHN WOOD

16 DAVID MOREHOUSE

ANDY RYDER

17 ROBERT F. KING

JOHN HOLTE

18 MARY CARLSON

RAMESH DANDEKAR

19 JOSH McKEARIN

PRESTON McDOWNEY

20 RENEE MILLER

ERIC RASMUSSEN

21 STEVE HARVEY

PAULA WEIR

22 MICHELLE BALS

JAKE BOURNAZIAN

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1 P R O C E E D I N G S

2 (9:12 a.m.)

3 DR. NEERCHAL: Good morning. I\'m

4 Nagaraj Neerchal. I\'m the chair of this

5 committee, and it\'s a real pleasure to welcome

6 you all back to Washington, D.C. Some of you

7 have been here since Monday, I think, and I

8 think that\'s part of the reason you want to

9 leave. I cannot blame you for leaving

10 Washington at election time. Sometimes it\'s a

11 good thing to do.

12 I think that a couple of \-- those

13 who are new to this committee, I need to make

14 a few logistics announcements here. The

15 restrooms, most important, right, on either

16 end of the corridor here as you get out,

17 either hang a left or a right, walk to the

18 end of the corridor.

19 And all those who are

20 attending \-- you know, EIA employees, all

21 guests need to sign in \-- when you walk in,

22 there\'s a sign-in form. Please sign in with

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1 your e-mail and phone number and contact

2 information.

3 I think I should say \-- those of us

4 who have been coming to this meeting for a

5 few years, we are used to seeing Bill here.

6 Bill Weinig has retired and I think Alethea

7 has taken over. And I should probably say as

8 the chair of this committee, I have

9 corresponded with Alethea on the logistics of

10 this meeting for the last few months, and I

11 thought that Bill is a very tough act to

12 follow, but Alethea is doing fine.

13 The ASA contact for this meeting is

14 Kristin Campbell, and those of you who have

15 travel reimbursement and those kind of

16 issues, you need to talk to Kristin.

17 And if you want to be reached by

18 telephone, the telephone number you want to

19 give out to people is \-- you may want to

20 write this down \-- (202) 586-6273.

21 Lunch will be downstairs on the

22 second floor, room 069.

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1 I think most of us will be walking

2 down there, so you\'re welcome to join us.

3 Now, we do have a transcriber for

4 this meeting, Mark Mahoney \-- for his

5 benefit, please lean in like I\'m doing now,

6 lean into the microphone when you speak, and

7 if you\'re in the audience, if you have a

8 comment or a question, please walk up to the

9 microphone and speak into the microphone.

10 This is to help Mark out with his

11 transcription.

12 Then we have all the equipment

13 here. If the speakers need a lavaliere

14 microphone, please talk to Preston and

15 Larry \-- Lawrence. I don\'t see him here. He

16 might be waiting for people (inaudible) needs

17 to be escorted in here.

18 I think we have two new members. I

19 think one of them is not attending today,

20 Michael Toman from RAND Corporation, and I

21 think when we go around the introductions, he

22 will be introducing himself also, and we

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1 welcome you. Thanks for agreeing to serve on

2 this committee \--

3 MR. TOMAN: It\'s a pleasure.

4 DR. NEERCHAL: It\'s a fun committee to

5 serve, I can assure you. And now \-- I think

6 that we decided there is \--

7 MS. BROWN: No program.

8 DR. NEERCHAL: Next to me, you usually

9 expect Nancy to sit here, so instead of Nancy,

10 we have Stephanie Brown, the new \--

11 MS. BROWN: Director of Statistics and

12 Methods Group.

13 DR. NEERCHAL: Yes. SMG chief. And

14 we just realized that you have a strong UMBC

15 connection here. Stephanie knows the athletic

16 director of UMBC very well, Charlie and his

17 wife, so we have to exchange \--

18 MS. BROWN: Great basketball team this

19 year.

20 DR. NEERCHAL: And we came in #2 in

21 chess just last weekend.

22 MS. BROWN: Brawn and brains.

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1 DR. NEERCHAL: Right. UMBC has won

2 four of the last eight NCAA titles, chess, and

3 seven of the last eight Pan-American titles. So

4 we are a big chess powerhouse.

5 Finally, I think let\'s start with

6 the introductions. We will first have the

7 committee people introduce themselves, and

8 then we\'ll go to the audience. And once

9 again, I\'d remind you that the audience

10 should come up to the microphone, and please

11 mention your name and affiliation.

12 I will start. I\'m Nagaraj

13 Neerchal. I\'m the chair of the Mathematics

14 and Statistics Department at UMBC. I\'ve been

15 chair of this committee for the last two

16 years, and I guess maybe I\'m \-- every time I

17 think this is my last committee, but Alethea

18 says no, I have one more meeting to go.

19 MS. BROWN: I\'m Stephanie Brown. I\'m

20 very, very new \-- only a month, Director of the

21 Statistics and Methods Group here at EIA. I

22 have come at a very exciting time. I\'ve spent

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1 the last two days at EIA\'s 30th birthday

2 celebration, and now the first ASA committee

3 meeting, so I look forward to working with all

4 of you in the many years to come. I\'m sure it

5 will be exciting and challenging.

6 MR. CARUSO: Good morning. I\'m Guy

7 Caruso, administrator of the Energy Information

8 Administration.

9 DR. KENT: I\'m Cal Kent. I\'m

10 currently vice president for Business and

11 Economic Research at Marshall University, and

12 also former administrator of EIA.

13 DR. WEYANT: John Weyant, Stanford.

14 I\'m still recovering from Phil Tseng\'s comment

15 at the end of the panel that Bill Hogan and Jim

16 Sweeney and I were on yesterday afternoon where

17 he said we had more than a hundred years of

18 collective experience, which is definitely an

19 exaggeration, but unfortunately, not a very big

20 exaggeration.

21 DR. KOKKELENBERG: Hi. I\'m Edward

22 Kokkelenberg. I\'m at SUNY Binghamton, professor

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1 of economics there, and this is my second time

2 around on this committee.

3 DR. FEDER: I\'m Moshe Feder. I\'m a

4 statistician at RTI, Research Triangle

5 Institute. Been on the committee just over five

6 years, so like Nagaraj, I\'m rotating out after

7 next meeting. And my areas of interest are

8 surveys and time series analysis.

9 MR. TOMAN: Mike Toman at RAND. I

10 direct the Energy and Environment program there,

11 and I\'ve been at Resources for the Future and

12 the Inter-American Development Bank in my past.

13 DR. HILL: Walter Hill, St. Mary\'s

14 College of Maryland. I\'m an associate professor

15 there. I\'m also currently a visiting scholar at

16 the University of Michigan. I\'m interested in

17 survey research.

18 DR. BLAIR: Ed Blair, University of

19 Houston.

20 DR. FORSYTH: Barbara Forsyth, Center

21 for Advanced Study of Language, University of

22 Maryland.

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1 MR. McDOWNEY: Preston McDowney,

2 Statistics and Methods Group.

3 MS. JENNINGS: I\'ll begin with the

4 audience on this side. I\'m Alethea Jennings,

5 EIA.

6 MS. LENT: Janice Lent, EIA.

7 MS. WAUGH: Shawna Waugh, statistician

8 with the Statistics and Ethics Group.

9 MS. BLESSING: Colleen Blessing, EIA

10 National Energy Information Center.

11 MR. SWEETNAM: Glen Sweetnam, EIA.

12 MS. MILLER: Renee Miller, EIA.

13 MR. RASMUSSEN: Eric Rasmussen,

14 Administrator, EIA.

15 MS. BLUMBERG: Carol Blumberg,

16 Statistician, Office of Oil and Gas.

17 MR. HARVEY: Steve Harvey, director of

18 the Office of Oil and Gas, EIA.

19 MR. BROENE: Tom Broene, EIA.

20 DR. TSENG: Philip Tseng, EIA.

21 MS. WEIR: Paula Weir, EIA.

22 MS. BALS: Michelle Bals, EIA.

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1 MR. NU: (inaudible) Nu, EIA.

2 MR. BOURNAZIAN: Jake Bournazian,

3 Statistics and Methods Group.

4 MR. DELEY: John Paul Deley, I\'m the

5 agency\'s records officer. I also wanted to take

6 this opportunity to introduce Lee Vinzel, who is

7 a graduate student at Carnegie Mellon who\'s

8 working on a Ph.D. on the history of EIA.

9 MR. VINZEL: I\'ve written a little bit

10 about the relationship between EIA and the ASA,

11 so I\'m excited to observe today.

12 MR. FREEDMAN: Stan Freedman, EIA.

13 MR. FAWZIE: Aloulou Fawzie, EIA.

14 MR. DANDEKAR: Ramesh Dandekar, EIA.

15 MR. BRADSHER-FREDRICK: Howard

16 Bradsher-Fredrick, EIA.

17 DR. NEERCHAL: Anyone else? Thank

18 you. I just want to do a final reminder to the

19 committee members that if you want to make a

20 comment or if you have questions, please put

21 your tent to work technically, and hopefully

22 I\'ll remember the (inaudible) and I\'ll call them

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1 down chronologically.

2 Now, I think I\'ve covered most of

3 everything.

4 You might remember that Guy threw

5 out the first pitch in the Washington

6 Nationals game last April, I think.

7 MR. CARUSO: July.

8 DR. NEERCHAL: July. Anyway, so he\'s

9 our first speech. I\'ll turn the mic to Guy

10 Caruso, administrator to EIA to kick off the

11 meeting.

12 MR. CARUSO: Thanks, Nagaraj. It\'s

13 great to see you all here. Welcome to Mike as

14 it\'s his first meeting. We\'re pleased you could

15 become a member of the committee. Mike\'s one of

16 the people \-- if he had been on the panel, John,

17 I don\'t think the number would have changed this

18 much, if he substituted for one of those three,

19 that\'s as long as I\'ve known Mike in his work.

20 I want to bring everyone on the

21 committee up to date. I think a lot of you

22 who were at the sessions yesterday and the

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1 day before heard some of this, but just want

2 to let you all know what\'s going on with DIA

3 and its budget to start with, and then where

4 we\'re hoping to go in \'09 with the budget.

5 Since last meeting, we have agreed

6 on the set of strategic goals. I think we

7 talked a little bit about them at the October

8 meeting. And the other thing that we\'ve done

9 since October is the usual AEO reference case

10 early release, and then had to revise it

11 because of the new energy bill, so we\'ve

12 actually done it twice in the last six

13 months, which is a little bit of additional

14 work.

15 And then I\'ll talk about some

16 congressional requests which directly impinge

17 on some of the things that this committee has

18 assisted us with in terms of methodology and

19 insight into where EIA could go, particularly

20 on climate change.

21 I know Jay\'s not on the committee

22 anymore, but he was very helpful in that.

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1 And then yesterday, we released our

2 ever-popular summer outlook for gasoline, and

3 I\'ll give you a little bit of insight on

4 that.

5 And then one of the new things that

6 resulted from the Energy Policy Act of \'05,

7 with further mandates in the energy bill that

8 was passed in December of \'07 was a

9 requirement to do more on biofuels, and we\'ll

10 be initiating a survey on biodiesel. But

11 even more importantly if the \'09 budget goes

12 as we expect, we will also be initiating a

13 new survey on ethanol as well, and maybe a

14 little bit about the conference, for those

15 who weren\'t able to be there.

16 This year\'s budget, which really

17 only began \-- let\'s see, we had a continuing

18 resolution for most of the first quarter of

19 the budget October through December and only

20 a couple \-- only about six weeks ago we

21 actually got the money for the \'08 budget,

22 which is \$95.5 million. The good news is,

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1 it\'s almost \$5 million higher than \'07. The

2 bad news is that as part of the budget

3 compromise with the President, the Congress

4 had to find \-- I think it was about \$11

5 billion to cut from the budget, and they went

6 through at the 11th hour and cut a lot of

7 programs, and we were among the many that got

8 hit.

9 They took \$10 billion \-- \$10

10 million \-- I wish it was \$10 billion \-- \$10

11 million out of what had been passed out of

12 both Senate and House appropriations. So we

13 were slated to get \$105.5 and we got \$95.5.

14 But a lot of other statistical agencies,

15 having attended the monthly meetings of heads

16 of statistical agencies, there were a number

17 of statistical agencies that actually had

18 reductions in \'08 relative to the \'07, so I

19 guess we couldn\'t complain too much.

20 We have about 356, precisely,

21 federal employees actually on board in EIA,

22 but we have authority to go to 374, so the

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1 treadmill that \-- really Nagaraj\'s comment

2 about Nancy retiring, Bill Weinig retiring,

3 we\'re barely keeping up with the

4 attrition \-- mainly through

5 retirements \-- last year. I think we hired

6 26 new people, but about that many retired or

7 left.

8 Our target was to hire 50, but it\'s

9 really difficult. The HR process here, like

10 many places, is difficult. But I want to use

11 this again as a plug for any of you who have

12 students or colleagues who would be

13 interested in considering EIA. Over the next

14 three years, we\'re projecting about 30 new

15 hires per year, 30 to 35 per year, just to

16 keep up with the anticipated retirements.

17 As I mentioned earlier, we are

18 developing monthly renewable fuels as

19 mandated, data collection as mandated in the

20 \'05 energy bill. The additional mandates

21 that were in the Energy Independence and

22 Security Act of \'07, EISA, added further

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1 impetus to do more on ethanol and biofuels,

2 so we\'ll be looking at \-- if we get the

3 money, we would like to do a weekly \-- to

4 include ethanol data on a weekly basis. It\'s

5 become that important as part of the U.S.

6 Liquid fuels market heading towards \-- it\'s

7 now \-- let\'s see, we\'re projecting 8.5

8 billion gallons in \'08, and it\'s headed

9 toward 30 billion by 2030, so it\'s

10 increasingly important in our oil and gas

11 picture on a monthly as well as a long-term

12 basis.

13 At one time, we had anticipated

14 actually reducing a couple of petroleum

15 marketing surveys. We got so much pushback

16 from various users that we \-- and the

17 Congress put the money in \-- that we have a

18 hard time actually justifying dropping those

19 surveys. So we\'re going to continue them

20 again in \'08, as well as add back some data

21 we had dropped on electric power.

22 When I first got here almost six

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1 years ago, one of the things that the senior

2 people at that time said was we don\'t do a

3 good enough job saying no. Somebody,

4 especially someone who\'s in a prominent

5 position within Congress asks for something,

6 EIA delivers. We\'re very customer-oriented,

7 as you know, so we try to obviously improve

8 our efficiency in doing things, but we

9 continue to do almost everything probably

10 that we were doing when Lincoln Moses \-- and

11 even more, because a number of things have

12 been added.

13 And then the last part of the \'08

14 budget which is potentially of some

15 significance, is that for the first time, EIA

16 has an earmark in its budget to fund a study

17 that is being run through the National

18 Academy that \-- it\'s about a million dollars

19 and kind of not a good precedent to have EIA

20 be asked to fund these earmark studies. And

21 earmarks are prominent in a lot of other

22 parts in DOE, but the first time for EIA.

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1 In \'09, we went back to

2 OMB \-- first of all through the department

3 and then through OMB, to restore the \$10

4 million-plus that we did not get in the \'08

5 budget. And the good news is, Secretary

6 Bodman approved without change our request,

7 and OMB \-- most of the request made it

8 through OMB, and now it\'s in the President\'s

9 request for EIA before the appropriations

10 committees, which would put back most of

11 those things that, as I mentioned, we had to

12 take out as a result of the \$10 million

13 reduction last year.

14 One of the big issues that came up

15 at the conference, particularly yesterday

16 when we talked about \-- in the

17 administrator\'s panel, was the need to fund

18 fully the improvements in data quality that I

19 think all the administrators that were there

20 and Helmut who was not there in his taped

21 remarks all said the first thing we need to

22 do is maintain data quality, and that\'s what

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1 we plan to do with a substantial amount of

2 the increment, particularly in the oil and

3 gas area, and as well as the new things which

4 are biofuels, biofuels surveys, and then we

5 all also agree that it definitely was time

6 for an upgrade, a redesign of the NEMS model

7 which goes back to Cal\'s tenure here in 1991.

8 And lots has changed and we\'ve tried to keep

9 up with it through add-ons, and I know we\'ll

10 talk about some of those challenges in John

11 Weyant\'s item today.

12 Again, the international is another

13 area where we want to strengthen the ability

14 to do more analysis. And then an item that\'s

15 unfortunately become an additional cost to

16 all of us in government, but especially in

17 DOE, is the increasing need to improve

18 cyber-security. It\'s adding as much as a

19 million dollars a year to our costs in IT, so

20 that had to be funded.

21 The strategic goals \-- since we\'ve

22 talked about these, I\'m not going to go into

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1 great detail, but number one goes back to the

2 point I made, that we really do need to do a

3 significant amount of recruitment to maintain

4 the highly qualified and motivated staff that

5 EIA is known for.

6 And we recognize it\'s a different

7 generation that we\'re hiring now and it

8 requires different management skills, but on

9 the other hand, we\'re really pleased with

10 some of the bright young people that have

11 come on board in the last two years. We now

12 have a significant number of 20 somethings

13 and 30 somethings in EIA, which I think is

14 really the first time since probably the \'80s

15 that we\'ve had a significant number of people

16 in those age groups.

17 They\'re quite good at new

18 technology, even though there \-- experience

19 still is very important, particularly in the

20 data collection and relationships with our

21 customers. The trade-off is we\'re getting

22 some very, very bright young people, and

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1 we\'re seeing already the results of that in

2 some of the work we\'re doing. You\'ll hear a

3 bit from Glen Sweetnam later about work

4 that\'s being done on the resource estimates,

5 and he\'s got a couple of very, very skilled

6 and motivated young people working with him

7 on that and I\'m very impressed with them.

8 In that vein, when we talked about

9 the future of EIA at the administrator\'s

10 panel yesterday, one of the things that is

11 very clear is that like the extensive use of

12 the internet and the sea change in the way

13 EIA did business already starting in the

14 \'90s, we think that as you look forward over

15 this next five years, that the way we

16 disseminate our information and how our

17 customers use our data will really change a

18 lot as a result of new communication and

19 information technologies.

20 And Gina Pearson, as head of our

21 National Energy Information Center, is doing

22 a great job of updating our technology in

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1 those areas. So that\'s a big part of this

2 strategic plan.

3 But the core remains providing that

4 relevant timely and accurate data, as came up

5 repeatedly during the last two days.

6 As I mentioned, we released the

7 Annual Energy Outlook 2008 reference case in

8 December of \'07, and then within I think

9 about three weeks, the Congress passed the

10 Energy Independence and Security Act, which

11 for the first time in a long time really had

12 some significant policy changes that made a

13 big difference in our \-- would have made a

14 big difference in our outlook, and we made a

15 decision that despite the fact that it took

16 about three months of additional work to redo

17 the AEO reference case, thought it would be

18 really \-- if we left that out there as our

19 reference case, it was already overtaken by

20 events.

21 So we did redo that and released it

22 before Congress on March 4th, and the full

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1 AEO \-- with all of its side cases, about

2 between 30 and 35 side cases, will be

3 released by the end of the month.

4 I think we\'ve got a few of the

5 highlights just to give you some ideas of

6 where AEO is coming out. Number one, as you

7 can imagine, we raised our prices,

8 particularly oil prices, across the board.

9 And I\'ll show you a graph on that. The other

10 big change is that natural gas consumption

11 actually reaches a peak during this period

12 between 2006 and 2030 and actually declines

13 by 2030, and the main reason that the model

14 produces that result is because the higher

15 price of natural gas makes the use of natural

16 gas and new electric power generation

17 uneconomic relative to coal.

18 Now, as you all know, the EIA, by

19 statute, does not assume any policy change,

20 so we have to do our forecast based on

21 current policy. Current policy, of course,

22 does not have restrictions on carbon.

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1 Without restrictions on carbon,

2 coal is king when it comes to new electric

3 power generation in this outlook. Now, we

4 all have our own views of whether that\'s

5 realistic or not, and that\'s why we have

6 30-plus side cases, one of which is

7 restrictions on carbon as well as other

8 analysis.

9 So with those assumptions, we have

10 coal continuing to grow dramatically after

11 2020, and gas declining. And the other big

12 change is for the first time, perhaps ever,

13 and certainly in my tenure, the largest

14 segment of the energy supply mix is

15 renewables, growing by more than 3 percent

16 per year while total energy grows by only

17 .7 percent per year.

18 This is a graph on the prices that

19 we\'re using in this outlook, and it makes the

20 point that coal is by far the cheapest in

21 terms of \-- on a BTU basis, and natural gas

22 and crude continue to stay relatively high

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1 compared with history.

2 This is our latest world oil price.

3 These are nominal \-- no, they\'re real. In

4 real terms, we do see oil prices coming down

5 in the reference case, but for those who

6 don\'t believe that we\'re going to see this

7 return to even something in the neighborhood

8 of \$60 or \$70 oil, we have the high price

9 case which continues to essentially just keep

10 going up in real terms. And in nominal

11 terms, the higher price case gets to \$180 by

12 2030.

13 By sector, the natural gas \-- the

14 point I made about natural gas here is that

15 the electric power is where it peaks and

16 declines beginning in the middle part of the

17 next decade.

18 The other thing which I think will

19 be of interest to this committee is when the

20 Department of Commerce released its

21 industrial output data revisions in late

22 2007, we were surprised to see that in the

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1 chemical sector, the use of natural gas per

2 unit of output in the new commerce data was

3 much lower than we had been assuming in our

4 model, in the NEMS, and we\'ve revised our

5 algorithm for natural gas use in the

6 industrial sector \-- in particular, in

7 chemicals \-- and that\'s made a pretty

8 important difference in our projection for

9 industrial use of natural gas.

10 On the generation side, as I

11 mentioned, this just illustrates how coal

12 continues to grow as a share of total

13 electricity, with the only other component

14 growing as a share is renewables. And that\'s

15 largely a result of the mandates

16 both \-- almost exclusively at state and local

17 level \-- the state renewable portfolio

18 standards that exist in now more than 25

19 states.

20 Within the renewables, biomass and

21 wind are the big winners.

22 I mentioned that we\'ve been doing

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1 even more for Congress in recent years, and

2 that has actually accelerated in the current

3 session of Congress, and that\'s mostly

4 focused on climate change. But we also were

5 asked by Senator Alexander to update a

6 so-called subsidy study that we did \-- I

7 think it was in the late \'90s \-- so it was

8 about ten years ago, and we released \-- no, I

9 think we will release that tomorrow.

10 Our policy is when we get a request

11 from a senator or congressman, they get about

12 one week of use of the study before we then

13 put it on the web. And we delivered that

14 last, what, Thursday, Eric? Yeah. We

15 delivered it to Senator Alexander Thursday,

16 and we\'ll put it on the web tomorrow.

17 And we did an analysis of the

18 Bingaman and Specter cap-and-trade proposal.

19 The much more stringent cap-and-trade

20 proposal by Leiberman and Warner will be

21 debated on the floor in June, and our

22 analysis of that is scheduled to be delivered

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1 to Senators Leiberman and Warner on the 15th

2 of this \-- well, between the 15th and the

3 20th of this month. So that will be

4 highly \-- I think it will get a lot of

5 attention from the press.

6 Turning to what we released

7 yesterday, which was the summer gasoline

8 outlook, we expect again another significant

9 increase in gasoline prices, about 20 cents a

10 gallon this summer compared to where they are

11 now, averaging about \$3.50. We are seeing

12 some results of higher prices, with a decline

13 in gasoline consumption coming out of the

14 winter with relatively high inventory levels.

15 And as I mentioned, we\'re now up to

16 about 8.5 billion gallons of ethanol

17 production for this year. That\'s \-- put in a

18 barrels per day basis, it\'s 130,000 barrels a

19 day higher than last year, contributing to

20 the gasoline pool, mainly blended at

21 10 percent level.

22 Sales of E-85 are still extremely

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1 small. One percent of the ethanol is going

2 into E-85.

3 And we expect lower imports of

4 gasoline as a result of lower consumption and

5 refinery output down a little bit, which is

6 mainly because of weaker margins for

7 gasoline.

8 Our crude oil outlook has been

9 raised once again to over \$100 a barrel. We

10 don\'t see prices coming down very much this

11 summer, but we do think that with new

12 supplies of non-OPEC crude coming online in

13 the second half of the year, we have

14 trending \-- crude oil prices trending down.

15 But for this group, which is statisticians

16 and economists, we\'ve been 15 to 20 percent

17 too low on our price forecast of crude for

18 the last four years, so if our track record

19 continues, those could be low.

20 This just again repeats what I\'ve

21 said \-- I won\'t dwell on that. That\'s the

22 actual price average.

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1 This must have been done before we

2 made some last-minute changes. The number

3 released yesterday is 354.

4 I mentioned the biodiesel survey,

5 that\'s now in the works. And we\'re proposing

6 that it begin in 2009, and we\'ll be

7 collecting that data beginning in February of

8 next year.

9 Yesterday\'s conference was I think

10 outstanding from our point of view. Most

11 outstanding from my point of view is once

12 again demonstrating what a level of

13 dedication and effort that was put into the

14 planning and implementation of that

15 conference by \-- literally about half the EIA

16 staff worked in some way on that conference.

17 And you could see a great deal of

18 the pride in everyone both planning, and

19 yesterday and Monday actually at the

20 conference. So many compliments that \-- of

21 course, I guess as the administrator, they

22 tended to come to me, but I tried to pass

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1 them on to all those who\'ve worked on it, but

2 really I think the good news was to hear it

3 from so many different people, so many

4 different customers of EIA and from the

5 highest levels of government, like the

6 Secretary of Energy, past and present, and

7 leaders in Congress like Dingle and Domenici,

8 as well as the people that use our data, like

9 many around this table, every day.

10 So it was a great session, and all

11 of the concurrent session presentations that

12 the presenters were willing to share will be

13 on our website soon as soon as we have them.

14 So anyone who didn\'t have a chance to attend

15 at all, or attend the different concurrent

16 sessions, they\'ll be able to see that on the

17 website.

18 So lots happening. It seems like

19 every six months, we keep doing more, and I

20 guess that\'s good news for the American

21 taxpayer.

22 Nagaraj, I\'d be happy if there are

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1 any questions.

2 DR. NEERCHAL: Any questions? Calvin?

3 DR. KENT: A quick question. The

4 National Academy study that you are being forced

5 to fund?

6 MR. CARUSO: Yes.

7 DR. KENT: Could you tell us a little

8 bit about that?

9 MR. CARUSO: Howard\'s the one who is

10 actually working most closely with it, but it is

11 part of a long-term study that actually the

12 Academy is the U.S. focal point, but it\'s \-- you

13 know, EISA, in Austria? It\'s a group that\'s

14 done some long-term modeling efforts. I know

15 John is familiar with them. And another group

16 here in the U.S. who I can\'t remember the name,

17 but the money\'s actually going to go to this

18 study, and it\'s called Future Energy Assessment

19 or something \-- it\'s a very vague \-- when we got

20 the mandate in the congressional language, it

21 said \$1 million for this \-- like I said, very

22 general title, and it said through the National

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1 Academies. When we of course followed up with

2 the National Academy, it turns out the money\'s

3 actually going to go to EISA and another group

4 who I can\'t recall at the time. But Howard will

5 be here and he\'ll be able to give you more

6 detail on it.

7 DR. KENT: Fine. Thank you.

8 MR. CARUSO: Eric?

9 MR. RASMUSSEN: The study overall is a

10 global energy assessment, and the organization

11 here in Washington that is to receive the money

12 is the Heiden Center. So the Academy is a

13 passthrough only. The funds will go to the

14 Heiden Center.

15 MR. CARUSO: And our goal is that, you

16 know, if we have to take a million dollars out

17 of EIA\'s budget, we\'re at least going to try to

18 direct this study in a way that we get something

19 back for it. Most earmarks are strictly

20 passthroughs. We\'re trying to do our best not

21 to let that happen, but it\'s not easy to do in

22 the current budgetary system.

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1 Thank you.

2 DR. NEERCHAL: Now we have Janice as

3 our second speaker. Update for the Committee

4 since the fall meeting.

5 MS. LENT: Good morning. Most of you

6 probably remember me from the October meeting of

7 this committee. I\'m relatively new here at EIA,

8 and this is the first time I\'ve had the pleasure

9 of updating the committee on the progress that

10 we\'ve made in implementing suggestions that were

11 put forward at the last meeting.

12 As always, we\'re very grateful for

13 the input that this committee gives us. We

14 learn a lot by discussing our projects with

15 this committee. So I\'m just going to briefly

16 update you on some of the specific projects

17 that we talked about last October.

18 The first one, developing key

19 energy indicators, this is the project that

20 Joe Conklin and I reported on last October.

21 The goal is to assemble a set of energy

22 indicators that will give users a quick

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1 overview of the energy situation and

2 highlight important changes in the energy

3 situation. The indicators that will be made

4 available on the EIA website \-- and if you

5 remember last October, Joe and I showed you a

6 list of 13 indicators that had been selected

7 by an interoffice team here at EIA.

8 So the committee\'s

9 suggestions \-- first of all, this committee

10 was generally positive about the project, and

11 felt that this was something EIA should be

12 doing. You all suggested developing a beta

13 version and putting it up for evaluation,

14 also suggested some types of drill down

15 capabilities to metadata error measures,

16 historical series, and a couple of committee

17 members suggested developing different sets

18 of indicators for different user groups, so

19 for example, having one for students and one

20 for industry analysts.

21 Also on the list was a new

22 indicator, an energy CPI, consumer price

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1 index, that was still to be developed. Some

2 committee members felt we should develop it,

3 and others felt that maybe we should work

4 with BLS to improve the energy component of

5 their CPI.

6 So here\'s our update. You remember

7 we had 13 indicators at the October meeting.

8 After that, we got some additional internal

9 input from EIA, and the number increased to

10 16. EIA senior staff felt that we\'d gone

11 overboard, that was a few too many

12 indicators, so they\'re reviewing the list.

13 The number will probably be reduced

14 to maybe around five. Once we have the set,

15 we do plan to develop a web-based

16 presentation, as the committee suggested, and

17 we like the committee\'s ideas for the drill

18 down capabilities. We will implement those

19 as resources permit.

20 Multiple sets of indicators

21 probably are not an option right now due to

22 the resource constraints, but might become an

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1 option in the future. We have to see if the

2 indicators are popular with users, and the

3 number of indicators can eventually be

4 increased.

5 The energy CPI might be on the

6 final list. We\'re not sure at this point.

7 The reason that we decided not to work with

8 BLS to improve their CPI is basically because

9 the time constraints for producing and

10 publishing the BLS CPI are very tight. It\'s

11 unlikely that they would be able to improve

12 the energy component of the CPI using data

13 that are available before their publication

14 date.

15 So another project \-- this was in a

16 breakout session \-- some work was presented

17 that had been done by SMG staff, Jake

18 Bournazian, Lawrence Stroud, and Shawna

19 Waugh, on building an information quality

20 page for the EIA website. The goal here was

21 to have the centralized replication where

22 users could go to find information on EIA

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1 data quality issues and data quality reports.

2 The committee gave us some good suggestions,

3 first of all to consider the target

4 audiences, because some reports, more

5 detailed reports, are probably for internal

6 users, whereas the summary reports would be

7 of interest to external users.

8 Now, the team presented, or

9 developed, two possible webpage designs, and

10 the committee preferred the one that had less

11 text, less clutter. And the committee also

12 suggested including some of the data quality

13 information on the program office home page,

14 because maybe the users would be more likely

15 to hit it there.

16 So our update \-- the detailed

17 quality reports, to some extent, are being

18 published on the intranet for internal users.

19 That will continue and perhaps be expanded,

20 and we\'re working on making access to those

21 reports easier. The EIA team reviewed the

22 program office home pages to look for data

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1 quality information that could be

2 highlighted, and basically the work is

3 continuing at this time, working to make data

4 quality information easier to find both for

5 the internal and the external users.

6 Another breakout session focused on

7 industrial natural gas demand. This was Coby

8 Platt\'s presentation. He discussed an

9 important issue affecting EIA\'s short-term

10 forecasts of industrial natural gas

11 consumption. One of the data inputs that

12 affects the forecast is a natural gas

13 weighted production index. And the indexes

14 that EIA is currently using for this \-- we\'re

15 getting them from a company called Global

16 Insights.

17 They appear to be inconsistent with

18 some of our other data, at least for some of

19 the major natural gas consuming industries.

20 So Coby presented a new index

21 estimation method that makes use of more EIA

22 data. This presentation also raised some

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1 interesting questions about industrial

2 natural gas consumption patterns and how they

3 might be changing over time, particularly in

4 some of the key industries like petroleum and

5 coal products, agricultural chemicals, and

6 primary metals.

7 The committee suggested we might do

8 some more research on price elasticity of

9 demand in the industrial sector for natural

10 gas, and also suggested that we investigate

11 some of these changing consumption patterns

12 simply by talking to some of the plant

13 managers and others in these natural gas

14 consuming industries.

15 So these suggestions basically have

16 been followed. Some anecdotal research has

17 been conducted on operations and fuel

18 consumption in the industries that we\'re

19 looking at. Also, EIA staff are planning to

20 meet with Federal Reserve staff who are doing

21 some similar work, to share information on

22 the estimation methods for the production

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1 index estimation. And plans are being

2 developed to do some further research on

3 price elasticity of demand within those key

4 industries.

5 Another report, Paul Holtberg of

6 Office of Integrative Analysis and

7 Forecasting gave a talk on the quality

8 control process for the Annual Energy

9 Outlook, which is one of EIA\'s major

10 products. The review process that he

11 described was fairly intensive and

12 time-consuming.

13 The committee\'s comments: basically

14 some committee members felt that in order to

15 evaluate the quality control process, they

16 would like to see some comparisons of the

17 actual data to the projected data from the

18 AEO. The committee also felt that the

19 current quality control process was very

20 extensive, and perhaps to cut down on the

21 labor, the report could be published every

22 two years rather than every year.

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1 So Paul said he definitely is

2 willing to do a future presentation in which

3 he could look at some of the actual versus

4 the projected data and do some comparisons.

5 Also looking at ways to streamline the review

6 process, but for now, due to the high

7 customer demand for this product, it will

8 continue to be annual for the foreseeable

9 future.

10 Another project that we reported on

11 was a project that George Lady, Dr. George

12 Lady, of Temple University is working on in

13 conjunction with SMG staff on using

14 regression analysis for forecast evaluation.

15 This was basically an update on the ongoing

16 project between SMG and Dr. Lady on the NEMS

17 forecast evaluation. The NEMS is the

18 National Energy Modeling System.

19 The evaluation method is to

20 construct a regression model that relates the

21 NEMS input variables to the forecast

22 variables. So we\'re essentially modeling the

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1 model, and these regression coefficients that

2 are estimated can then be saved, and they can

3 be used for model evaluation even after the

4 modeling software is no longer operational.

5 This is important for the long-term models,

6 because if you\'re doing this evaluation 30

7 years later, you may not have the model

8 operational. And right now, we\'re

9 concentrating on models that project energy

10 consumption by fuel source and by sector.

11 So the committee basically approved

12 the estimation of the evaluation method and

13 the experimental design. This committee had

14 previously recommended the use of a Latin

15 hypercube design to generate the combinations

16 of values to be used for the input variables.

17 That recommendation was followed,

18 and the committee recommended continuing this

19 impact analysis of the error sources, because

20 the method allows us to essentially decompose

21 the forecasting error into components,

22 components that are due to errors in the

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1 input values versus components that are due

2 to modeling error \-- the modeling assumptions

3 that relate the input variables to the

4 consumption forecasts.

5 And Dr. Lady has been using the

6 short-term models in order to do this impact

7 analysis \-- the RSTEM, Regional Short Term

8 Energy Models \-- and now he has some results.

9 We can compare with the RSTEM since it\'s

10 short-term, we can compare the actual values

11 with the projections. And he has some

12 interesting regression results for the impact

13 analysis. Maybe he\'ll be presenting those at

14 the fall meeting, or somebody from SMG will

15 present them.

16 And SMG is working with the Office

17 of Integrated Analysis and Forecasting to

18 evaluate these results, and also to look at

19 potential products that could be developed,

20 evaluation reports, model quality reports,

21 that could be developed, including this

22 impact analysis, and could be useful in

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1 evaluating the energy consumption forecasts

2 and evaluating the model assumptions.

3 Meanwhile, Dr. Lady is also looking

4 at some possible enhancements to the

5 regression models. For example, he\'s

6 researching some more sophisticated ways to

7 incorporate weather data into the regression

8 models. The models that we\'ve been looking

9 at now just take heating and cooling degree

10 days and put them in as independent variables

11 in the regression models, but the

12 relationship between the heating and cooling

13 degree days and the consumption doesn\'t

14 appear to be linear, exactly linear.

15 Some type of power transformation

16 might be used, or also other information such

17 as humidity, rainfall, could also be included

18 in the models as enhancements in the future.

19 So on this project, we may have

20 some exciting results to present at the

21 October meeting.

22 So that\'s basically our overview of

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1 some specific projects where we have made

2 progress. We\'re not necessarily where we

3 hoped to be on some of them, but again, we\'re

4 grateful for the committee\'s input, and as

5 you can see, it has been very useful in a

6 broad range of projects here at EIA.

7 DR. NEERCHAL: Any quick comments or

8 questions? Thank you, Janice.

9 MS. LENT: Thank you.

10 DR. NEERCHAL: We are running a little

11 behind, as you might have noticed by now which

12 is a tradition.

13 So next we have \-- sounds like a

14 very exciting presentation on the history of

15 EIA.

16 MR. DELEY: Good morning. My name is

17 John Paul Deley. I\'m the EIA\'s Records Officer.

18 I\'m also chair of the agency\'s history

19 committee, and vice chair of ASA\'s committee on

20 archives and historical materials.

21 Partnership in civil law is a

22 contract between individuals or groups of

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1 individuals who in the spirit of cooperation

2 agree to carry on an enterprise, contribute

3 to it by contributing property, knowledge, or

4 activities, and share in its profit. Today,

5 we gather to celebrate the collegial

6 profitability of the 30-year productive

7 partnership between the American Statistical

8 Association and the Energy Information

9 Administration.

10 Edmund Burke, the English statesman

11 and political philosopher, stated that

12 \"Partnerships cannot be obtained in a single

13 generation, but become a partnership between

14 those who are living, those who are gone, and

15 those who are yet to be born.\"

16 As we reflect on the

17 accomplishments of those who have preceded us

18 and the challenges that lie ahead for those

19 who follow, it is crucial that we consider

20 our legacy together.

21 My goals this morning include but

22 are not limited to providing an overview of

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1 the inception of the ASA Committee on Energy

2 Statistics, highlighting a sampling of the

3 rich documentary legacy of the ASA Committee

4 on Energy Statistics, and introducing Dr.

5 Calvin Kent.

6 When ASA was founded in Boston in

7 1839, it recognized a need for an

8 interdisciplinary approach to the questions

9 of medicine, law, economics, demographics,

10 weather, the environment, politics, and

11 commerce. Here are some of the founders:

12 William Cogswell, Richard Fletcher, John

13 Dicks Fisher, Oliver Peabody, Edward Jarvis

14 and Lemuel Shattuck. Almost from its

15 inception, these scholars had an interest in

16 matters concerning energy.

17 Here is the title page of the very

18 first article printed in the very first issue

19 of the very first ASA publication, a paper

20 read before the ASA meeting in January 1887.

21 It was provided to us this morning by Dr.

22 Carol Joyce Blumberg, who is with us today.

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1 The article is titled, \"Statistics of Water

2 Power Employed in Manufacturing in the United

3 States,\" and it is by Professor George F.

4 Swain.

5 Of interest to students of

6 renewable energy history today, the article

7 notes that in 1880, there were 55,404

8 waterwheels in the U.S., representing

9 35.93 percent of the power used by the

10 country.

11 ASA\'s archival materials, stored at

12 Iowa State University, contain a myriad of

13 publications reflecting an interest with how

14 the newly industrialized nation fed its

15 factories, propelled its trains, warmed its

16 homes, and cooked its food.

17 But the beginning of the story we

18 celebrate today took place at the meeting of

19 the ASA board of directors on August 13,

20 1978, where a motion was made that read, \"The

21 American Statistical Association should

22 cooperate on a request from the Administrator

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1 of the Energy Information Administration,

2 Lincoln Moses, to establish an advisory

3 committee to the administration when final

4 approval is granted by the Office of

5 Management and Budget.\"

6 The minutes go on to state that,

7 \"This is a rather unusual request, but since

8 the term of Lincoln Moses will officially

9 conclude at the end of 1979, it was felt that

10 ASA should be prepared to initiate this

11 committee as early as possible. Hence, the

12 committee on committees recommends that such

13 approval be granted in anticipation of the

14 action by the Office of Management and

15 Budget.\"

16 Dr. Lincoln Moses, who was crucial

17 to the founding of this committee, was EIA\'s

18 first administrator and was a distinguished

19 fellow of the American Statistical

20 Association. He died in December of 2006.

21 In the Journal of Statistical

22 Science, Volume 14, Number 3, Page 348

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1 published a conversation with Lincoln Moses,

2 an oral history with a printed transcript.

3 He is quoted by Byron William Brown and Miles

4 Hollander as saying, \"The Technical Advisory

5 Committee, which with great difficulty, I

6 managed to establish, was enormously valuable

7 to me as an administrator and to subsequent

8 administrators.\"

9 At the next meeting of the ASA

10 board of directors on February the 9th, the

11 minutes, page 13, state that, \"President

12 Hartley established the ad hoc committee on

13 Energy Statistics. In discussing this item

14 in the executive committee, it was felt that

15 ASA should take a larger role on many of the

16 major issues involving world and national

17 problems. The ad hoc committee was

18 constituted through December 1982, at which

19 time, a recommendation would come to the

20 board for decision on the continuance of the

21 ad hoc status or the establishment of a

22 continuing committee.\"

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1 Here are the members of the first

2 ad hoc committee. Thirteen of the sixteen

3 individuals in attendance at the first

4 meeting, which was chaired by Dr. William H.

5 Shaw, who was memorialized in the May 1989

6 issue of The American Statistician \-- in his

7 opening remarks that day, Dr. Moses thanked

8 Bruce Dwyer and Cathy Repass for providing

9 cakes. Dr. Moses commented that he was

10 particularly concerned about receiving the

11 committee\'s recommendations for cost

12 effectively managing an organization that

13 then had a budget of \$65 million and a staff

14 of 750, which he notes had come primarily

15 from three organizations \-- the Bureau of

16 Mines, the Federal Power Commission, and the

17 Federal Energy Administration.

18 He expressed that EIA staff was

19 uncomfortable with the \"rubbery quality of

20 the numbers, or the lack of numbers

21 altogether.\" Stan Freedman, who was in

22 attendance at this meeting, has shared with

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55

1 me that he was tasked with providing

2 assistance in obtaining sandwiches for lunch

3 for that meeting.

4 The committee was formed and

5 managed under the rules of the Federal

6 Advisory Committee Act, Title IV of the U.S.

7 Code and administered by GSA.

8 Here is an image of the first ASA

9 Committee on Energy Statistics Federal

10 Register Notice from April the 12th 1979.

11 This committee\'s first meeting with EIA was

12 held in Washington D.C. on May the 4th 1979

13 in the Post Office Building at 12th and

14 Pennsylvania Avenue.

15 Topics discussed included but were

16 not limited to a discussion of an energy

17 accounting framework in consonance with the

18 National Income and Product Accounts and with

19 international statistics.

20 The development of standards for

21 successive revisions to ongoing energy data

22 series and the development of seasonal

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1 adjustment capability, review of major

2 information systems including the Energy

3 Emergency Management Information system and

4 the Oil and Gas Information System; review of

5 energy applied analysis models and

6 forecasting tools, and procedures to measures

7 and degrees of uncertainty inherent in EIA

8 forecasts and analysis; and five, discussion

9 of the indexing system to convey the overall

10 energy situation similar to the consumer

11 price index or the unemployment index.

12 It\'s interesting in following

13 Janice\'s comments just a moment ago that

14 three of the five topics which we\'re

15 currently discussing were on the agenda 30

16 years ago in a different form. But that\'s

17 just worth noting.

18 Here\'s a list of the materials

19 we\'re required to retain and make available

20 for public inspection: Charters and

21 organizational materials, official membership

22 lists, copies of Federal Register meeting

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1 notices, departmental reports on advisory

2 committees, correspondence relating to

3 activities of advisory committees, certified

4 transcripts of minutes of the meetings,

5 annual reports, annual reports consistent

6 with OMB and DOE directive.

7 As records officer of EIA, I manage

8 a program of storage and access for these,

9 along with the rest of the records of the

10 agency. To date, approximately 343 papers

11 have been given at meetings of the ASA

12 Committee on Energy Statistics, and these

13 papers serve as a portal into better

14 understanding the complexities involved with

15 managing EIA\'s dynamic data sets over a

16 30-year time frame.

17 The integrity of these records

18 depends on the maintenance of consistent and

19 reliable protocols for access, and the

20 creation of an online database of titles and

21 topics to ensure relevance and timely access

22 to these valuable materials.

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1 These papers comprise only about 12

2 cubic feet of materials, and they\'re stored

3 at Paxton, Inc. in Springfield, Virginia.

4 Minutes, transcripts and papers from meetings

5 from 1979 through 1982 have been digitized in

6 two formats \-- PDF and Word. Minutes and

7 transcripts of papers for meetings from

8 spring of 1995 through the fall of 2007 are

9 available on the EIA intranet \-- the address

10 is given here, and many of you are familiar

11 with our webpage. And the minutes and papers

12 from 1982 through \'95, that middle period,

13 are currently available only in hard copy

14 paper format, and at present time, no

15 comprehensive index exists, though there is a

16 box listing of paper titles, presenters, and

17 topics arranged chronologically by meeting

18 and year.

19 It is important to note that EIA\'s

20 intranet is a dissemination tool and not a

21 preservation tool. We currently do not have

22 a single tool for central organization of all

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1 of our content and data.

2 But to more fully discuss this

3 partnership and renew the challenges that

4 have confronted EIA over the last 30 years,

5 it is my pleasure and honor to introduce Dr.

6 Calvin Kent.

7 Dr. Kent served as EIA\'s

8 administrator from August 6, 1990 until

9 January 1993. He was born in Kansas and

10 received his BA from Baylor University and

11 his M.A. and Ph.D. at the University

12 Missouri, Columbia. He has done

13 post-graduate work at Virginia, Chicago,

14 Rice, Wichita State, North Carolina, and

15 Tennessee.

16 Prior to coming to EIA, Dr. Kent

17 held the Herman Lay chair of Private

18 Enterprise at Baylor University in Waco,

19 Texas, where he founded and directed the

20 National Center for Enterprise Education, and

21 was adjunct professor at Baylor School of

22 Law.

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1 He was twice elected president of

2 the National Association of Economics

3 Educators. He has been chief economist to

4 the South Dakota Research Council. He has

5 been mayor of Woodbury, Texas, president of

6 the Vermillion, South Dakota City Council,

7 and former chair of the Huntington, West

8 Virginia City Council.

9 After leaving EIA, Dr. Kent was

10 vice president for Technology

11 Commercialization, and began the Institute

12 for Entrepreneurial Advances. He served as

13 the dean of the Lewis College of Business,

14 and currently is the distinguished professor

15 at the Lewis College of Business, Marshall

16 University.

17 Please join me in welcoming Dr.

18 Calvin Kent.

19 DR. KENT: It is truly wonderful to be

20 back with you all again. Not only did I have

21 the distinct honor of holding what I still

22 consider to be the best job I have ever had, and

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1 that was administrator of EIA, but I also got to

2 serve six years on this committee, and since

3 that time have been asked and have been

4 overjoyed to come back and meet with you on

5 three separate occasions and present.

6 So what I want to do today is talk

7 specifically with you about how the ASA

8 committee has contributed to the work of EIA,

9 because the ASA committee, I think it\'s fair

10 to say, has been absolutely vital to the

11 success of this organization.

12 So let\'s begin and let\'s see if I

13 can get the thing to advance properly. Which

14 one do I hit? The left button? Okay.

15 In 1977, there was a very clear

16 mandate given to EIA, and that was to create

17 the clear, comprehensible, and cohesive \-- I

18 love the three Cs \-- body of energy

19 information, and then also in the

20 legislation, a further mandate was given to

21 collect, evaluate, assemble, analyze, and

22 disseminate information relative to resource

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1 reserves, energy production, energy demand,

2 and energy technology. They could have saved

3 themselves a lot of ink just by saying

4 anything related to energy came under the

5 purview of the Energy Information

6 Administration.

7 The next thing to note is the

8 specific role of EIA as it was defined in the

9 early years by EIA itself. And that was to

10 provide policy independent data, forecasts,

11 and analysis. Now, please note the two words

12 there \"policy independent.\" Now those words

13 may seem a bit of an oxymoron, but EIA has

14 done an extremely good job over the years of

15 being able to accomplish precisely that goal

16 of providing policy independent. The reason

17 for those terms became very clear to me, and

18 that was EIA\'s information was going to be

19 absolutely essential in the making of

20 governmental policy, and without that

21 information, policy would be made in the

22 black hole of ignorance.

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1 In addition to this, EIA also early

2 on found itself in the position of promoting

3 sound policymaking, efficient markets, and

4 public understanding regarding energy and its

5 relationship to the economy and the

6 environment. So even early on, before

7 environment had become the issue that it is

8 today, EIA a mandate that it had assumed in

9 the area of environmental.

10 Now, the ASA committee itself on

11 energy statistics began, as you heard in the

12 previous presentation, to provide periodic

13 reviews of EIA\'s data and analysis programs

14 and to make recommendations. This particular

15 function changed over time as we\'ll talk in

16 just a moment, but the thing to note is that

17 the key word again that keeps coming up in

18 this is \"analysis,\" because that was part of

19 what we were expected to do in EIA, and the

20 ASA committee was to help us in doing all

21 three of the things that are listed

22 there \-- to give advice on priorities,

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1 because in a budget-constrained world, EIA

2 certainly faced the situation where it had to

3 make priorities, decisions regarding

4 priorities, and this was to be a function of

5 the ASA committee as well as to look at the

6 methodological issues behind the statistics

7 programs. And then of course, the function

8 that it has performed more than adequately,

9 and that is to advise on improved energy

10 modeling and forecasting tools.

11 I identified in an earlier paper

12 six major interactions that the ASA committee

13 had with EIA, and it is interesting to note,

14 even though I did go back over all of those

15 paper documents and I am sorry to hear that

16 they are not archived because at one time I

17 had all of them, and when I had to

18 leave \-- didn\'t have to, but when I left the

19 College of Business, one of the things I did

20 not take with me was three file cases from my

21 period as administrator in which I had all of

22 those documents with me, plus all of the ones

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1 that went all the way up to 2002. So I now

2 have another example to prove to my

3 wife \-- who thinks that I am a packrat \-- as

4 to why you should never throw away anything.

5 These are the major items. I did

6 take a look, since my study went up only

7 through 2002 \-- at what had happened since

8 that time, and I can\'t honestly say that I

9 read the detailed minutes, but I did look at

10 all of the reports, and you can see where the

11 emphasis in the committee has been. And

12 there have been some changes over the years,

13 but data quality originally and continues to

14 be the dominant concern of this committee, or

15 at least the dominant concern that has been

16 brought to this committee.

17 Modeling was extremely important

18 when we were given the challenge of producing

19 a national energy modeling system. And here,

20 I must confess that putting the national

21 energy modeling system together faced rather

22 extreme opposition from some quarters of EIA

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1 who simply felt that forecasting was not an

2 appropriate thing to be done by a statistical

3 group, because that belonged more to

4 economists and not to statisticians. I never

5 have quite known where that argument came

6 from, but as an economist whose major

7 emphasis was statistics, I found that

8 argument to be somewhat quaint to say the

9 least.

10 But during the years from 1989,

11 when the NEMS was first not only proposed but

12 demanded, through the implementation and the

13 production of the first AEO using the NEMS,

14 it was the dominant subject at these ASA

15 meetings. And over the years, it has taken

16 about 23 percent of the committee\'s

17 attention, but that figure has declined

18 dramatically in recent years.

19 Confidentiality of data was a huge

20 issue when I became administrator, and as

21 those of you know who heard my remarks

22 yesterday, you have the situation where both

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1 the Department of Justice and later the

2 Internal Revenue Service wanted to have the

3 ability to paw through EIA\'s data,

4 particularly on the major oil companies, to

5 see \-- DOJ was concerned with the issue of

6 monopolization and price fixing, IRS was

7 concerned with whether or not they were

8 really reporting all of those excess profits

9 that they were making.

10 Through various means and methods,

11 we were able not to give them the information

12 even though we were ordered to do so, and

13 that issue fortunately has been solved by the

14 recent legislation, CIPSEA, which has given

15 us in EIA protection.

16 Resources and requirements took up

17 a good portion of the time in the committee,

18 and that has actually increased as EIA has

19 become increasingly resource-constrained.

20 EIA\'s independence, surprisingly enough, has

21 not been a major topic of this group \-- even

22 though it does get some mention at some

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1 meetings, it constitutes only a very small

2 percentage. But what surprises me, and it is

3 a pleasant surprise, is that from the

4 beginning, the independence of EIA has been

5 one of its most treasured possessions, and

6 one of the things that all the folks, not

7 just at the top, but I think has permeated

8 all the way through the organization, and

9 seen as one of our great hallmarks, and that

10 is EIA\'s independence.

11 That is not easy to keep or to

12 maintain, because under the rather odd

13 organizational structure, the administrator

14 is appointed by the President, we\'re part of

15 the Department of Energy, and that

16 immediately aligns us with a particular

17 administration, because when the

18 administration goes, as I found out, you go

19 along with them.

20 One of my things that I enjoyed the

21 most was that I ceased being administrator of

22 EIA when Bill Clinton took the oath of

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1 office, so I had my driver drive me to the

2 parade and I took the subway back home.

3 Timeliness and accuracy has also

4 been a major concern and one that has grown

5 over the years, although it has certainly had

6 an up-and-down consideration by this

7 committee. Timeliness was something that was

8 of great concern early on, particularly when

9 the first Gulf War came into being, we were

10 tasked with getting information out

11 immediately, and that began the daily

12 publication of the ESAR, the Energy Situation

13 Analysis Report.

14 And ever since, EIA has been able

15 to continue to meet the demands of the public

16 for more frequent publications, many of which

17 do continue to come out daily. But as I

18 would stress, and this committee has stressed

19 over the years that if there is a debate, if

20 there is confusion, if there is question

21 about whether we should be more timely or

22 more accurate, accuracy needs to trump all

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1 else.

2 Other topics, such as who gets the

3 sandwiches and who brings the cake, took

4 about 6 percent of the time, and it\'s good to

5 note that over the years, we have still found

6 something valuable for Stan Freedman to do.

7 I was considerably worried about that when I

8 left.

9 Next one is just to mention some of

10 the specific \-- let me go back one \-- I\'ve

11 got myself off here.

12 MR. FORSYTH: You have to go back a

13 couple.

14 DR. KENT: Yes, I\'ve got to go back a

15 couple more.

16 I was known when I was here as

17 roadkill on the information highway, and I

18 think you\'re beginning to understand why.

19 Maybe I should let somebody else play with

20 this.

21 I want to get to data collections

22 and \-- just keep going, I\'m going to get

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1 there eventually. Start going slow, start

2 going very slow. You know, for an old man,

3 that\'s easy to do. Stop. Okay.

4 Data collection issues. Again, I

5 went through what had happened recently, and

6 found that the committee had been concerned

7 in the data collection area \-- about a third

8 of its time was spent on the collection

9 itself, the timeliness of responses, and more

10 recently, the use of technology, particularly

11 the net, for surveys and things of this

12 nature.

13 The validity of data, particularly

14 audits, documentation, and standards, which

15 were in a bit of disarray when I came here,

16 has taken about 16 percent. Timeliness of

17 dissemination has taken about 10 percent.

18 Sampling techniques and survey design have

19 become more and more, and I think

20 appropriately so, concerns of this particular

21 group. And then standardization of data

22 definitions was of course at the beginning of

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1 this EIA was a huge issue as you tried to

2 bring together some 50 different

3 organizations that had had at least some

4 finger in the pie of energy statistics and

5 data.

6 Now, if I can get it to advance to

7 the next one \-- let\'s see if I can get it to

8 go. Yes. I think I may finally have got

9 this figured out.

10 Energy modeling was of course, as I

11 said, a huge issue that dominated the

12 committee during the first preparations of

13 the NEMS. We of course had some help here by

14 the National Academy, which produced a

15 report, which quite frankly was basically

16 what we told them to write, and they did a

17 very good job of transcribing what we told

18 them. So far as the energy modeling was

19 concerned, we were the first statistical

20 agency that was given a congressional mandate

21 to forecast.

22 No other agency had that mandate to

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1 actually forecast, particularly to forecast

2 as far into the future as we were doing \-- or

3 as we were told to do.

4 We are also of course mandated to

5 use simulations to forecast policy options,

6 and this greatly accelerated when I came in

7 under the first Bush administration, because

8 one of the functions of the NEMS was supposed

9 to be able to do what-if analysis. If we do

10 this, what\'s going to happen? If we do this,

11 what\'s going to happen? And so we produced

12 the first AEO with scenarios in it. At that

13 time, we had the reference case, we had high

14 oil prices and low oil prices, and now what

15 we\'ve grown to about 30 different scenarios

16 that are used and projected. So this has

17 been a tremendous area of growth for EIA.

18 Of course, the greatest problem

19 that was faced, and one which took

20 considerable time of this group, was how do

21 you integrate the various EIA long- and

22 short-term models so they were consistent

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1 with each other, because the STEO and the AEO

2 were not at that time producing results which

3 would have been considered to be compatible.

4 Moving along, the development of

5 the NEMS, I\'ve already mentioned that in July

6 of 1989, the administration ordered the

7 development of a more accurate and useful

8 forecasting system, and also gave the

9 dictation that the NEMS was to be equally

10 useful in policy analysis as well as

11 forecasting.

12 The report of 1991 on the NEMS

13 required that it be modular, transparent, and

14 useful, and rapid, for policy analysis. That

15 was their specific recommendations for the

16 National Energy Modeling System.

17 The ASA committee was then

18 designated as the official user group for

19 NEMS evaluation, a requirement that I note

20 has still not been lifted, the burden of it

21 has not been lifted from your shoulders. And

22 of course, the ASA committee spent 26 percent

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1 of its time on NEMS-related questions, which

2 was more than they have spent on any other

3 single topic. And beginning in 1999, the ASA

4 committee became involved in the development

5 of the SAGE model, which is international as

6 well, and I\'ll have more to say about that in

7 just a moment.

8 EIA was criticized when I came into

9 office, and continued to be criticized by a

10 group called PART, because we did not do

11 everything that everybody wanted us to do

12 when they wanted us to do it. So over the

13 1980s, EIA was criticized for sacrificing

14 quality of data to other concerns. And of

15 course, over the past 10 years, as I\'ve

16 indicated before, the problems of data

17 quality have required increased committee

18 attention. And EIA has of course made great

19 use of online dissemination and collection as

20 a major way of reducing costs along with

21 expanded technology.

22 Okay. Let me see if I can get

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1 caught up. Okay, the problems of resource

2 limitations Intensified over the last 20

3 years, as you have heard. National energy

4 strategies, plans, and legislation have been

5 more frequent and more complicated, and EIA

6 has been asked to make evaluations, and Guy

7 mentioned just some of the more recent ones

8 we had to do.

9 We faced the deregulation of

10 natural gas and electricity, which presented

11 unusually complex problems which the

12 committee was heavily involved in so far as

13 how do you get data, reliable data, and

14 particularly reliable estimates when you now

15 have deregulated industries which do not have

16 a requirement by law to report certain data.

17 In addition to this, we now have

18 the responsibility for greenhouse gas

19 reporting, and here, I must admit when I

20 first saw it, I was very surprised at the

21 committee that reviewed EIA\'s operations, and

22 they suggested that the voluntary greenhouse

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1 gas reporting be dropped. That I think would

2 be a huge mistake, because the people who

3 have been reporting certainly want to make

4 sure that if any form of carbon taxation or

5 any other form of cap-and-trade comes in,

6 that they get credit for any achievements

7 that they have made in that area, and that

8 voluntary reporting system is going to be

9 crucial for that.

10 Data confidentiality I think I have

11 already mentioned. It was extremely

12 important, because the oil industry was

13 becoming very much reluctant to give

14 information because they were afraid that it

15 would be used for non-statistical purposes,

16 or that it could of course result in giving a

17 competitive disadvantage to their opponents

18 in the marketplace. And federal agencies,

19 particularly Census, which had considerable

20 confidentiality protection, were reluctant to

21 work with EIA for fear that some of their

22 confidential information might leak out,

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1 which is of course why the MECS survey is

2 still done over \-- as I understand it, by

3 Census, and I don\'t think that has moved from

4 Census, has it, Stephanie? I think it\'s

5 still done over there.

6 MS. BROWN: No.

7 DR. KENT: The CIPSEA Act of 2002 did

8 provide protection for those that we

9 designated \-- or EIA designated as being the

10 surveys that they wanted to protect.

11 The independence of EIA \-- of

12 course, Congress sought to say \-- and this is

13 what the Congressional Research Service said

14 back in 1980 \-- sought to centralize

15 responsibility for the collection of all

16 important energy information, give the agency

17 independence from the policy process so it

18 would not be compromised, and that

19 independence has and continues to be

20 threatened. It is most threatened when

21 energy prices spike and people want to come

22 up with some sort of legislative action using

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1 what I call the King Canute theory of

2 economics \-- and those of you who are not

3 familiar with your history may not remember

4 the Danish monarch who was told he was so

5 powerful that he could stop the tide from

6 coming in and had his throne carried down to

7 the seaside \-- he sat in his throne and

8 commanded the tide not to come in. The tide

9 came in, and the theory turned out to be all

10 wet, and that is certainly true for many of

11 the theories about energy pricing that are

12 coming around, particularly from the

13 legislative branch these days.

14 Also, I think it took a lot of guts

15 to go into this area of emissions, carbon

16 emissions, on the part of EIA, because back

17 when Jay Hakes was the administrator,

18 certainly gave the agency a lot of scrutiny,

19 particularly their work on the Kyoto

20 protocol, which was not consistent with the

21 political correctness of that day.

22 What is the continuing role of the

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1 ASA committee? I think it is to ensure

2 accuracy of data, with particular emphasis on

3 estimations. These have become more and more

4 important particularly as deregulation of

5 electricity and natural gases spread, and

6 also, as more and more of our domestic energy

7 situation is affected by international \-- I

8 think pretty soon we\'re going to wind up

9 discussing at least the possibility of

10 whether the annual energy outlook and the

11 international outlook ought to be combined

12 into one single evaluation.

13 Secondly, to evaluate models for

14 adequacy and effectiveness, certainly now

15 that the NEMS is old enough to vote, it is

16 probably time for it to be revised and

17 updated. I did hear a complaint at our

18 seminar yesterday that said why is it written

19 in Fortran. It was written in Fortran

20 because that\'s all anybody knew when it was

21 put together, and we had people who were very

22 good Fortran jockeys. But my point on that

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1 would be, it\'s going to take a lot of

2 resources to rewrite it in another language,

3 and I think those resources can be better

4 spent \-- rather than converting it \-- and

5 that may be something with which you

6 disagree.

7 I think you need to continue to

8 review all of EIA\'s publications to make sure

9 that they are meeting the standards for

10 statistical accuracy and clarity. This is

11 particularly a case for those documents which

12 are disseminated to the general public,

13 because they are being used, and I\'m sure all

14 of you on the committee have had the same

15 experience that I have had of going to

16 meetings where energy issues are being

17 discussed and an EIA publication,

18 particularly one of the summaries or one of

19 the short publications, is whipped out and

20 used as the basis for the remarks that are

21 being made.

22 So it is very, very imperative that

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1 you look at all of the documents,

2 particularly those that are likely to be most

3 read by what we call the people in the little

4 white houses out there, because there is so

5 much mythology and misinformation that is now

6 available.

7 I would certainly say that to

8 continue to consult with the IA staff, I\'ve

9 always felt that this committee is the

10 biggest bargain that exists in the federal

11 government. I mean, you get paid a little

12 bit of your expenses for coming here. If the

13 level of expertise had to be paid for at

14 market prices, the committee certainly could

15 not be afforded.

16 But I think that one of the most

17 significant contributions that has been made

18 by this committee is that it has upgraded the

19 quality of EIA staff, because EIA staff, when

20 I at least became administrator, rarely

21 appeared in front of this committee. A few

22 people, yes. Now the philosophy is, and I

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1 think should continue, that you get more and

2 more of the EIA staff involved in presenting

3 their work and having it critiqued, because

4 that is a tremendous part of the mentoring

5 process and the growth process, and of course

6 I compliment Renee in particular and Stan for

7 the work that they have done as mentors in

8 this whole area.

9 And then last, I think, as we\'ve

10 said before in the area of prioritizing EIA\'s

11 efforts, the committee needs to be very

12 vocal.

13 I would add one more to this, and

14 that is, somehow or another, we need to come

15 up with a way of getting an advocacy group

16 out there to promote EIA to the general

17 public so that there will be pressure placed

18 upon Congress to make sure that EIA is

19 adequately funded. After hearing the love

20 fest that we had for the last two days with

21 EIA, I was beginning to wonder, you know,

22 when are we going to see the results.

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1 One of the nice things for me is

2 that we were tasked last year by our state

3 legislature to develop a EIA for the state of

4 West Virginia, and that has been one of our

5 major tasks, and I just put down here for you

6 all to know what was called back in my day

7 the \"spaghetti diagram,\" which is probably

8 one of the more popular things that comes out

9 both internationally and domestically, on

10 where energy comes from.

11 As you can see, we have a small

12 concern about carbon legislation in West

13 Virginia, because of the amount of coal.

14 Coal clearly dominates the economy in West

15 Virginia. It is also the single largest

16 source of contribution to our state treasury,

17 and of course it is also very important in

18 that raw coal is our major export, as a good

19 deal of it leads to fuel power plants

20 particularly up and down the Ohio Valley.

21 In the electricity, we are a very

22 strong net exporter of electricity, and so we

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1 become very interested in all of those

2 questions as well.

3 It\'s also not recognized that east

4 of the Mississippi, we are the largest

5 producer of natural gas, and so this is also

6 of vital concern to all of us. We also have

7 tremendous potential in the alternate fuels

8 area, particularly in the field of low flow

9 hydro and in wind, because the studies that

10 have been done show that we have more

11 potential for wind development than any other

12 state in the nation, and we are particularly

13 well-suited for wind because we don\'t have

14 the transmission problems that are had by

15 some of the other states which are further

16 away from the electric markets.

17 So that gives you an overview of

18 what this committee has done. I can only

19 stress how important, how vital and how

20 necessary you are to the continued success

21 not of EIA, but to the economic health of the

22 nation.

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1 DR. NEERCHAL: Comments or question?

2 DR. KOKKELENBERG: Can I offer just

3 one comment? The comment is on your observation

4 about Fortran \-- recent experiences that I\'ve

5 gone through suggest that the computer people

6 like to change things because they\'ve got

7 something new, and sometimes there are very good

8 changes, but I would urge EIA to, unless there

9 was a super good reason for moving from Fortran

10 to some other language, be careful. You\'re not

11 trying to produce a new computer code, you\'re

12 trying to produce a product.

13 DR. KENT: Yes. Okay.

14 DR. WEYANT: This may be a topic for

15 more discussion in a subsequent meeting, but on

16 this EIA love fest fan club idea, what do you

17 see as the role for this committee? Do we

18 object to earmarks? Or another thing that might

19 be less dangerous, because I think that might be

20 dangerous, but I don\'t know for sure, would be

21 to have some kind of user survey where \-- I know

22 you kind of do this, but what EIA data analysis

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1 means to me, kind of thing. Is that done in any

2 consistent way? Should we recommend it that

3 you\'re already doing it?

4 DR. KENT: Well, first of all, I think

5 that one of the things that Jay did very well

6 and Guy has continued to do, which was a bone of

7 contention between me and the press, was

8 whenever we came out with any analysis data or

9 anything like that, it always was DOE or

10 Department of Energy says, and we had no

11 independent personality, so to speak.

12 DR. WEYANT: Branding.

13 DR. KENT: And branding. And more

14 needs to be done even in that area, but I know

15 it was a big concern of Jay\'s. It\'s been a big

16 concern of Guy as well, and that needs to

17 continue. I\'m very much happy every time I see

18 something that comes up that has EIA on it,

19 because that does not only reaffirm the agency,

20 but I think it contributes to the validity of

21 the data, because anything that comes from a

22 government agency tends to be tainted.

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1 The Census Bureau, which is part of

2 the Department of Commerce, is never quoted

3 as being the Department of Commerce. You see

4 what I\'m saying? And so it does have \--

5 DR. WEYANT: That\'s the other way.

6 DR. KENT: Yes, and that\'s where we

7 need to go with EIA. And I think we\'re moving

8 in that direction, but I think, with all of the

9 users that are out there \-- that get it for

10 free, I might add \-- that they ought to be

11 willing to do something in terms of lobbying

12 very vigorously for an increase in the EIA

13 budget and to be very specific about why they

14 need to have it done. And the other thing is, I

15 don\'t know if you have a champion on the Hill.

16 John Dingle used to be our best champion. In

17 his old age, I don\'t think he\'s as vigorous as

18 he was.

19 Senator Byrd, our senator, is

20 certainly not as vigorous as he was. I have

21 to say this about earmarks: coming from West

22 Virginia, I can\'t say anything against

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1 congressional earmarks. Next to coal, that\'s

2 our most valuable resource.

3 But leaving that aside \-- I mean,

4 if Senator Byrd ever dies we\'re going to

5 stuff him, send him down and have Disney put

6 one of these mechanical things in there so

7 that he can last for a few more years before

8 anybody will recognize it. He\'s that

9 important to us. People keep talking about

10 renaming the state \"Byrdland,\" and that may

11 very well happen.

12 But he certainly has been a very

13 strong supporter of this committee, and when

14 I was administrator \-- and Guy, doesn\'t he

15 still sort of carve out EIA and put us in

16 with some rather strange bedfellows? Are we

17 considered now a part of the Department of

18 Energy\'s budget?

19 MR. CARUSO: Yes. The way it was when

20 you were here has changed.

21 DR. KENT: Okay, because we used to

22 have some of Senator Byrd\'s patent committees,

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1 the National Endowment for the Humanities,

2 Bureau of Indian Affairs \--

3 MR. CARUSO: That\'s changed.

4 DR. KENT: EIA and so forth. He had

5 in his own little committee and really looked

6 after EIA very well. But you need to have a

7 very, very strong advocate at the top who can

8 look after you, and I don\'t know who that would

9 be, but certainly there\'s somebody out there

10 that can have \--

11 MR. CARUSO: John, you were asking for

12 more than just a customer survey, right?

13 DR. WEYANT: Yes. I had a whole

14 range \-- identifying the champion, all that.

15 Anything that would lead to the new budget

16 request getting approved. I guess that\'s what I

17 had in mind. I don\'t know, I guess for me, but

18 it would be nice to know what would be perceived

19 as risky as opposed to (inaudible).

20 And I guess a good question Cal

21 brought up is, is there a person in Congress

22 right now \--

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1 MR. CARUSO: On the Senate side, both

2 Bingaman and Domenici have been very supportive.

3 DR. WEYANT: I know Bingaman pretty

4 well.

5 MR. CARUSO: I don\'t think it rises to

6 the level of champion. You know, every time we

7 ask him would you mind intervening with whoever

8 the current chairman of the Appropriations

9 Committee is, he always says yes. So it\'s kind

10 of our initiative. Maybe they\'re doing things

11 just on their own just with staff prompting.

12 And on the House side, as Cal pointed out,

13 Dingle is supportive, but I don\'t think \-- he\'s

14 got so many other Michigan-centric issues that

15 really are \-- I think we\'re way down the list

16 for him. And there\'s no other congressman.

17 Eric Rasmussen\'s our liaison with Congress, so

18 he can probably give you a little more detail.

19 MR. RASMUSSEN: I think you\'ve named

20 the more obvious ones. Our problem has been

21 recently not so much that the Appropriations

22 folks don\'t approve our budget requests, because

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1 they have, it\'s when it comes down to action on

2 what they call an omnibus appropriations, they

3 meld a whole bunch of separate appropriations

4 bills into one because they\'ve run out of time.

5 Our little budget gets lost in the maze there,

6 but it comes to what some people call the end

7 game negotiations, but that\'s when it\'s easy for

8 our champions or our good friends on the Hill to

9 sort of lose sight of our budget as opposed to

10 some other much larger agencies or components of

11 the department that they have perhaps a

12 constituent interest in.

13 So that\'s an issue of sustained

14 attention not only of (inaudible) of the

15 budget process, not just when they act on our

16 energy and water appropriations bill as a

17 separate bill.

18 DR. NEERCHAL: Another aspect of the

19 brand name establishment that I want to bring up

20 is the academic side. I think that to help the

21 recruitment of members for the committee or

22 recruiting all these positions you have open, it

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1 might be helpful to have the EIA and the ASA

2 committee actively more highlighted in the

3 American Statistical Association, or for

4 example, similar forums in the economics \--

5 DR. KENT: Well, just to throw out

6 something, and I know that this is all being

7 recorded and that makes me a little nervous

8 about saying some of the things that are out

9 there. When you look at the amount of money

10 that the energy companies spend on lobbying, why

11 aren\'t their lobbyists taking care of the source

12 of the information that they use? I mean, even

13 foreign countries who have strong well-funded

14 representation, and if we can somehow or another

15 become part of that lobbying effort, and we

16 obviously \-- here I\'m using the \"we\" because I

17 still feel a part of this group, get our friends

18 out there to do all the heavy lifting up on the

19 Hill for us so that it won\'t be forgotten,

20 because in the year of earmarks, you can make

21 sure that you can have a pretty potential force

22 up there if you take all of the electric

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1 companies, the oil and gas companies, and now

2 the wind companies and all the other people that

3 use our data \-- if they would coalesce around

4 somehow or another, maybe what you need to do is

5 have a function for all of the lobbyists that

6 somehow or another, you put them on notice \-- I

7 don\'t know.

8 DR. WEYANT: Just on the California

9 committee \-- and actually two of the more potent

10 players were the Manufacturers Association and

11 the Chamber of Commerce. I don\'t know if you

12 brief those guys or not.

13 You know, there is this problem, I

14 think, with all the modeling and all the

15 lobbying relying on EIA data, but again, it\'s

16 kind of there\'s no \"Intel inside\" logo that

17 gets put on all those graphics that all the

18 people these do those things, but I think if

19 we really said, suppose this function was

20 taken away or degraded, these are some of the

21 people \-- even more that would be a problem.

22 DR. KOKKELENBERG: I\'m just going to

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1 observe that many of these industries have been

2 collecting their own data long before EIA. The

3 American Petroleum Institute, the Coal

4 Producers, the Natural Gas Association, they

5 have come to have their own sources of data and

6 reliance on this, and so there\'s competition out

7 there. And if there\'s going to be earmarked

8 dollars, I\'m sure NERC is standing out there

9 saying how about us. I mean, you really do need

10 electricity, so that\'s one of the \-- maybe

11 they\'re loathe to add EIA to the people they

12 promote because they\'re so self-centered, and

13 probably understandably. I don\'t know how you

14 overcome that or free ride on that, as it were.

15 MR. CARUSO: Of course, it\'s against

16 the law to lobby for federal government

17 agencies, but we do educate.

18 DR. KOKKELENBERG: I will add one

19 other comment. Some session I organized at the

20 American Statistical Association years ago, I

21 got \-- I can\'t think of his name now, but he

22 worked for Merrill Lynch and he was one of the

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1 big energy analysts for Merrill Lynch, and his

2 comment was essentially that I need to know

3 what\'s happening today, actually this morning,

4 this (inaudible) morning, in energy things, and

5 the Energy Information Administration gives me

6 stuff that is historic which doesn\'t help me.

7 That was his basic comment \-- from the financial

8 sector\'s point of view, timeliness, even if it\'s

9 slightly raw, is better than very precise data

10 two months later.

11 MR. SWEETNAM: You ought to mention

12 the inventory data.

13 DR. KOKKELENBERG: That\'s true, but

14 I\'m not sure \--

15 MR. SWEETNAM: I was just going to

16 suggest \-- the gas storage report and the

17 petroleum storage report, were on the market

18 each Wednesday and Thursday morning at 10:30.

19 That\'s an example of one audience they get that

20 current information.

21 DR. KOKKELENBERG: Could you say who

22 you are?

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1 MR. SWEETNAM: This is Glen Sweetnam.

2 MS. BROWN: On the suggestion of kind

3 of coalescing the oil and wind and all these

4 other companies that could provide financial

5 support, isn\'t there a danger with the

6 independents for EIA to garner support from some

7 of those outside agencies? I mean, as the

8 administrator said, I would be concerned.

9 MR. CARUSO: Oh, yes. Financial

10 support, but support on the Hill I think is the

11 problem.

12 DR. KENT: I certainly wouldn\'t get

13 money from them \--

14 MS. BROWN: But even with their

15 support on the Hill, there isn\'t any perception

16 of a lack of independence?

17 DR. KENT: Not if it comes from a wide

18 variety of sources.

19 DR. NEERCHAL: I think we are running

20 about half an hour late. I think that\'s the bad

21 news. The good news is the afternoon sessions

22 are going to be shortened a little bit, so we\'ll

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1 just carry this half an hour translation through

2 the day. We\'ll take our 10:30 break at 11:00.

3 So we\'ll be back at 11:30.

4 (Recess)

5 DR. NEERCHAL: Those who were not here

6 when we made the introductions earlier and you

7 are here now, do you mind, please come to the

8 microphone and introduce yourself.

9 I think we should start with

10 Howard.

11 MR. GRUENSPECHT: Hi. I\'m Howard

12 Gruenspecht. I apologize for not being here

13 earlier. I got called away. I might get called

14 away again. You\'d all be better off if I

15 weren\'t here, not because of the contribution

16 I\'m going to make, but because of things I\'m

17 being called away for.

18 DR. FORSYTH: Thank you for being

19 here.

20 DR. NEERCHAL: Tell them that we need

21 you here.

22 MR. MOREHOUSE: I\'m David Morehouse

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1 with the natural gas division, Office of Oil and

2 Gas.

3 MR. KING: I\'m Bob King with the same

4 division.

5 MR. WOOD: John Wood. Reserve and

6 Production division, EIA.

7 MR. HOLTE: I\'m John Holte. I work in

8 OIF.

9 MR. RADICH: Tony Radich, also of OIF.

10 MR. MAPLES: John Maples, OIF as well.

11 MR. CHASE: Nicholas Chase at SNEIF.

12 MR. STAUB: John Staub with OIF.

13 MS. MAYNE: I\'m Lauren Mayne with OIF.

14 DR. NEERCHAL: Thank you. Very good.

15 Glen, you\'re up.

16 MR. SWEETNAM: Yes. Very good. I

17 don\'t even know how many of you were able to

18 attend the peak oil session two days ago at the

19 EIA conference, but at that session, I presented

20 the results of some modeling work. The overall

21 work we\'ve been doing has been in collaboration

22 with our Reserve and Production division, with

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1 John Wood and his people, working on both a

2 presentation and a paper looking at the issue of

3 long-term oil scenarios.

4 As part of that process, my

5 division developed a new model of oil

6 production, long-term oil production, with

7 the intention of having a model that would go

8 out for a very long term, and in fact we run

9 the model going out to 2200. We think it\'s a

10 good model, had a lot of fun building it, but

11 it made a lot of sense for us to bring the

12 model structure and assumptions to you all so

13 you would be aware of it, in the hope that

14 you could give us some advice on its

15 structure, advice on how to improve it,

16 advice on the assumptions and how to get

17 better assumptions for the data that goes

18 into it. So I\'m very happy we\'re going to be

19 able to present this this morning.

20 The primary builders of the model

21 in addition to myself were John Staub, Lauren

22 Mayne and John Holte. Lauren Mayne and John

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1 Staub are going to present the actual model

2 structure and results to you right now. So

3 I\'m going to turn it over to Lauren Mayne.

4 MS. MAYNE: Hello. I\'m unfamiliar

5 with working with this microphone and the like,

6 but if anyone has any questions about a

7 particular slide as we\'re going through, please

8 raise your hand and I\'ll see what\'s going on.

9 As Glen mentioned, the real purpose

10 of the presentation today is really to get

11 feedback on our model and methodology rather

12 than to provide complete forecasts of what\'s

13 going on.

14 Starting out with the presentation

15 today, we\'re going to be going over the

16 general concepts behind what we\'re doing, the

17 trends we\'re going to be discussing, and

18 really the background data and methodology

19 behind the IPPM or IPPM model.

20 After that, we plan to present an

21 example output so that everyone can have an

22 idea of what we\'re looking at as our results.

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1 And then have an opportunity for committee

2 members to share their comments, suggestions

3 and the like.

4 First of all, concepts. Peak oil

5 is really what this method and model is

6 designed to address. However, peak oil is

7 loosely defined in a lot of areas, so we plan

8 to go over exactly what we mean by peak oil.

9 Next, oil streams. We do not

10 assume that oil is a homogeneous mixture

11 throughout the world; rather, have very

12 different streams depending on reservoir and

13 hydrocarbon quality. We have also divided

14 our input assumptions and outputs by regions,

15 to really reflect the different production

16 dynamics \-- whether they be economic or

17 political throughout the world.

18 And finally, our input assumptions

19 that are shaped by these.

20 Peak oil we define to be the

21 maximum annual average daily production rate

22 in any particular stream; however, oil can

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1 vary depending on which stream you\'re talking

2 about. Here, we define it through petroleum

3 liquids, which is a mixture of six different

4 streams, again divided by reservoir and

5 hydrocarbon quality.

6 First is crude oil and lease

7 condensates, Natural Gas Plant Liquids (NGPL)

8 extra heavy oil, such as that in the Orinoco

9 belt, bitumens such as that in the Canadian

10 oil sands, oil shale which is really Kerogen

11 but it\'s still grouped in the petroleum

12 liquids here, and crude oil from other source

13 rock which has not yet migrated.

14 Liquids we do not include in

15 petroleum liquids are coal to liquids, gas to

16 liquids, or biofuels.

17 We have also divided input

18 assumptions by regional groupings. Here, we

19 have four regional groupings, the United

20 States being the only country that\'s broken

21 out. Then we have other non-OPEC, OPEC

22 Middle East, and other OPEC. In the

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1 committee members handouts, you will notice

2 that Saudi Arabia is also included in these

3 regional breakouts; however at this point in

4 time, we did not feel it was appropriate to

5 be singling out any other country besides the

6 United States, so that has been removed.

7 Now that we all have a general

8 understanding of how we\'re constructing our

9 assumptions, the actual assumptions for the

10 different groupings of the model, first start

11 off regarding consumption.

12 In this model, we have candidate

13 consumption trajectories. Shaped from the

14 IEO 2007 up to 2040, and from 2030 to 2100,

15 we have them really guided by the Climate

16 Change Science Program reference case

17 scenarios that came out in 2007. And I say

18 candidate consumption trajectories here

19 because it is not assumed that production

20 will actually satisfy these consumption

21 targets, but rather, they simply give us a

22 shape to achieve and see if it\'s feasible or

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1 not.

2 We also have an assumed world oil

3 price. Here we have, again, it based on the

4 IEO 2007, and for those of you who don\'t

5 know, IEO stands for International Energy

6 Outlook, produced by OIF with NEIA. World

7 oil price after 2030 is assumed to be a flat

8 real oil price. Again, this model was really

9 meant to address production volumes rather

10 than production prices.

11 The next assumptions are really

12 dealing specifically with below ground

13 factors. Initial oil in place and recovery

14 factors. You\'ll notice initial oil and place

15 and recovery factor vary both by region and

16 by stream. It should also be noted that the

17 maximum recovery factors here are not the

18 real recovery factors. These maximum

19 recovery factors are assumed to be the

20 maximum technically achievable limit in 2200.

21 We are not stating that they will be achieved

22 in 2200 or in 2100.

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1 These simply give us a limit to the

2 initial in place that we can produce over the

3 time horizon.

4 The next group of assumptions

5 really has to do with the production costs in

6 order to determine the economic achievable

7 limits. Each of these varies both by stream

8 and by region, finding and development costs,

9 lease operating costs, taxes and royalty, and

10 cost of capital. You\'ll also notice that the

11 finding and development costs vary by

12 cumulative production on whatever stream and

13 region it\'s in.

14 These are based on supply curves

15 which we can go over later in the

16 presentation, but really just reflect the

17 increasing difficulty of extracting more and

18 more of a resource from a particular stream.

19 And although these cost and

20 economic assumptions are helpful, we\'re not

21 assuming that all political or

22 non-market-driven factors are removed in the

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1 long-term. In order to reflect

2 non-market-driven factors and really create a

3 more realistic view of the future, we have

4 also incorporated several other assumptions.

5 The first two being that we have assigned

6 maximum production volumes to several

7 streams, one of them being Canadian oil

8 sands, and we\'ve assumed maximum growth rates

9 for other streams such as Venezuelan Orinoco

10 belt production. These are really to reflect

11 either political biases in these particular

12 countries regarding either environment \-- or

13 infrastructure constraints in terms of the

14 growth rates.

15 We have also assumed due to

16 infrastructure constraints that the change in

17 a world total distribution of production in

18 any given year cannot be significantly

19 different from the previous year, so that our

20 mix of production streams coming in does not

21 oscillate drastically in between the

22 different editions.

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1 We have also assumed that

2 technology will continue to improve economic

3 conditions in the future. Due to this, we

4 have a built-in technology index curve which

5 allows us to shift the supply curve from

6 which the finding and development cost is

7 extracted in the future. And this shift

8 occurs as resources are continued to be

9 extracted.

10 This technology curve, although it

11 really reflects improvements, does not deal

12 with the profits. The profits can be turned

13 on or off regardless of whether the

14 technology index is included or not.

15 Although turning the negative profits, which

16 I guess really should be phrased as losses in

17 here, might seem a little counterintuitive,

18 having that turned off allows us to see what

19 is technically achievable rather than what is

20 economically achievable in any particular

21 production stream.

22 We also have another of other model

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1 operation features in here such as number of

2 increments assessed by year. This can also

3 be changed to increase the variety of

4 different production choices. The shape of

5 the supply curve could also be adjusted

6 depending on analyst preference, and

7 production profiles varying by both stream

8 and region can again be adjusted due to

9 analyst preference.

10 As a picture is worth a thousand

11 words, we have several graphs depicting these

12 assumptions, the first of which being the

13 consumption trajectories. Again, these are

14 assumed trajectories, not assumed to be

15 satisfied for production. You\'ll notice that

16 the first two curves here are really two-step

17 functions. The first of which being the IEO

18 2007 low price case and reference case, and

19 the second of which being based off of the

20 CCSP 2007 report. The bottom curve is

21 actually solely based on the CCSP report, and

22 has simply shifted up to account for

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1 differences in the projected and the real

2 2007 production volumes. As the report was

3 based on 2000 production, it\'s projected 2007

4 production was not real, so we simply shifted

5 the whole curve up by that volume.

6 The next graph depicts our real

7 world oil prices flatlined out to the rest of

8 the projection horizon. Now we get into our

9 below ground factors, in particular the

10 initial-in-place volumes varying by both

11 stream and by region. And again, these are

12 rough estimates which we hope the committee

13 will either have feedback on or have

14 suggestions as to how we might improve these.

15 This particular graph depicts the

16 initial-in-place volumes that were presented

17 on the previous table, allowing you to really

18 visually see the distribution that we\'ve

19 assumed in here. Again, these are

20 initial-in-place, not recoverable volumes.

21 The next graph really determines

22 the recoverable volumes being

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1 initial-in-place times recovery factor, and

2 here, the recovery factor is assumed.

3 This is simply a depiction of the

4 technology index curve, which allows us to

5 shift different supply curves due to whatever

6 analyst\'s judgment is in there. Again, these

7 are rough estimates which we look to have

8 your input on.

9 This really is a model schematic

10 allowing you to visualize how these different

11 assumptions get incorporated together to

12 combine either below ground or above ground

13 factors to see whether they can actually meet

14 these candidate consumption trajectories.

15 And to go over the actual model interaction

16 of these factors, John Staub will be

17 presenting that.

18 MR. STAUB: Thank you, Lauren.

19 Can everyone hear me okay back

20 there? Okay. One thing that we want to

21 emphasize is that the model operates in terms

22 of building proved developed reserves, and

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1 these are different than what are often seen

2 in the Oil and Gas Journal, because there\'s a

3 lot of debate about the reserve numbers that

4 are in the Middle East countries, how they

5 were increased in the 1980s and all that, and

6 so what we\'re looking at here is the reserves

7 that have actually had investment to build to

8 capacity so that they can actually produce

9 over a roughly 25-year period in time, and so

10 when we talk about reserves, or approved

11 developed reserves, that\'s what we\'re looking

12 at in the model.

13 And in terms of \-- we start with

14 the candidate demand scenarios, and then we

15 look at how much production capacity is

16 remaining from the previous year and subtract

17 those two numbers to find how much new

18 capacity we need to add in the current year,

19 and then we start looking across supply

20 curves in terms of how much \-- which streams

21 and regions we should use to provide the new

22 capacity, and then we layer in the below

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1 ground constraints in terms of what the

2 initial-in-place estimates are and what the

3 maximum recovery factors are, and also the

4 above ground factors in terms of the OPEC

5 decisions or the Canadian decisions in terms

6 of how much and how quickly they want to open

7 up the oil sands.

8 When the model operates, it\'s a

9 Fortran-based program, so it can quickly loop

10 through almost 200 years on a year-by-year

11 basis through each of the regions and each of

12 the streams. And if you want to look at the

13 model documentation, you can look at the

14 details more later.

15 In terms of \-- on our supply

16 curves, what we want to show here is that the

17 different streams and regions have different

18 costs of finding those resources and

19 developing those resources. So you can think

20 of resource 1 as being Middle East crude oil

21 resource which has a fairly low cost of

22 recovery and finding and development costs,

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1 whereas resource 2 might be the Canadian oil

2 sands, which has much higher development

3 costs. The finding costs are almost

4 essentially zero. And so then what happens

5 in the model is that you first subtract off

6 your cumulative production up to the

7 given \-- the year that you\'re looking at, and

8 then you start comparing the supply curves at

9 that point in terms of how much potential

10 reserve additions you can add in a given

11 year.

12 As Lauren mentioned, we have

13 technology improvements that we can use to

14 adjust those supply curves I showed on the

15 previous slide down and to the right. So

16 right now, we\'ve looked at some of the

17 historical research in terms of how

18 technology improves over time. The 2003

19 National Petroleum Council\'s study on natural

20 gas provided some suggestions about how

21 quickly the costs can change over time, but

22 we\'re looking out a long time into the

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1 future, and there\'s a lot of uncertainty on

2 this in terms of how much they\'ll change, so

3 any thoughts about how we might deal with the

4 uncertainties of the technology improvements

5 would be of great help.

6 This is just another slide looking

7 at the different supply curves\' meaning. But

8 in terms of the production profile, what

9 we\'ve done is we\'ve assumed that when you

10 make a given unit of investment in adding

11 approved developed capacity, you can then

12 produce that capacity over a 25-year period.

13 You can shorten that 25-year period, but you

14 can\'t allow the model to go longer than that.

15 It\'s just the way that it\'s coded.

16 And so what we\'ve assumed is that

17 the bitumen and the shale and the source rock

18 will have a fairly flat production profile

19 over time. You try to optimize the

20 production so that you have a continuous

21 stream of production. That\'s very

22 capital-intensive to build all the processing

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1 equipment, whereas your Gulf of Mexico

2 production \-- deepwater, some of the

3 production in the North Sea, you know, they

4 have five-year production profiles and so if

5 we expanded the model to more regions, more

6 stream-specific issues, we could potentially

7 have production profiles that would decline

8 in five years here, so you\'d have a much

9 higher percentage produced in the first year,

10 second year, et cetera.

11 And so then the model\'s just

12 stacking up all of these production profiles

13 across the regions and the streams. And what

14 we\'re doing is we\'re dividing up the total

15 amount of needed reserves in a given year

16 by \-- generally, we do it by 25 increments,

17 but you can do it up to 100 increments, and

18 so there are many, many of these different

19 production profiles that are getting stacked

20 together.

21 Now we\'re going to take a look at

22 some of the example output. This graph shows

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1 a case of \-- it\'s the whole world\'s

2 production from 1900 to 2200. The gray

3 shaded area is from 2100 to 2200. Then we

4 run the model out to 2200 to look at the real

5 long-term so that we don\'t end up saying, oh,

6 it works well through the end of the horizon

7 and not worry about, well, it might fall off

8 at the end.

9 The solid areas there represent

10 conventional liquid, so that\'s your

11 conventional crude oil, your natural gas

12 plant liquids, and then the shaded areas

13 represent your unconventionals, like your

14 Canadian bitumen and your shale and extra

15 heavy oils.

16 We can look at just the

17 conventional portions of those graphs in a

18 non-stacked version here and begin to think

19 about, do we think that the shape of this

20 curve is an economically rational curve.

21 What you see here is that \-- and just to

22 point out that \-- we\'re right here right now

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1 in 2007, but the top line there is the

2 non-OPEC other, so what we\'ve done here is

3 we\'ve limited the additional growth in terms

4 of the production at a slow growing rate, and

5 then, beginning in about 2050 or something,

6 around there, we\'ve actually put in a forced

7 decline on that curve.

8 And so what we often do in running

9 a model is we\'ll remove all those

10 constraints, let it run, and then if it peaks

11 very sharply, we\'ll come back and add some

12 constraints to let the production come down

13 at a slower rate, partly because we haven\'t

14 fine-tuned the assumptions in terms of how

15 the cost changes when you get to kind of the

16 boundary of how much oil you can actually get

17 out in the very long run, so what percentage

18 of your initial-in-place volumes can you get

19 out, and so that\'s been done on that curve.

20 Similar graph for unconventional

21 petroleum. This graph shows production of

22 your initial-in-place volumes over time, so

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1 you can begin to think about how much have

2 you actually produced by a given point in the

3 model. Same for your unconventional

4 petroleum.

5 Here, we\'re showing the finding and

6 development cost of the last unit added, so I

7 mentioned that we can split the needed

8 reserve additions into 25 or 100 units. And

9 so what it\'s looking at is by stream and

10 region, what\'s the cost of adding that last

11 unit. And you notice, for example, in the

12 brown line, the second line down there, it

13 dips a bit in the initial part and then it

14 goes up, and that\'s partly because the

15 technology improvement factors is pushing

16 costs down more quickly than the models

17 moving up the supply curve in terms of

18 volumes.

19 And that can be seen also on this

20 graph here, for your extra heavy oils, where

21 your technology is pushing down the cost.

22 Here, we can take a look at the

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1 market share across the regions and streams,

2 and the black line shows the total OPEC and

3 we\'ve added some constraints onto the OPEC

4 regions to try to hold their conventional

5 production to about 45 percent, assuming that

6 they think that that might be a profit

7 maximizing approach.

8 Here, this is just strictly looking

9 at the approved developed reserves versus

10 regular reserves, and you can see essentially

11 what the Oil and Gas Journal and other

12 publications, even EIA republishes those

13 numbers on the left side, and then what we do

14 is in the model, we calculate what the

15 implied proved developed reserves are based

16 upon their current production levels, and so

17 then that gives us a starting point for going

18 forward. And it\'s based upon our assumed

19 production profiles for these resources.

20 So I know the committee\'s I think

21 already seen these questions, but what we\'re

22 really looking for help on is thinking about

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1 is, is this even an appropriate way to model

2 long-term oil production, you know, very

3 long-term, and how might we better estimate

4 these recovery factor improvements and how

5 technology improves over time; how might we

6 better estimate the finding and development

7 costs, and should we try to change the shape

8 on the supply curves or not, and what types

9 of sensitivity analysis might we do. Is this

10 a good candidate for doing Monte Carlo

11 estimates on creating probability

12 distributions on these? Not sure even where

13 you might begin on some of these issues in

14 terms of developing probability

15 distributions.

16 I should also mention that \-- I

17 just thought of this \-- on these prices,

18 because people always want to know how did we

19 estimate prices \-- and Lauren showed that we

20 essentially just drew some price curves, and

21 the prices are used in the model to adjust

22 the recovery factors over time. But that\'s a

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1 whole other ball of wax of how do you allow

2 those prices to affect the recovery factors.

3 So I\'ll open it up to the

4 committee.

5 DR. NEERCHAL: Thank you.

6 MR. RASMUSSEN: I\'ll try to speak so

7 that this is picked up back there.

8 This is of interest to me for a

9 whole variety of reasons, one of which is

10 model building, but let me tell you a little

11 story. Many years ago, I was in college, I

12 specialized in something called natural gas

13 technology. I was a chemical engineer,

14 graduated as one. And in natural gas

15 technology, people tried to get us jobs in

16 the gas industry. And I said \-- I\'m not sure

17 I want to go work for the natural gas

18 industry because your production is going to

19 peak long before I get to retirement age.

20 Well, it didn\'t. Okay. So here I

21 am looking at \-- is oil going to peak. This

22 study, I think, is one, important; and two, I

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1 think the group has done a very nice job in

2 presenting a very complex topic to us, as a

3 study that\'s ongoing, and secondly, in

4 creating a rather detailed model here, an

5 analysis. I like what they\'ve done.

6 I do have a whole host of

7 questions, and many of these are ones that

8 the committee \-- the research group may have

9 already looked at \-- so I don\'t understand

10 all the work that you obviously have done.

11 First of all, one of the key things

12 in this model is the reserve production

13 ratio. What percentage of the reserves are

14 you going to produce, particularly on the

15 downward slope after you get to the peak.

16 And the United States was used as the

17 model \-- or the experience of the United

18 States as the model for other countries or

19 other basins or other streams.

20 And I\'m not sure why the United

21 States had that level of \-- I think it was a

22 factor of ten \-- we would always produce

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1 one-tenth of your remaining reserves in a

2 given year.

3 I think that might be because the

4 oil industry has historically figured that

5 the cost of capital was 10 percent, so that\'s

6 the hurdle rate we\'re going to use for many

7 projects, and one day you\'re using that, that

8 implies that you\'re not going to really prove

9 out reserves more than 10 years ahead of

10 where you\'re going to produce.

11 And I\'m not sure if that isn\'t just

12 kind of a relationship from that that came

13 forward with this one in 10 production ratio,

14 and if that\'s the case, would that apply to

15 other countries? That\'s question one.

16 Question two is related to that.

17 You varied the cost of capital by region and

18 by stream, and I\'m not sure the cost of

19 capital should vary by region and by stream,

20 since capital is fungible, at least at the

21 University of Chicago, they always taught us

22 the cost of capital is the cost of capital,

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1 and it doesn\'t make a darn what you\'re going

2 to spend the capital on, it does make a

3 difference as to the risk involved in

4 whatever you spend it on. So therefore, you

5 may have different hurdle rates, but the cost

6 of capital does not vary over projects unless

7 there\'s only some specific kind of funding

8 available to only one specific kind of

9 project.

10 The third comment I have is, the

11 present value analysis, which you people are

12 quite well aware of, really implies the shape

13 of the curves you have, and I have a note to

14 myself that says page 10, if I could ever

15 find page 10, I don\'t know. It\'s on page

16 nine. Yeah, but I\'ve got notes on my page.

17 In the last thing, it says,

18 determine region and stream investment for

19 each increment that maximizes profit. That

20 would be okay if one firm was making the

21 decision, so the firm would look and say,

22 I\'ve got these three streams today and I\'ll

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1 maximize the profits (inaudible) we\'re going

2 to produce form.

3 But we have here many countries and

4 many companies, and so maximizing profit and

5 then electing which stream to pick doesn\'t

6 sound like a rule. Now, I may have this rule

7 interpreted erroneously, and if so, if you\'re

8 doing this stream by stream versus doing it

9 for the aggregate. One of my major concerns

10 is the price. You\'re taking the price as

11 given, and Congress would always argue that

12 the price is part of supply and demand.

13 Well, okay. You have supply that you\'ve been

14 working on, but you\'re taking the demand as

15 given, and you\'re taking the demand as

16 relatively price inelastic. And I think that

17 that is a serious problem for the very long

18 forecasts that you\'re making.

19 In the short run, the argument

20 could be made that the number of cars on the

21 road, the number of trucks, the way we move

22 goods and people from point A to point B,

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1 determines the demand pretty much for liquid

2 hydrocarbons. And I wouldn\'t argue with

3 that, but in the intermediate run, there can

4 be changes.

5 And I think you only have to look

6 at the BTUs per dollar of gross domestic

7 product or the natural gas price forecasts in

8 the annual energy outlook of this year and

9 its usage in industry, how things, even with

10 huge investments in the energy consuming

11 equipment, whether they be electricity

12 generating or heat treating or ammonia

13 production, have affected the consumption of

14 natural gas as the price relative to coal and

15 other sources can change well, say well,

16 okay, I can\'t burn coal in my car or my

17 truck, but you can do other things, and what

18 you\'re really not worried about is moving

19 cars from point A to point B, you\'re

20 interested in moving people and in moving

21 goods and services.

22 And if you can do those with mass

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1 transportation, or you can do them

2 telecommuting or you can ship goods and

3 services in different manners or ship goods

4 in different manners, whether they be water

5 or by train, that may well affect demand. I

6 think you really need to put a demand

7 function into this model to make it

8 appropriate. And the demand function will

9 kick out the price. You might have to take

10 these forecasts price which you are concerned

11 about.

12 The sensitivity analysis I think is

13 a very good idea, and you\'ve done it for some

14 of \-- you\'ve obviously done it when you

15 looked at the various reservoirs and reserve

16 situations. You haven\'t done it for the

17 reserve production ratio, and I think that\'s

18 critical. You might want to play with that.

19 And the other thing is, that the

20 price variance might be an interesting way to

21 look at it. You\'ve got these flat forecasts,

22 you\'ve kind of had to assume those, but you

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1 have a high variance in earlier prices, and

2 if you can\'t make a good price forecast

3 because you can\'t make a good demand

4 forecast, at least you can take the historic

5 variance and put that into a Monte Carlo

6 simulation that you do. And I would say if

7 you\'re going to do Monte Carlo, focus on

8 putting the distribution on the very

9 important things and let the other ones go,

10 because Monte Carlo has been generally

11 (inaudible) I think to generate a bunch of

12 graphs and say the answer is yes, no, and we

13 don\'t know (inaudible) distributions. So try

14 to focus on those.

15 The technology curve, that one \-- I

16 don\'t have an answer, but I can say that I\'ve

17 found in some stuff I did on flat glass

18 production, technological change, was that a

19 logistics curve works very nicely for that if

20 you want some sort of learning curve, but it

21 isn\'t \-- what you\'re facing is in the

22 technology issue here, is slightly different

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1 than say the production of a particular good

2 or service. You\'re trying to get that

3 incremental barrel of oil out of the field or

4 reduce the cost of getting those last million

5 barrels or hundred thousand barrels out of

6 the particular field, and I know this kind of

7 stuff comes in fits and starts.

8 It\'s a discontinuous function. And

9 I know some people who have done a lot of

10 work using electronics and magnetic fields to

11 define where drill pipes are broken and where

12 the oil reservoir is, and that has been

13 really a big increment in enabling you to get

14 more out of a particular oil field. But then

15 I look at things like the development of

16 diesel engines or solar panels, and they\'ve

17 all been rather cumulative over many, many

18 years.

19 Modeling technology \-- generally in

20 our models, we say, well, it\'s a function of

21 time. Time is our \-- technology grows

22 1 percent a year or 10 percent a year,

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1 whatever it is, and so it\'s really just

2 saying that\'s a measure of our increments.

3 We don\'t know how the technology is growing,

4 and historic technological change is not

5 necessarily a precursor to future

6 technological change.

7 The problem is when you use time

8 and say it\'s going to grow 1 percent a year

9 or 10 percent a year, whatever it is, for

10 long, long periods of time, like for 200

11 years in this case, it blows away the model.

12 You can\'t \-- you\'ve got to have some sort of

13 other kind of shift that gets some sort of

14 reasonable results.

15 So again, it\'s a measure of our

16 increments there.

17 I noticed that Saudi Arabia didn\'t

18 get completely erased from some of the graphs

19 because there\'s a dashed line that all of a

20 sudden got broken as Saudi Arabia was taken

21 out. I would argue you should put more

22 countries in rather than take out Saudi

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1 Arabia. It sounded to me like there was a

2 political argument, let\'s not identify Saudi

3 Arabia instead make (inaudible), but it would

4 seem to me that that is the wrong way to go.

5 You really should have country

6 differentiation in these things. And so if

7 you don\'t want to identify Saudi Arabia as

8 Saudi Arabia, you could have major OPEC

9 country as a name or you could have half a

10 dozen other countries in there so that they

11 all (inaudible).

12 One of the things that kind of

13 tried to cut to the chase here, what are the

14 costs if you are wrong with this forecast of

15 when the peak occurs or what kind of decline

16 in oil production will we see. That to me is

17 a major issue. If the costs are not serious,

18 if you\'re off a little bit, then I wouldn\'t

19 worry about putting too much time in that,

20 but estimating those costs is something I\'m

21 not quite sure how to do. And when all is

22 said and done, I guess the question will be,

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1 so what? What are the policy outcomes?

2 The alarmist press thinks peak oil

3 is a serious problem, and they\'re bringing up

4 all these doomsday scenarios. I don\'t think

5 Congress takes those serious, but I\'m not

6 sure, and there have been some very reputable

7 people who have worked on these peak oil

8 issues and have predicted reaching the peak a

9 lot sooner than you do with this current

10 model, or that GAO did or that Guy Caruso did

11 in the talk he gave about three years ago.

12 And I\'m particularly concerned with

13 Colin Campbell\'s argument about peak oil

14 having come and gone already. Colin is an

15 extremely \-- and I\'m not even sure he\'s still

16 alive \-- but Colin is an extremely good

17 economist and modeler and very cognitive in

18 energy. I don\'t know if you\'ve brought him

19 into the fold on this particular problem, but

20 I would certainly try to get his advice and

21 consultation on any further models. He is a

22 name now, but he also has the ability.

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1 So that pretty much ends my

2 comments which are awfully long. I\'m sorry.

3 DR. NEERCHAL: That\'s okay.

4 Thanks. John?

5 DR. WEYANT: Some similarities, maybe

6 a little bit of a different tactic started where

7 it ended up on why this is an important problem

8 in the first place. I think there are

9 conditions under which it is to me, the future

10 really is kind of the next stage if oil peaks

11 and the peak is sharp and there\'s no good

12 substitutes or something like that, we\'ve got a

13 potential problem because of bottleneck

14 constraint, but that need not always be the

15 case, so that actually argues for putting this

16 in NEMS or an international context. So I think

17 I would spend a little bit more time on what the

18 problem is and why it\'s important.

19 Then the rest of my comments, I

20 kind of broke it down into \-- the core of the

21 work, so far as I understand it, is kind of

22 this engineering economy approach to

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1 petroleum and reserves and developed and

2 undeveloped reserves and production. And

3 there\'s some kind of a relationship between

4 that and prices. So talk a little bit about

5 that. And this is, I think, mostly ignorance

6 on my part just clarifying what was done and

7 why, and then I think there are a whole other

8 set of issues \-- many of which Ed has already

9 alluded to \-- having to do with kind of

10 putting that machinery within what you could

11 call a equilibrium or general equilibrium

12 context, where you have two things, both the

13 kind of interplay between prices and

14 quantities that Ed seems interested in doing

15 as opposed to assuming \-- it almost seemed

16 like in parts here, you were assuming both

17 prices and quantities, which seems dangerous.

18 I don\'t know if that\'s true or that

19 (inaudible) or just the way you\'re staging

20 that or putting it in that kind of context,

21 the other thing I\'ll actually I come down

22 even harder towards is putting in some logic

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1 on kind of market structure. This is not

2 necessarily a perfectly competitive market,

3 and I think that\'s \-- it did seem like these

4 constraints and things were partly to mimic

5 physical petroleum geology things, but also

6 partly to get at the incentives on the

7 individual participants in the market.

8 And I would actually just go more

9 in that direction, so for me, at that level

10 where you\'ve got some technical stuff for all

11 the parties, some more than others, and some

12 political constraints, one thing that I

13 always felt was useful to look at \-- not that

14 I\'ve done a lot in this particular

15 sector \-- is the kind of revenue profit

16 implications.

17 I did this paper back in 1980 that

18 said the Saudi Arabians were going to bore

19 off their constrained oil and go back to

20 their assigned quota, because if they kept

21 supporting the then-\$34 a barrel or whatever

22 the heck it was, the problem was they were

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1 going to go to the oil business a few years

2 so they were willing to play the part in

3 supporting a relatively higher price at that

4 time, that they probably weren\'t willing to

5 go completely out of the oil business.

6 And at that point, it looked like

7 that could be for all time, that that wasn\'t

8 necessarily something they do. So I do agree

9 with Ed that therefore, the stakes for these

10 individual countries are important. You

11 would not see the dynamic that I just talked

12 about looking at OPEC Middle East or

13 certainly not OPEC, any bigger, their bigger

14 aggregate, was kind of the Saudi\'s burden at

15 that point in time. I know times change and

16 maybe some other country becomes important.

17 So on the technical stuff, I wasn\'t

18 really clear. I\'m used to this \-- maybe the

19 world has moved beyond this \-- this kind of

20 very squishy USGS resource classification,

21 where you have discovered reserves and as-yet

22 undiscovered reserves on kind of one axis,

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1 and then proven at current, which they

2 defined after many attempts to get them to do

3 so as a crisis in technology is expected to

4 prevail over the next 30 years, and then

5 things that were kind of inferred marginal

6 (inaudible).

7 It looked like the different

8 streams was one attempt to bring some of

9 those down. I know when we first looked at

10 the oil and gas implications which we were

11 told not to make public, from all the climate

12 policy models, it was bifurcated, so there

13 were two main camps on the production side of

14 this. I don\'t even know if we looked at the

15 prices, but one of them basically assumed

16 that you were going to get all the as-yet

17 undiscovered unconventionals ultimately when

18 you needed them kind of in with the regular

19 stuff, and they had no peaks, so you just had

20 discontinuing increases and people kind of

21 ooohed and ahhed.

22 These are people who are showing

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1 results on their own models and they just

2 hadn\'t looked at them before because they

3 were doing optimal carbon prices, taxes, and

4 cost/benefit analysis of carbon constraints.

5 The other group actually had a

6 peaking because they assumed very little,

7 maybe none, I forget exactly, of the stuff

8 that was kind of more speculative actually

9 got into those reserves. So (inaudible) is

10 what\'s the algorithm, and it sounded like

11 really the answer to both these questions are

12 these cost curves, and I\'m not familiar with

13 that kind of cumulative cost curve kind of

14 things, but near as I can tell, which is

15 maybe partial but not very useful information

16 is I was involved in \-- in fact I was asked

17 to coordinate the CCSP exercise and chose not

18 to do so.

19 There are two things I\'ll say about

20 that. One is, despite the way it played out,

21 which was predicted, these were to be very

22 not policy relevant at all, so they assumed

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1 three targets for greenhouse gas

2 concentrations, but in the (inaudible) of

3 that they assumed what is generically known

4 as perfect world among flexibility (phonetic)

5 kind of like a one world community, everybody

6 (inaudible) the little (inaudible) they\'re in

7 is you can get out of the burden sharing or

8 whether developing countries will do anything

9 in the next couple of decades by saying

10 they\'ll just be kind of emissions trading so

11 we\'ll get a target and they can trade against

12 their baseline and the whole world has to

13 come up with the money to pay for that.

14 Number two, I\'m not sure if

15 (inaudible) actually looked at these numbers.

16 Have you shown them these numbers and were

17 they surprised? The actual numbers you get

18 from them? I would \-- based on the

19 experience, I would be careful if you\'re

20 going to go public with this, to actually

21 talk about that. They may have been because

22 this was in fact a big deal, they may have

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1 actually published or \--

2 MR. STAUB: They are published.

3 DR. WEYANT: So they\'re just out

4 there.

5 MR. STAUB: They are. Yes.

6 DR. WEYANT: It would be interesting

7 to see how strongly they\'re willing to stand by

8 any of those, and you might not care because

9 you\'re just shaking \-- okay, on the general

10 equilibrium, the first thing you\'ll find \-- the

11 reduction I think you\'ll get from economists is

12 the blatant \-- maybe appropriate \-- but blatant

13 violation of the Hotelling rule, which says that

14 if you look at the difference between the market

15 price and the cost of lifting the oil, that the

16 return on that investment should be equal to the

17 same famous University of Chicago rate of return

18 on capital, elsewise you neither keep everything

19 in the ground or produce everything immediately.

20 I think you know this.

21 So you look at the pushback and

22 usually I say, well, that kind of guides

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1 things sometime someplace and you\'re in

2 trouble if it goes for too long and the

3 people actually operate that way, make sense,

4 but having a fine price is kind of a

5 dangerous thing, I think, if you want to

6 avoid those kinds of critiques.

7 Moreover, I do agree with this kind

8 of price, that it might be a good idea to in

9 some variants just experiment with a price

10 elasticity or two just to see what kind of

11 price dynamics you do get. I \-- again, I\'m

12 not sure why you\'re trying to hit the \-- it

13 seemed like at times you were trying to hit

14 the prices and hit the quantities. It just

15 seems like a hard job. You know, it may be

16 useful, maybe that kind of shakes out various

17 kinds of insights, but I think the two

18 probably work together.

19 And the final thing in that area

20 is \-- actually, I started on this as the

21 logic of the constraints, which to me

22 probably is based in part on pure politics

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1 and sticking it to oil consumers or other oil

2 producers or whatever, but at the end of the

3 day, I do think the revenue implications are

4 kind of an important thing to either just

5 report those and say, oh, looks like a bad

6 deal or a good deal for the Saudis, or do

7 some kind of a monopoly price or oligopoly or

8 a competitive (inaudible) fringe producer

9 thing.

10 And again, I wouldn\'t get too

11 deeply into that, but I think some simple

12 calculations one could do would be somewhat

13 useful, starting with just what are the

14 revenue implications. You know, a big shock

15 in the kind of thing when people hear about

16 emissions trading, really hard constraints

17 with emissions trading, so it\'s like you\'ve

18 got really good environmental outcome and you

19 have trading people starting looking at the

20 revenue transference required and that shed a

21 whole new light on that whole debate, you

22 would be in the position of going \-- if you

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1 were in the U.S. \-- before the U.S. Congress

2 and saying, no, by the way, for the good of

3 mankind, we\'re going to be transferring

4 hundreds of millions to billions of dollars a

5 year to people in China and India.

6 As wise a policy as that might be,

7 you could just imagine the debate that would

8 be \-- it\'s a little bit different, but would

9 people really follow these prices or

10 quantities if the revenue implications were

11 this way, and even they would wink, wink, and

12 say, just we\'re really making out pretty well

13 here.

14 These also might be areas where you

15 could do sensitivities, and then I\'ll end

16 with that I would pass on Saudis and maybe a

17 small Saudi group or Gulf producers or

18 something like that. I just think it\'s

19 politically relevant and economically

20 distinct in some ways, partly because if you

21 go back to this Hotelling logic, they have

22 this big gap between the lifting cost and the

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1 marketplace, it\'s not as pronounced \-- the

2 gap isn\'t as pronounced as the rest of the

3 world.

4 And finally on the technology

5 progress top (inaudible) problem, I would

6 just do sensitivities, but I might add some

7 structural elements to that. I\'m reminded of

8 the evolution of discovering process

9 modeling. You know, the old Kaufman log

10 normal, log normal, so the Kaufman start on

11 the uncertainty of petroleum economics was to

12 have play, which is \-- I could never \-- Glen

13 probably could define this for me, I can\'t \--

14 but it\'s kind of an area where there\'s known

15 to be oil, so there\'s a log normal

16 distribution on the number of pools and then

17 a log normal amount in each pool.

18 So there are a bunch of people that

19 worked on kind of a follow-on to that which

20 is very oil industry-specific but

21 interesting, and that is given the drilling

22 history in a particular plain, and the

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1 returns to that effort, what is the kind of

2 distribution of remaining reserves to be

3 found in that plain. This is a much more

4 micro than even you\'re looking at here. And

5 the big problem they had when they just did

6 the log normal, log normal distribution is

7 extremely wide, so you can have a pretty good

8 estimate of how much you were going to find

9 after you\'ve already found the 85 or

10 90 percent.

11 But then people used a minimal, a

12 really minimal geological information and

13 say, well, it\'s really not log normal, we

14 have geological experts and they\'re worth a

15 lot of money, so we just truncate the

16 distribution according to some petroleum

17 geology logic \-- not either economics or very

18 hard drilling (inaudible) constraints, and it

19 turns out that \-- I forget the name for those

20 distributions, somebody here probably

21 knows \-- that enabled you to after a 15 or

22 20 percent of the drilling history, to have a

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1 pretty precise estimate of how much you were

2 going to find.

3 So the analogy here might be \-- the

4 ends way of putting this if you do Monte

5 Carlo you\'re going to get an anything is

6 possible. Maybe not updated production of

7 something, there may be some limits, but

8 there may be some kind of geological logic

9 from the people who do that kind of thing,

10 but we\'ve put just enough of a bound on those

11 things that it would reign in the

12 distribution to the point where it could be

13 more useful.

14 I think that\'s all I have.

15 DR. KOKKELENBERG: Not so much on

16 yours, but just building a little bit more. One

17 is that you asked about negative profits, and

18 the answer is that if you\'re looking at this

19 year-by-year, you know, you\'re definitely going

20 to have a lot of negative profits, because

21 people will be looking at the project life, or

22 at least some reasonable length of time when

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1 they make a decision about investment, and

2 therefore negative profits may be the situation

3 at least \-- they hope \-- temporarily. And so

4 when you mentioned negative oil production, the

5 negative oil production isn\'t a bad idea either

6 for some fields, because you might want to \--

7 DR. WEYANT: Repressure.

8 DR. KOKKELENBERG: Repressure it or

9 store it like we store natural gas.

10 Then another thing you kept \-- you

11 mentioned engineering, because you did a lot

12 of this work. Have you looked at linear

13 programming for this particular problem?

14 MR. SWEETNAM: It\'s an optimization

15 program. But I mean \--

16 DR. KOKKELENBERG: I know, but I mean

17 in terms of linear programming, I mean, you\'ve

18 got all these constraints \-- different fields,

19 different streams, different API numbers \-- I

20 don\'t know if this would be more amenable \-- or

21 at least you might get some insights from taking

22 some linear programming approaches to find out

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1 what the effective constraints are really on a

2 particular field or on a particular model, and

3 then exploring those with your sensitivity

4 analysis. Use it as a learning tool for

5 yourself rather than to \-- okay.

6 MR. SWEETNAM: Fine. So I guess I

7 don\'t know if this is appropriate to respond \--

8 DR. NEERCHAL: Sure. I just want to

9 ask if there are any other comments from the

10 committee members here.

11 MR. TOMAN: Can I ask a couple of

12 questions first? You mentioned at the start

13 that this was \-- I don\'t remember the words you

14 used, a candidate consumption task that might

15 not necessarily be satisfied. What do you know

16 from the runs you\'ve done so far on the

17 situations in which the implied production

18 doesn\'t satisfy the candidate we have?

19 MR. SWEETNAM: So I guess \--

20 MR. TOMAN: Does that happen often or

21 only under certain conditions?

22 MR. SWEETNAM: I guess this gets into

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1 this whole issue of us not building an

2 equilibrium model. In other words, we did pick

3 the consumption in price. Would you put

4 in \-- this is the consumption scenario, and this

5 is the price we assumed. Now, can you lift your

6 assumed capital cost for adding new productive

7 capacity? Can you meet it or how is it met? So

8 what we find is that in the intermediate case

9 that she showed and that John and Lauren showed,

10 we can meet it fairly easily as long as we

11 didn\'t have above-ground constraints on

12 investment in new capacity.

13 I think \-- I guess one of the

14 things that I was most concerned about was

15 your reference, Ed, to R/P ratios, because we

16 don\'t have R/P ratios, and it really was \--

17 DR. KOKKELENBERG: I guess I might

18 have picked that up on something else.

19 MR. SWEETNAM: I think you may have,

20 and that\'s what concerns me \--

21 DR. KOKKELENBERG: I\'m sorry.

22 MR. SWEETNAM: It\'s just \-- it makes

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1 me realize we\'ve still got a lot of explaining

2 to do.

3 DR. KOKKELENBERG: I\'ve read a lot and

4 I apologize. On some earlier work, in fact, I

5 think Guy Caruso said that \--

6 MR. SWEETNAM: Yes, it did, and that

7 was one of the reasons, and hopefully over the

8 next couple months as we produce our papers, it

9 will be clearer, but what we\'ve done is said

10 there\'s a lot of confusion about reserves and

11 because the R-to-P ratios vary so much around

12 the world, they\'re not very helpful for

13 predicting future oil production.

14 And so really what we did is go all

15 the way back and say how much oil is in place

16 in the ground, and then what do we think the

17 recovery factor ultimately could be, and then

18 how much capital does it take to turn that

19 resource into the ground into a producing

20 well. And so that\'s what this model does, is

21 it schedules the capital investments in

22 production capacity.

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1 So those supply curves you see are

2 what\'s called in the industry the finding and

3 development. All companies in industry for

4 (inaudible) I\'ve spent this much capacity

5 capital, and I got this much reserve. And

6 once reserves are found, they\'re generally

7 produced. Nowhere except Saudi Arabia,

8 essentially, has reserves that are ready to

9 produce that they aren\'t producing.

10 So in this model, we just invest

11 the capital when it\'s needed, so the question

12 is when is it needed? So we put in this

13 demand trajectory, demand path, and said

14 let\'s schedule the lowest cost incremental

15 capacity first. And so I think that that\'s

16 fairly basic economics in a competitive

17 market \-- the prices would go up and down so

18 that the lowest cost was produced first.

19 Then we of course did have constraints. Like

20 we say, well, we know OPEC has the lowest

21 costs, but they\'re choosing not to produce

22 first, so in our scenarios, we relied on

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1 Dermont-Gately\'s idea of a constant market

2 share, so we kept OPEC as a constant market

3 share, then we say, now you look at all the

4 conventional, all the unconventional, all the

5 different streams, let\'s produce the lowest

6 capacity first. When you invest the capital,

7 then you produce it out. For the

8 unconventionals it\'s a very flat production

9 capital. For the conventionals, especially

10 deepwater, it\'s a very steep production

11 capital.

12 And so we do look forward. We look

13 and say, now, for the next 25 years, what\'s

14 the most profitable to produce, because we

15 can\'t just look at the lowest cost, because

16 some countries have high taxation. So we

17 look at what\'s the most profitable to do

18 first, and then you have to look out 25 years

19 to know what the price is, we know how much

20 production we need, let\'s add the most

21 profitable capacity first. And so when we

22 look at this, then of course because we don\'t

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1 allow demand to vary, we don\'t allow price to

2 vary, we get that at some point, you can\'t

3 profitably meet demand.

4 And so then you\'ll see on those

5 curves, that\'s where the supply and demand

6 start to separate. And of course, as an

7 economist, I\'d have my license taken away

8 because supply always equals demand, but in

9 this case, I\'ve artificially said this is

10 demand, this is price, what happens? And

11 what we\'re trying to do is schedule the most

12 profitable production first, and then at some

13 point, we can\'t profitably meet demand.

14 And that\'s getting to this issue of

15 when do we hit the peak, when do we have a

16 problem. And so then you focus on these real

17 issues of how much is does it cost to add

18 capacity, how much does technology affect

19 that cost, how much does technology affect

20 recovery factor? So that\'s really the

21 purpose of this model.

22 Do you have couple more \--

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1 MR. TOMAN: You\'ve partly answered the

2 second question, Glen, which is the above-ground

3 constraints. You\'ve suggested that so far, at

4 least, you\'re not having a peak oil problem in

5 John\'s sense unless those are pretty

6 significantly binding constraints.

7 MR. SWEETNAM: Right, and so I\'m

8 sorry, so if we do have a case where we say

9 Venezuela will not expand their heavy oil,

10 Canada is constrained to only 6 million barrels

11 a day, and OPEC says we\'re only going to produce

12 35 million barrels a day. That\'s it. And in

13 that case, by 2020, we\'re in trouble.

14 MR. TOMAN: In Lauren\'s presentation

15 there was also discussion of some of the

16 stabilizing factors that are put in to prevent

17 different shares from oscillating a lot, and

18 constraints of this type. Do you have a sense

19 yet from different model rungs how important

20 those are as guardrails? Are they merely

21 stabilizing because you haven\'t written a 10,000

22 page model? Are they actually affecting the

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1 trends in some material way but you\'ve got to

2 live with that because you need the model to

3 work?

4 MR. STAUB: I can answer that. The

5 rungs you see here \-- they may have some, but

6 the ones we showed on Monday don\'t have any of

7 those factors in them. As we\'ve experimented

8 with the model and understood better in terms of

9 the price curves that we\'re putting in, we\'ve

10 been able to move away from having (inaudible)

11 curves.

12 MR. SWEETNAM: Because we had this

13 idea that there was an inertia that the industry

14 was working in an area we might want to keep the

15 industry investing in an area, we\'ve actually

16 relaxed those constraints.

17 MR. TOMAN: Okay, good. It seems to

18 me \-- let me just make a couple of short

19 comments based on that. It seems to me there

20 would be two ways you could go \-- I think a

21 simpler way, if I followed what you were trying

22 to accomplish, which is not a market projection,

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1 but a test of the conditions under which a peak

2 oil problem occurs, could be to simply forecast

3 more combinations of price and consumption

4 trajectories. You could look at price paths

5 that go up a fraction per year until they tail

6 out or something like that. There\'s presumably

7 some very parsimonious ways to set up thousands

8 of those combined scenarios to just get more

9 insight into those conditions.

10 The other way, which seems very

11 strongly implied by that price chart, would

12 be to \-- and I\'m not suggesting you should do

13 this, but I can easily imagine somebody

14 looking at the chart and saying, ah, those

15 must be three different cost levels for a

16 backstop technology. You know, if you really

17 thought you could get either coal to liquids

18 or cellulosic ethanol at those prices, then

19 basically in some sense, you get an

20 equilibrium because the backstop\'s soaking up

21 all the excess demand.

22 But since your purpose isn\'t to try

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1 to produce a market equilibrium analysis

2 here, maybe you\'d want to take that first

3 route, and then whatever insights come out of

4 that could be embedded in the new generation

5 of NEMS to try to have more supply constraint

6 capacity in what you already have as an

7 economic equilibrium model.

8 Is that kind of where you\'re trying

9 to go with this?

10 MR. SWEETNAM: The ideas that we would

11 put in our international models, if we put

12 something like this in, and part of the insight,

13 of course, we\'re trying to get is where does the

14 oil come from. And then what are the affects of

15 above the ground or political constraints? What

16 is the effect on revenues and the type of fuels

17 that are used and prices of the constraints such

18 as Venezuela or OPEC.

19 MR. TOMAN: I\'m not an expert in the

20 methodologies for these sensitivity analyses,

21 but if you looked at some ranges of original oil

22 in place figures or recovery factors plus some

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1 of these demand in price combinations and did

2 some sort of a sampling approach, it shouldn\'t

3 be so hard to be able to pull out the conditions

4 under which you\'ve seen greater or lesser

5 occurrence of this kind of hard constraint

6 problem that\'s drawing all the fear in the press

7 these days. Presumably that\'s the kind of

8 answer for now at least that you\'re trying to

9 drive toward. When does this really happen?

10 What do we need to be worried about?

11 MR. SWEETNAM: Thank you very much.

12 DR. NEERCHAL: Any other comments

13 specific to this presentation?

14 DR. HILL: It looks like you don\'t get

15 a peak until after 2100. I\'m surprised that we

16 have such a flat curve. I\'m looking at this

17 diagram on page 23. I\'m actually quite

18 struck \-- that there\'s a flat price assumption

19 which I don\'t think I believe. That\'s

20 (inaudible).

21 MR. SWEETNAM: Yes. And I\'m going to

22 have to think back on the Hotelling because of

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1 course I grew up in the Hotelling way of

2 modeling all this, but it\'s just been extremely

3 un-useful, Hotelling, for estimating the gas

4 prices or oil prices. It\'s just not that useful

5 at all.

6 DR. WEYANT: I\'m not sure I would do

7 that critique. I said people would do that.

8 DR. KOKKELENBERG: What John was

9 talking about was essentially about the

10 producing rather than the prices, and I agree

11 with you on the prices. Hotelling seems to have

12 been essentially a theory that\'s been disproven

13 by price \--

14 MR. SWEETNAM: Or other conditions \--

15 DR. WEYANT: If everything was

16 completely stable, it\'s a great rule.

17 Everything\'s not completely stable, so you can\'t

18 actually do anything \--

19 DR. KOKKELENBERG: But on the argument

20 of looking at the interest rates and the

21 production, it\'s really true.

22 MR. SWEETNAM: Right.

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1 DR. KOKKELENBERG: You do have

2 political constraints in OPEC that says 35

3 million barrels a day or whatever, because, you

4 know, as John pointed out, their cost of lifting

5 that oil is so low compared to the market, it\'s

6 a wonder they don\'t just say we\'re going to

7 produce everything right now. We\'ll produce as

8 much as the world can handle.

9 MR. SWEETNAM: And put the money in

10 the bank.

11 DR. KOKKELENBERG: Yeah. Well, they

12 haven\'t done that yet.

13 SPEAKER: I don\'t think they\'re going

14 to do it.

15 DR. WEYANT: So I guess our sense is

16 this sounds like a great kernel for a model, and

17 you probably already have some ideas about how

18 to sync it up with other simple cuts or putting

19 it in the other model system, it\'s just a matter

20 of thinking about what the next best step is.

21 DR. NEERCHAL: John?

22 MR. WOOD: They produce it all

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1 now \-- that lowers the income. In December of

2 1998, the world \-- or the U.S. price of oil was

3 \$8 a barrel and it does not take but a few

4 million barrels to move the price \$30 or \$50 a

5 barrel, and therefore, the price we\'re looking

6 at now has no particular relationship to the

7 cost of finding, developing, and producing oil.

8 It is a manifestation of market

9 power and a little uncertainty in the world.

10 And so that\'s kind of one of the things that

11 drove this approach. Here are some demand

12 paths. And they have desired production

13 levels, and they have some prices associated

14 with it. How long can we meet that and under

15 what conditions? And after you\'ve done that,

16 then you could go ahead and then construct

17 the price curves. But the fundamental thing

18 is that there\'s nothing in the production

19 cost and finding oil that requires a \$75 or

20 \$100 price. It doesn\'t require, in my

21 opinion, even a \$50 a barrel price.

22 So the fact that you\'re looking at

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1 \$100 is interesting, but the structure of

2 this model was to set out a set of demand

3 paths and then see if those demand paths

4 could be met, and for how long they could be

5 met. And that is an awful lot of important

6 information if they get stuck.

7 DR. NEERCHAL: Thank you. I would

8 like to invite the public for any comments on

9 this presentation or any of the presentations of

10 the morning session.

11 DR. WEYANT: Unfortunately, I have to

12 turn into a pumpkin. Sorry about that.

13 DR. NEERCHAL: Now we are down for

14 lunch. I think lunch is downstairs the second

15 floor, directly below this room. Correct?

16 (Whereupon, at approximately

17 12:45 p.m., a luncheon recess was

18 taken.)

19

20

21

22

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1 A F T E R N O O N S E S S I O N

2 (1:53 p.m.)

3 DR. NEERCHAL: I think we will get

4 started. So we have Colleen and Nicholas on web

5 customer surveys.

6 MS. BLESSING: I\'m really happy and

7 excited today to be presenting the results from

8 our most recent customer survey and then

9 Nicholas will follow me and show some of the new

10 things that we have on our website. The very

11 first thing that I wanted to talk about, and I\'m

12 sorry that John\'s already gone, in the last

13 session, John said there might be a question for

14 a customer survey you might want to ask, like

15 what does EIA mean to you. So that\'s going to

16 be the request that I\'m going to give to the

17 committee \-- and everybody in the audience,

18 actually, everyone in EIA.

19 First of all, I\'m going to ask for

20 comments on the survey that we did do in

21 2007, but more important to me is, I\'m

22 looking for suggestions for questions that we

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1 can ask on our upcoming survey in summer of

2 2008. So as you see the questions I\'m

3 stepping through, I\'m hoping that you say,

4 well that\'s nice that they know that, but now

5 they can ask a different question and you can

6 tell me.

7 I\'ve already got a list of 25

8 questions given to me by EIA staff on

9 possible new questions to ask on the 2008

10 survey, so I\'m trying to generate a long list

11 of possible new questions. So think about

12 that when I\'m going through my slides.

13 Okay, why do we do a customer

14 survey? Well, we want to learn who our

15 customers are, how often they come to our

16 site, what they\'re looking for, how satisfied

17 they are with the information, and what else

18 they would like us to do. It\'s important to

19 me to get up-to-the-minute customer

20 responses. Ten years ago, when we did

21 surveying, our customers said, we still want

22 the report in paper. Well, they\'re not

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1 saying that anymore. Five years ago, they

2 said, your search engine doesn\'t work very

3 well, or they said it in worse language than

4 that. They\'re not saying that anymore. So

5 it\'s not good enough to do a survey every

6 three or four or five years. I like to do a

7 survey every year, because customer feedback

8 changes.

9 We want to identify areas for

10 improvement, and some of the areas that we\'ve

11 identified, we\'re already doing work on and

12 I\'ll touch on that briefly, and then we need

13 to collect performance information. There\'s

14 one standard question that we ask every year,

15 and I\'ll identify that when we come to it.

16 Our goals are to collect

17 \"actionable\" information, and one of my SMG

18 reviewers said that he thought \"actionable\"

19 was a bureaucratic word, and it probably is,

20 but to me it means that you\'re not just

21 collecting information from your customers

22 because it\'s nice to know, but that once you

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1 have the information, you\'re able to develop

2 new products or make changes or change the

3 navigation to react to that or to respond to

4 the feedback.

5 We really wanted to have a high

6 response rate, and in order to do that, I

7 think one of the things is to keep the survey

8 short. And that goes to the next bullet is,

9 I don\'t like to annoy customers with our

10 customer surveys. You know sometimes when

11 you\'re working on a site and you\'re deep in

12 the data, something comes up in your

13 face \-- yes, yes, Moshe is saying yes \-- you

14 know, and it\'s probably the American Customer

15 Satisfaction Index survey, and I\'ve said this

16 to ASA before, my first click is \"close,\"

17 stop bothering me.

18 So I like to have the survey be

19 short and not pop up right when people are

20 working, but at the end.

21 And for this survey that we did in

22 the summer of 2007, we collected mostly

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1 customer satisfaction information, but also

2 there\'s one market research question that

3 I\'ll identify when we get there.

4 Because our website, depending upon

5 who you ask, has maybe 200,000 pages and the

6 survey needs to be tagged to each page, the

7 survey can\'t be attached to each page, so

8 what EIA did is we wanted to catch the users

9 who touched certain specific pages. Those

10 were identified as the home page, most of the

11 level two pages, which are one link from the

12 homepage, and then we identified five or six

13 of the main products, major products from

14 EIA, and we put the survey tag on those

15 pages. So the customer comes in, they\'re

16 doing their work, they get their data, they

17 maybe go to a different site even, they close

18 their browser, and once they close their

19 browser, then the survey itself popped up.

20 When I presented to ASA the last

21 time, what I said was that an invitation to

22 the survey popped up, put the survey is so

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1 short and it\'s \-- we thought it was not

2 intimidating-looking, so we thought if they

3 just saw the survey, they might say, oh, darn

4 it, a survey, oh well, it\'s short, it\'s EIA,

5 I love them, I\'ll take it. I think that\'s

6 what happened.

7 Then the responses flowed into a

8 database, and we aren\'t allowed \-- the

9 government, except for in \-- I used to say we

10 can\'t use cookies, but then some people say,

11 in extreme circumstances, you can beg OMB and

12 you can use cookies, so except for in extreme

13 circumstances, we can\'t cookie the people

14 that come to our sites. So if Nicholas were

15 to come to the site today and then he comes

16 tomorrow and then he comes the next day,

17 every time he closes his browser, the survey

18 is offered to him again. So it is possible

19 that someone could take the survey more than

20 once. I don\'t know why they would want to do

21 that and I don\'t think that people are

22 stuffing the ballot box, but I just wanted to

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1 let you know that it is possible for multiple

2 invitations.

3 Usually when I\'ve done the survey

4 this way for several years, the only people I

5 usually get complaints from are from internal

6 people, EIA people who say, get this survey

7 off, and I just usually say \-- do you have a

8 question?

9 DR. NEERCHAL: But isn\'t it possible

10 for you to ask the question, have you taken this

11 survey before?

12 MS. BLESSING: Yes. We could do that.

13 DR. FORSYTH: It would put it up to

14 nine questions.

15 MS. BLESSING: But I think that if

16 you\'ve taken the survey before, I would hope

17 that they would just, instead of clicking yes,

18 they would close, they would just close. That\'s

19 what I\'m hoping for.

20 There were a couple of customers

21 this time in the open-ended text box who

22 said, don\'t you know there\'s a way around

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1 this? You know who came to your site. Stop

2 offering it to me again. And they didn\'t

3 realize the no cookie rule for us.

4 Our goal for 2007 was to replicate

5 the results. In 2006, we were very proud of

6 the fact that we got 4,800 responses in three

7 weeks for our survey.

8 We spent quite a bit of time

9 discussing which questions we were going to

10 ask in 2007. We had a fairly long list of

11 possible ideas, and we ended up adding three

12 questions. There were five questions on the

13 2006 survey, and we decided to go with eight

14 questions for 2007.

15 This is just a screen shot \-- so

16 there were eight questions, and you can

17 already see five of them. This is what would

18 pop up on your user screen when they closed

19 their browser, and I just wanted to show you.

20 If by any chance anyone wants to go to this

21 survey, the link to the survey is at the top

22 of the slide page.

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1 The questions that we asked this

2 time were: What category best describes you

3 or your organization? So are they government

4 or business and industry, academia, private

5 citizen, media? How often do you visit EIA\'s

6 site? Do you live in the United States? And

7 that was just a yes/no answer. Rate your

8 satisfaction with the quality of the

9 information on the site. And that was on a

10 1-to-10 scale. Then the three questions that

11 were new this time were numbers five, six,

12 and seven, the ones with the stars.

13 We asked what information were you

14 looking for? And the answers were entered

15 into a text box. There was some discussion

16 about pre-populating that question with

17 answers so that the user could just check the

18 box, but there are several problems with

19 that. One is if you had a manageable number

20 of pre-populated answers, it would probably

21 be oil and gas information, coal information,

22 electricity information. If I just saw that

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1 people were looking for oil and gas

2 information and then they said they didn\'t

3 find it, I don\'t know what they\'re looking

4 for. Also, I want to see what people are

5 saying they\'re looking for. I don\'t want

6 them to check my boxes with my terms, I want

7 to see what terms they\'re using. That\'s been

8 very helpful for us to see \-- to update the

9 A-to-Z index \-- and will be helpful I think

10 in updating the glossary to hear the terms

11 that real customers use rather than the terms

12 that we use.

13 So we asked: what were you looking

14 for? Did you find it? Number seven is our

15 market research question, and we didn\'t want

16 to ask a question that might raise

17 expectations, something like: would you like

18 EIA to have wikis and blogs and

19 podcasts \-- because then since everything is

20 free for citizens, what are they going to

21 say? No, don\'t do that. They\'d go, yes,

22 yes, yes, yes, yes. And then they\'d probably

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1 think, ohh, EIA\'s planning on releasing this

2 soon. Which we were not. We just wanted to

3 know. So the way we phrased the question is:

4 which technologies do you use anywhere on the

5 internet? So we just wanted to see their

6 familiarity with those technologies.

7 We asked about blogs, wikis, RSS,

8 podcasts, and videocasts.

9 And then the last question, which

10 is my favorite is: Is there anything else you

11 want to tell us? And that was an open-ended

12 text box. We fielded this survey last summer

13 from July 16th to August 6th. That was

14 probably almost to the minute three weeks.

15 So we got working days and Saturdays and

16 Sundays.

17 Before we did any of the

18 tabulations or the pie charts, we edited out

19 employee responses, which were only a few,

20 nonsense responses, and profane responses.

21 We went through \-- and some people think it\'s

22 funny to, I don\'t know, to say bad words.

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1 And it\'s not that they\'re saying them to us,

2 they just have goofy responses, students

3 especially, so we take those out.

4 My favorite nonsense response in

5 response to the question \"anything else you

6 want to tell us?\" Is \"Is the beer cold yet?\"

7 I don\'t know. So I took that person out.

8 Now, the statistics and methods

9 group wanted me to be clear with everybody

10 that I present this to, that because this was

11 the pop on your screen, it\'s not a random

12 sample, that the participants obviously are

13 self-selecting, so it\'s not a true

14 statistical sample. But statistics and

15 methods group said I could say that the data,

16 even though they\'re anecdotal, they are very

17 useful to support hypotheses we already have.

18 And I kind of like to characterize

19 that in laymen\'s terms, it\'s kind of the

20 power of large numbers. If you get 5,000

21 responses from customers, let\'s say they all

22 say the same thing, it\'s really hard to say,

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1 well that\'s not statistically significant. I

2 mean, if they all say the same thing, it\'s a

3 powerful response. So that\'s kind of my

4 disclosure, you know?

5 So let\'s go to the results. I\'ll

6 just quickly run through these. They\'re

7 pretty easy to read pie charts. This is

8 the \-- I call it the customer wheel. It\'s

9 remained relatively the same since 1994 when

10 I started doing surveys here. Business and

11 industry is our biggest category of

12 customers, and then followed by significant

13 slices of citizen, research and consulting,

14 finance, academia and government, so we do

15 have a very broad spectrum of customers. The

16 media slice at 2 percent is fairly small, but

17 two things, I don\'t the media \-- they\'re

18 always on deadline, they don\'t have a lot of

19 time to be answering these little customer

20 surveys, and also, the media is a multiplier,

21 so if I get one Wall Street Journal writer,

22 he might reach two million people if he

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1 writes an article. So that slice \-- the real

2 slice of who that person reaches is larger

3 than 2 percent.

4 How often do you visit EIA\'s site?

5 The biggest chunk by far is weekly. Half of

6 the people say they come weekly. Eight

7 percent daily, 14 percent monthly, and

8 probably the most interesting slice for me is

9 the gray slice, on the left, the first time

10 people 17 percent. I\'m kind of rounding that

11 to one in five. One in five people coming to

12 our site at any given time have never been to

13 our site before.

14 Do you live in the United States?

15 Sixty nine percent said yes and 31 percent

16 said no. If people remember the presentation

17 that I think I did a year, a year and a half

18 ago about our survey, I asked this question

19 on the 2006 survey and we got, I think, 66

20 said United States and 34 said international.

21 I wanted to ask it one more time just to make

22 sure, because this is a really interesting

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1 result and I wanted to make sure that that

2 was correct, and I think that it\'s truly

3 reflecting what\'s going on out there. This

4 is third time that we\'ve actually asked this

5 question. So this is definitely question I\'m

6 thinking about not asking this year, because

7 we know this answer, at least for now.

8 How satisfied \-- the question here

9 was, how satisfied are you with the quality

10 of the information on the website on a

11 1-to-10 scale. If they answered a 6, 7, 8, 9

12 or 10, we said that they were satisfied or

13 very satisfied. We came up with a 91 percent

14 satisfied or very satisfied, which is

15 important to us because our OMB performance

16 measure is that we have 90 percent satisfied

17 or very satisfied, otherwise EIA gets a

18 yellow light or a red light in the red

19 light-green light system, so the 91 got us

20 the green light. That\'s kind of one of the

21 reasons that I use a 10 point scale for

22 satisfaction. I\'d prefer a 5 point scale,

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1 but 10 point scale gives them more chances to

2 give us a 6, 7, 8, 9, or 10.

3 Did you find what you were looking

4 for? Okay, 56 percent said yes, they did,

5 easily. Twenty-one percent said yes, but it

6 wasn\'t that easy and 14 percent said partly,

7 but if you add up the yes, easily, yes with

8 effort, and partly, you get like 90 percent.

9 So I showed this to somebody a week or so ago

10 and they said, that\'s pretty good, actually

11 that 90 percent said they either found what

12 they were looking for or they came close.

13 And only 6 percent said no, that they didn\'t

14 find what they were looking for. So I think

15 this is a positive result, but obviously

16 still a lot of area for improvement.

17 So here\'s where we asked about

18 their familiarity with the technologies, and

19 wikis was the one that they said most that

20 they were familiar with or had used, and then

21 going down, videocasts and podcasts were the

22 lowest, although we\'re suspicious that wikis

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1 might have won because people might have

2 thought that if they read Wikipedia, that

3 they\'ve used a wiki, and they might have

4 voted for that and that\'s not exactly the

5 same thing. Anyway, this might be another

6 area for new questions this year.

7 I\'ll just summarize \-- anything

8 else you want to tell us, there were

9 thousands of responses, so I read through and

10 I come up with the themes for what the

11 responses are. The overall, by far, number

12 one comment was a kudo to EIA, there are

13 nearly 400 compliments like, thank you, keep

14 up the good work, invaluable research tool,

15 you guys are great. I mean, on and on and on

16 and on and on.

17 And this kind of speaks to what

18 John and maybe others were saying in the

19 morning session \-- and I know Guy knows it.

20 Guy says everywhere he goes, people say, I

21 love you, I love you. On this survey, people

22 say, we love you, we couldn\'t do our job

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1 without you, best use of taxpayer dollars. I

2 don\'t know exactly how to translate that into

3 some way that I could communicate to Congress

4 to try to get more money, and you kind of

5 want to say there are a number of

6 people \-- I\'m jumping ahead a little bit \--

7 but there are a number of people, probably

8 25, who say, don\'t get your budget cut.

9 You should get more money. And I\'m

10 thinking \-- you\'re telling me this? But I

11 can\'t e-mail back and say, could you just

12 write Domenici? So I don\'t know how to make

13 that work for us, but I know from these

14 surveys that lots and lots of customers love

15 us and rely on us.

16 On navigation, we used to get

17 slammed on navigation. We used to have

18 hundreds and hundreds of terrible \-- I can\'t

19 find anything, your navigation is terrible.

20 Now we had 54 negative comments, which 54 out

21 of a possible 5,000 I thought it was a

22 victory.

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1 And I thought, it seemed to me like

2 every single person who had a negative

3 comment about navigation got together and

4 said let\'s say it exactly the same way,

5 because it was just ironic or uncanny that

6 every person who said the navigation didn\'t

7 work started out with a positive

8 statement \-- there\'s lots of good

9 information, I really love you guys, I

10 couldn\'t live without you, comma, but it\'s

11 hard to find things sometime. I get lost

12 sometimes. There used to be something I

13 could find that I can\'t find now.

14 They would start A, positive,

15 comma, B, negative. Always like that. So I

16 thought that they were\-- sometimes actually

17 on the web, there\'s a \-- I mean, a psychology

18 that if you can\'t find something you feel

19 like it\'s your fault when really it shouldn\'t

20 be your fault, it\'s the website designer\'s

21 fault. I think there\'s still a little bit

22 thinking, well, I know there\'s so much here

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1 and it\'s probably there somewhere so I love

2 you guys so I\'m not going to say something

3 really negative, but 54 people wanted to say

4 at least it wasn\'t as easy as they would

5 like.

6 Timeliness, we also used to really

7 get tons of negative comments on timeliness.

8 This time, only 34 comments on timeliness.

9 And as anyone who works with data or

10 statistics knows, customers want the data

11 yesterday, they want December data in

12 November, and they don\'t even care if it\'s

13 wrong. We talked about that this morning

14 too, they just want it earlier. So to have

15 only 34 people have a negative comment is

16 really good for EIA.

17 This was a new category, and I

18 don\'t want to overstress this category but

19 this was a category that I hadn\'t really seen

20 too many comments in before, and there were

21 21 of them, where people commented about the

22 data accuracy, the objectivity. One person

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1 said \-- and these are all direct quotes,

2 \"you\'re always gloom and doom,\" \"quit

3 analyzing the reasons why oil and gas prices

4 are so high, you\'re a data collection

5 agency.\" That harkens back to the discussion

6 this morning where at the beginnings of EIA,

7 a lot of people did not want to do forecasts,

8 they thought we were a data collection agency

9 only, and that the second quote here, that

10 person thinks that, too. One person said, \"I

11 see some politics in the data. Please quit

12 tweaking your data sets.\"

13 DR. NEERCHAL: Or the other way

14 around.

15 MS. BLESSING: And, \"It appears like

16 you guys want high prices.\" I think sometimes

17 when we say oil has hit the highest price it\'s

18 ever hit, customers read it as, they seem like

19 they\'re happy about this. That\'s what I get

20 from that last comment, and so we have to be a

21 little bit careful about when we hit records and

22 we\'re talking about records, that it\'s still,

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1 we\'re talking about it statistically, we\'re not

2 looking like we think it\'s a good thing.

3 A couple other \"anything else\'s.\"

4 A few people said that they would like more

5 writing for the web. And I already talked

6 about the support for EIA funding. Yeah,

7 please don\'t get your budget cut.

8 I\'d say probably 20 or 30 people

9 said that. They said, \"Best use of my

10 taxpayer dollars. I love writing my tax

11 refund to IRS because I know some of it goes

12 to you.\" Those kinds of comments. People

13 really actually say that.

14 There were compliments to EIA staff

15 and service. \"When I call or when I e-mail,

16 I get an answer quickly.\" The product that

17 customers mentioned most by name was \"This

18 Week in Petroleum,\" which is a web-only

19 product that\'s written in a very colloquial

20 kind of chatty way, and customers really,

21 really like that one.

22 And then there were over 120 other

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1 suggestions that EIA is sorting through on

2 just about everything \-- I want more of X, I

3 want more of Y; I want less of X, I want

4 additional X, Y, Z. Customers have as many

5 ideas as you could possibly imagine for what

6 they\'d like us to do.

7 So those were the results from the

8 eight questions that I asked. Then I did a

9 couple cross-tabulations. I wanted to see

10 who were the most satisfied groups, and I

11 want to start off by saying that all of these

12 satisfaction numbers are high and strong, and

13 most agencies would be happy with any of

14 them, but relatively, in EIA, the business

15 and industry, finance and media, their

16 satisfaction is in the 90 percent, and

17 students and citizens are in the 70 to 80, 86

18 range.

19 And I think the feeling is that

20 students and citizens are sometimes some of

21 the first-time people that are coming. It\'s

22 a little more difficult to navigate through

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1 the site, and they may get lost or not

2 understand what they find.

3 I checked on satisfaction by

4 geography, but that was basically the same

5 number, so I didn\'t find out that United

6 States people are 96 percent satisfied and

7 very satisfied and international aren\'t.

8 They\'re all the same level of satisfaction.

9 Now, this is more telling. I

10 cross-tabbed satisfaction with frequency of

11 visit, and the first-time people were

12 80 percent satisfied or very satisfied, but

13 the repeat customers were 93 to 95 percent

14 satisfied, so it\'s just first-time people

15 that are coming that are \-- you know,

16 80 percent is still good, but it\'s not at the

17 level of the people who are coming back.

18 Then the final little cross-tab

19 that I did was the correlation between

20 whether they found what they were looking for

21 and their satisfaction with the information.

22 So if they found whatever it was they were

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1 looking for, if they found it, they were

2 really happy \-- 97 percent were satisfied.

3 If it was hard to find or they partly found

4 it, then their satisfaction is going down,

5 and if they didn\'t find the information, then

6 59 percent were satisfied or very satisfied,

7 which is \-- that\'s getting pretty low.

8 So it seems to me like the

9 satisfaction with the quality of the

10 information is closely tied to whether they

11 found what they were looking for or not, and

12 not in any inherent value or quality or

13 independence of the data, which is a little

14 bit scary, because we could have the best

15 data in the world, but if they come and they

16 don\'t find the piece they\'re looking for,

17 they say the quality isn\'t very good, but

18 that\'s what the numbers show.

19 I did \-- for the first time, I

20 looked at what customers said they were

21 looking for, and I themeized them, and we did

22 a sort on the database to see what were the

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1 top items customers said they were looking

2 for, and the top couple that I put

3 together \-- I put together price, prices,

4 pricing, and cost, because those are four

5 different ways that I think people are

6 looking for the same thing.

7 I put oil, petroleum, and crude

8 together. Inventory, storage, and stocks

9 together. Again, you\'re already seeing how

10 customers are asking for things in different

11 ways. We might say \"underground storage,\"

12 but they might be saying \"inventory.\" And

13 you can see how even \-- have a whole other

14 page of this in my office of topics that

15 people said they were looking for, and I

16 tried to aggregate them, and some of them I

17 wanted to leave separate so that you could

18 see the actual topics.

19 So how are we going to use this

20 information? One of the things that we\'re

21 doing that Nicholas is going to talk about

22 imminently is, we\'re going to add some easy

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1 to understand content to answer some basic

2 energy questions, and he\'s going to show you

3 the work that we\'ve done so far and what

4 we\'re planning on launching soon. We wanted

5 to examine what people said they were looking

6 for and what terms they used, and an example

7 that I thought was interesting that someone

8 in my office found when we looked at the

9 customer terms versus our terms, is we talk

10 about spot price of crude oil, \"spot price,\"

11 so that would be in the glossary in A to Z

12 under \"S.\" But a lot of customers said

13 \"daily spot price\" and that would be under

14 \"D,\" so we\'re adding daily spot price as an

15 entry in A to Z so that customers can find it

16 both ways. Just an example.

17 We\'ve already used the results of

18 this customer survey for the web strategy

19 initiative that\'s underway right now. We\'ll

20 probably be reporting on that maybe in the

21 fall, or maybe next spring.

22 We haven\'t really done this in

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1 earnest yet, but we need to analyze the list

2 of suggestions, and what I\'d like to do is

3 send out the suggestions and have them sorted

4 by fuel and program office so I can send the

5 suggestions out, and at least people can see

6 what the suggestions were from customers.

7 We\'re continuing, probably almost

8 weekly, to try to improve the navigation on

9 this site, to address some of those questions

10 of first-time users coming and not being able

11 to figure out what we\'ve got there.

12 And then the last thing is, we\'re

13 planning to do the next customer survey. EIA

14 has promised OMB that we\'ll do a survey every

15 year, at least asking that one question,

16 satisfaction with the quality of the

17 information. The survey needs to be fielded,

18 completed, and analyzed by the end of the

19 fiscal year, which is the end of September,

20 so we\'re kind of coming into the period now

21 where I\'m starting to generate or amass a

22 list of questions that we might ask this

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1 coming time, and I think from the suggestions

2 that I\'ve gotten, people are thinking about

3 maybe going in some different directions.

4 So now should Nicholas go next and

5 then we\'ll take questions? Yeah, okay. So

6 I\'m hoping that everybody maybe has a

7 question or two that they would like me to

8 ask our customers.

9 Thank you.

10 MR. JOHNSON: Great. Can everyone

11 hear okay? I\'m Nicholas Johnson. My title is

12 web editor-in-chief. I\'m relatively recent here

13 at EIA, and I\'ll be talking a little bit about

14 what then followed from the customer survey

15 results that Colleen just spoke about.

16 We found, of course, that

17 unfortunately navigation is a problem for our

18 customers, and there was also sort of a

19 lesser trend, but a trend nonetheless, that

20 people have a difficult time sometimes

21 understanding the information on our site, so

22 because the EIA website is so central to our

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1 mission of promoting public understanding,

2 efficient markets, and sound policymaking, we

3 took it very seriously when we saw those

4 trends in the customer survey data.

5 So I\'ll show you a few things that

6 we\'ve done to react and improve this

7 situation regarding navigation and

8 communication, as well as a few things that

9 we plan to do in the future.

10 Just to start, this is a screenshot

11 of the former EIA homepage. As you can see,

12 it\'s mainly a list of links, relatively basic

13 design, and I\'ll also note that the

14 screenshots that I\'ll be showing you should

15 be in your booklets if you have difficulty

16 seeing them on the screen.

17 This is a screenshot of the new

18 homepage. It uses layout and graphics to

19 strategically highlight and emphasize EIA

20 content. And we\'ve also got some usage

21 statistics through our server logs that show

22 that the new homepage design is significantly

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1 improving the way people navigate on our

2 site. It increases the usage of all the page

3 links, all the pages that are linked from our

4 homepage, including those that are now at the

5 bottom of the page where we have the news and

6 the basic information.

7 So that basically means that it\'s

8 helping people find EIA information better,

9 and not only that, has really the picture of

10 the traffic from our homepage improved, but

11 also people are coming back to the homepage

12 throughout their session online, which is

13 just another indicator that they are finding

14 it to be a valuable way to find information

15 on the EIA website.

16 And not only did we improve the

17 layout and the design of the homepage to help

18 people navigate, but we added two new ways to

19 communicate with the public. The first one

20 I\'d like to highlight are the homepage

21 features here. And we\'ve found that by

22 featuring some select content on the EIA

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1 homepage, not only does it give us a new

2 channel to communicate things that are

3 important and timely, but it dramatically

4 increases traffic to those items.

5 Yes?

6 DR. FEDER: I see a search box at the

7 top right.

8 MR. JOHNSON: That\'s right.

9 DR. FEDER: What does it search within

10 the EIA \--

11 MR. JOHNSON: It searches within the

12 entire EIA website. Yes.

13 So the usage statistics for our

14 homepage features indicate that traffic to

15 whatever we feature there increases as much

16 as 44 percent over what we don\'t feature, and

17 some of the examples of things that we

18 featured are the annual energy outlook, just

19 another way that we can help people navigate

20 to some of our most important information.

21 A frequently asked question that we

22 were getting a lot through the call center on

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1 what is the country of origin for my gasoline

2 at the pump, and also other ways that we can

3 help people get information at EIA such as

4 our e-mail updates.

5 DR. KOKKELENBERG: Quick question.

6 MR. JOHNSON: Yes.

7 DR. KOKKELENBERG: You show the AEO

8 but we had a disclaimer about that of a guy

9 saying it was wrong, and so you\'re

10 revising \-- does that still link to the old

11 erroneous one? Or does it link to a site that

12 says we\'re redoing it?

13 MR. JOHNSON: Yes. And that\'s a good

14 question anyway about how the homepage features

15 work. We rotate them very frequently. So it\'s

16 no longer featured on the homepage anymore

17 anyway. And so that\'s part of our communication

18 strategy to connect people with the best

19 information, is to keep that very up to date.

20 Right now, I think we have a

21 service report, a couple service reports that

22 just came out, as well as coal news and

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1 market prices, because those are pretty hot

2 right now.

3 So another way that we\'ve improved

4 the homepage to help people find what they\'re

5 looking for is through the A-to-Z topics,

6 which is an alphabetical index of information

7 on our site. This is an example of one of

8 those pages. This is the \"H\" page. And so

9 we are showing in alphabetical order, content

10 by country, by state, by topic. We\'ve got

11 hierarchical topics, so we\'ve broken heating

12 down by heating with electricity, heating

13 with natural gas, and we also list all of our

14 reports by names, so this is just another way

15 that we help people navigate our information

16 at EIA.

17 And another project that I\'d like

18 to just briefly touch on, this is responding

19 to possibly the lower satisfaction among

20 citizens and students, as well as some of the

21 negative comments we got about how difficult

22 it can sometimes be to understand EIA

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1 information.

2 This is a new series that we\'re

3 going to be launching within a couple weeks,

4 it\'s called, \"Energy in Brief\" and it\'s going

5 to really communicate things in plain

6 language that everyone ought to know about

7 energy. So it\'s going to include a short

8 article with graphs, with visuals,

9 interesting facts, and links to more EIA

10 information, and the topics will be popular

11 energy topics such as biofuels or renewable

12 energy, greenhouse gases, of course many

13 others, and common energy misconceptions.

14 And not only are we targeting citizens, we\'re

15 also targeting media, because often they

16 don\'t understand some statistical or economic

17 issues, and we do intend to cover some of

18 those in this series as well.

19 For example, what\'s the difference

20 between short-term fluctuations and long-term

21 trends? What is modeling? Or why is it that

22 the average gasoline price reported by EIA is

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1 not what I see at my local gas station?

2 Some of the subjects that we\'re

3 going to launch with in a couple of weeks

4 when we actually do come out with the briefs

5 are going to be on how dependent are we on

6 foreign oil, a primer on how much renewable

7 energy we use, how much greenhouse gas we

8 emit, the introduction to the liquefied

9 natural gas industry, as well as some basics

10 on electricity. But one thing that I am

11 asking for the ASA committee would be

12 suggestions about topics that we may cover

13 through the \"Energy in Brief\" series, kind of

14 what are some important subjects that people

15 should know about energy, be it the energy

16 industry or statistics or economics related

17 to energy.

18 And in the future, we\'re going to

19 be launching basically a repackaged version

20 of all of our consumer and citizen and

21 student-oriented information into a single

22 gateway where people can get basic

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1 information about energy. But I don\'t have

2 slides on that right now, it\'s more in the

3 conceptual stage at this point.

4 So that\'s all for me. I guess

5 we\'ll go to the discussion portion.

6 DR. NEERCHAL: Yes. Thanks. I think

7 we have two discussions. I think we\'ll do the

8 program discussions first, and then go for the

9 full committee discussions.

10 MS. BLESSING: I\'ll sit over there.

11 DR. NEERCHAL: Sure. All right, Barb?

12 DR. FORSYTH: Barb Forsyth, University

13 of Maryland. So I focused mostly on Colleen\'s

14 talk because I didn\'t spend a lot of time

15 looking at the slides you sent, in detail, but I

16 have some additional stuff probably more

17 informally afterwards, but there are some things

18 I like a lot about the survey that you did,

19 Colleen. So I have two things to start with.

20 First, wow, that you\'ve got 5,000

21 responses in three weeks. It\'s like you

22 improved on your previous record. And the

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1 other thing I wanted to say is, wow, you only

2 asked eight questions. I\'ve worked on

3 thousands of questionnaires and none of them

4 was only eight questions, so I\'m sure it

5 wasn\'t easy to keep it to eight.

6 MS. BLESSING: Yes.

7 DR. FORSYTH: So when Nagaraj said you

8 could add one at the front that says have you

9 answered it before, I\'m thinking, no, no, eight

10 is so nice.

11 I\'m also impressed with your

12 intrepid use of text boxes. As a contractor,

13 I always encouraged clients to avoid them

14 because they\'re so hard to analyze well in

15 such a short amount of time, but as a

16 customer in the user information, I\'m sure

17 that they will serve you well.

18 I think you do have to be intrepid

19 to take that on. It\'s a big analysis task,

20 so good luck, and I\'m sure it will be worth

21 the effort that you made to analyze those

22 results. It sounds like it already has been.

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1 So for example, on your website,

2 you should be supplying cold beer.

3 MS. BLESSING: Or links to where you

4 can get a cold one.

5 DR. FORSYTH: Right. Where you can

6 get a cold one.

7 MR. JOHNSON: A coupon.

8 DR. FORSYTH: So let me see, what

9 else \-- it also looks like \-- just adding to

10 what I said about the text boxes, that you have

11 some idea of how to process those already, like

12 the examples of the kinds of information that

13 people were looking for, you had categories that

14 seemed to have a structure to them when I looked

15 through them, so it\'s nice that you had that

16 rubric to start off with that will facilitate

17 your data analysis.

18 And it also looks like you\'ve got

19 actionable information. I was thinking

20 especially about that comment that you should

21 reduce the commentary or editorial content of

22 your \-- apparently, they were misinterpreting

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1 or reading other than your intended editorial

2 comments, so I thought that was a nice piece

3 of actionable item.

4 I of course anticipated that

5 everyone would want to say, this is not a

6 random sample, and so that\'s a place where I

7 choose to dig in. But I\'m wondering why you

8 always do it in the summer and \-- I can see

9 why, because it has to be done by September,

10 but I wonder about the impact of that, and

11 maybe it doesn\'t matter for your purposes.

12 Maybe, I\'m thinking that in summer, the

13 volume of activity might change, and also,

14 who is hitting your site probably changes.

15 And I don\'t know how, but my intuition

16 suggest that you probably get less of the

17 general public, because school kids aren\'t

18 going there in the summer, and maybe more

19 academics, but maybe it\'s pretty flat.

20 Those were just two intuitions I

21 had, but it might be that your user

22 population changes by season. You probably

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1 wouldn\'t have to do an eight-item survey to

2 find out if that\'s true. You know, you could

3 embed a simple question, you know, \"who are

4 you?\" Just tell us who you are, okay, now go

5 back to your work.

6 MS. BLESSING: We\'re actually

7 thinking \-- I\'m calling that the one question

8 survey. We are seriously thinking about doing

9 that, placing one question \-- I hadn\'t thought

10 about \"who are you,\" but it\'s, was this

11 definition useful to you? Yes? No? AOL does

12 that all the time where you\'re reading an

13 article and it says, \"Was this review helpful,\"

14 in the middle of the paragraph.

15 DR. FORSYTH: Yes. Amazon does it.

16 MS. BLESSING: Amazon does it, too.

17 Was this book review useful to you? Yes? No?

18 And then you continue to work.

19 DR. FORSYTH: Right.

20 MS. BLESSING: So we\'re just still

21 working out the details of what would be clear

22 and those kinds of things, but yes, we\'re

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1 definitely thinking about it and you\'re right \--

2 DR. FORSYTH: The thing about \"who are

3 you?\" is something you wouldn\'t have to do like

4 more than once or twice, like your \-- I forget

5 it was that you updated \-- oh, U.S. versus

6 somewhere else.

7 MS. BLESSING: Right.

8 DR. FORSYTH: Really, all you\'d want

9 to find out is if it changes around a year and

10 if you\'re getting different results in the

11 summer. And chances are you aren\'t, but maybe

12 you are.

13 So this is interesting. I didn\'t

14 understand this from looking at the

15 slides \-- I mean, from looking at the slides

16 ahead of time, and maybe I have this wrong,

17 but it sounds like you took all users who

18 went to the homepage, went to a second level

19 and tried one of your products. Did they

20 have to meet all three of those conditions?

21 MS. BLESSING: No.

22 DR. FORSYTH: Or any one of those?

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1 MS. BLESSING: They had to touch one

2 of those pages \-- and I forgot to mention,

3 sorry, that if \-- and there are probably many of

4 our users who come in through a bookmark or they

5 come in through a search engine, if they came

6 into a fourth-level page that wasn\'t one of the

7 tagged products, they would not be presented

8 with the survey.

9 DR. FORSYTH: Unless they went back to

10 the homepage.

11 MS. BLESSING: Unless they went back

12 through the homepage \-- unless at some point in

13 their navigation they touched one of those

14 higher level pages or touched the homepage. And

15 we know that from our web analytics, that about

16 90 percent of our traffic does not come through

17 the homepage, although the homepage is the

18 number one entry page for us, 10 percent of the

19 people do come through.

20 DR. FORSYTH: Right.

21 MS. BLESSING: So there is an issue

22 with missing higher level users, maybe who have

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1 bookmarked some important content that they come

2 in under the radar and they leave under the

3 radar. So yes, that was a good point.

4 DR. FORSYTH: Yes. So you may get a

5 selection of those high powered users depending

6 on what products you select for, so if they\'re

7 going to the AEO, Annual Energy Outlook, they

8 aren\'t like me, they\'re more sophisticated than

9 I am, so maybe you are getting some of your

10 higher end users through some of

11 those \-- depending on what those products are

12 that you\'re \--

13 MS. BLESSING: We picked a few of

14 those. AEO was one of them, \"This Week in

15 Petroleum,\" but there were probably only six or

16 seven, so if people are coming into (inaudible),

17 unless they searched around, we would have

18 missed them.

19 DR. NEERCHAL: So it is a deliberate

20 decision not to give a survey at the end \-- you

21 know, no matter where they come from, as soon as

22 the (inaudible) product and when they close out,

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1 you pop a questionnaire in?

2 MS. BLESSING: I don\'t want to

3 interrupt their workflow, because that annoys

4 me.

5 DR. FORSYTH: Any product, you\'re

6 saying, right?

7 MS. BLESSING: Then it would have to

8 be \-- I don\'t understand the coding, someone

9 else helps me with that, but they would have to

10 be coded on each of those pages, and those pages

11 are run by people in the organization so we have

12 to keep telling them, if the renew the page or

13 freshen the page, they\'ve got to add the link

14 again, so it\'s hard enough to keep the tags on

15 those pages, and we do think about \-- we do let

16 the web steering committee that has supervision

17 over the website in EIA know what the pages are

18 going to be, but it\'s a kind of a mechanical

19 thing, it\'s a workload thing.

20 It would be nice if I could just

21 say yes every single page.

22 DR. FORSYTH: Or everyone who touched

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1 something technical.

2 MS. BLESSING: Yes. We did make some

3 judgments about where they were going and \--

4 DR. NEERCHAL: Sorry to interrupt.

5 DR. FORSYTH: That\'s okay. I\'m

6 flexible.

7 MS. BLESSING: Absolutely.

8 DR. FORSYTH: And so following up on

9 the sample, because that\'s where a methodologist

10 is always going to focus, so 51 percent of your

11 people reported weekly use and 8 percent

12 reported daily use, so there\'s like up to

13 60 percent of your users who get touched more

14 than once by this survey, and so what you\'re

15 sampling isn\'t users, of course, it\'s user

16 sessions \-- kind of user session content.

17 And there may or may not be

18 important ramifications for that potential

19 duplication, so it really would be nice to

20 add a question \-- have you already answered

21 this survey this month, and then close them

22 out if they have. Or else, at least keep

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1 track of if they\'ve answered more than once,

2 so you can get an idea of whether the

3 information you\'re getting varies if they\'re

4 repeats or not.

5 Some of the things you ask are

6 pretty stable so it shouldn\'t matter, like

7 their satisfaction. If people are satisfied

8 one time, changes are they\'re satisfied

9 another time because you\'re asking it at the

10 end of their session.

11 But some of the things might not be

12 stable \-- for example, did you find the

13 information you wanted. Well, sometimes they

14 might, sometimes they might not, and so if

15 you get multiple responses from a single

16 respondent, you don\'t really know how to

17 interpret what they\'re getting.

18 Then, some additional stuff you

19 mentioned that I picked up on today, you

20 focused on the 50 to 90 percent \-- somewhere

21 between 50 and 90 percent said they found

22 what they were looking for, and I\'m thinking

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1 about that in relationship to the frequency

2 of use, like 60 percent of them use it a lot,

3 and so 60 percent of your users use it at

4 least weekly, possibly daily, and 90 percent

5 find what they\'re looking for. Well, it\'s

6 not surprising that if people are coming back

7 that often, chances are \-- I mean, this is

8 just my intuition, but chances are, they\'re

9 going to the same place.

10 And so maybe you want to look

11 closely at the people who are not

12 finding \-- and as you\'ve begun to do \-- look

13 at the people who are not finding what

14 they\'re after, because I think that\'s where

15 your actionable stuff is.

16 DR. FEDER: I was going to suggest

17 that you ask the people who said they were first

18 timers, are you likely to come back, because you

19 have 80 percent satisfaction compared to 91? It

20 would be nice to know something, maybe to say, I

21 don\'t want to come back here, so I would ask

22 that question. Can you (inaudible) that

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1 question only to people say at that first time?

2 DR. FORSYTH: That\'s a logical move.

3 DR. FEDER: So you don\'t burden the

4 other people.

5 MS. BLESSING: Right. That\'s a good

6 idea. And then similar to that is if they said,

7 if they were in that category, it was really

8 tough to find, or no, I didn\'t find it. I think

9 this time I want to drill down on them and say,

10 open a text box \--

11 DR. FORSYTH: Open a text box \--

12 MS. BLESSING: Say more about that.

13 DR. FORSYTH: Say more about that.

14 Yes. What was the problem?

15 DR. NEERCHAL: Ed?

16 DR. BLAIR: Ed Blair. I don\'t mean

17 to \--

18 DR. FORSYTH: It\'s okay.

19 DR. BLAIR: Cut into yours \-- but on

20 this point, it\'s exactly correct to say that the

21 sampling unit here is sessions or visits, not

22 visitors. So if the population unit of interest

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1 is visits, then the sampling of the population

2 unit, but if the population interest (inaudible)

3 then they\'re duplicated in the frame, and the

4 problem is not really that the same person will

5 answer twice, the problem is that the class of

6 users is over-represented, so that \-- you know,

7 even if they only answer once, the class \-- if I

8 come 50 times a year, and Barb comes one time a

9 year, I have 50 chances of being selected, and

10 she\'s got one chance of being selected. And

11 what that means is your profile of frequency of

12 use, that would be correct for visits that, you

13 know, like whatever the heck the number was,

14 50 percent of your visits come from people who

15 use this frequently. That would not at all \-- I

16 mean, that\'s an obvious one, that would be

17 biased with respect to visitors, you\'d have to

18 down weight them by that frequency.

19 But similarly, as Barb already

20 mentioned, the people who are coming all the

21 time probably know already what they\'re

22 looking for. That\'s almost certainly biased.

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1 Satisfaction, consequently, is almost

2 certainly biased, on a user basis.

3 DR. FORSYTH: Right. It\'s session

4 basis. And I\'ve been talking very cavalierly

5 across those two, so that\'s exactly right.

6 DR. FEDER: And the same way that was

7 very good point too because you get to

8 (inaudible).

9 DR. FORSYTH: Right.

10 DR. FEDER: Likely.

11 DR. NEERCHAL: Shall we go to Walter?

12 DR. FORSYTH: Yes.

13 DR. NEERCHAL: Walter?

14 DR. HILL: I did not have organized

15 comments. I think I saw the same thing as you

16 did initially. I\'m pretty impressed with your

17 4,800 responses. I\'ve done surveys like that

18 over three weeks, just during the summer. I

19 don\'t know if that\'s an issue. (inaudible) I

20 would not (inaudible). My group would not be in

21 because in the summer, we\'re on summer vacation,

22 so I suspect you\'d get more \-- (inaudible).

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1 MS. BLESSING: The average age of the

2 students \-- we asked students who responded how

3 old they were, the average age was 24. So all

4 the little kids, or a lot of little kids aren\'t

5 coming, but you know, to tell you the truth,

6 we\'ve done two surveys on our kids page, and the

7 kids give you a lot of trouble.

8 DR. FORSYTH: No kidding.

9 MS. BLESSING: Yes. Not your kids,

10 the younger kids, so actually there was kind of

11 thinking \-- my cohort in crime here on this

12 survey reminded me that we sort of almost wanted

13 to deal the survey when the younger kids were

14 out because we have to do a lot of editing out,

15 probably one in six or one in seven responses is

16 nonsense or really obscene and also \--

17 DR. HILL: That\'s possibly \-- or mine

18 certainly would ask beer questions.

19 MS. BLESSING: Those are okay, but

20 sometimes I think they\'ll say they\'re looking

21 for nuclear information to blow up the world, to

22 destroy everyone, or something. I mean, they

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1 just say \-- And adults don\'t do that.

2 Also \-- I forgot, I didn\'t mention,

3 I do it in my longer presentation, that when

4 adults come to a site and they don\'t find

5 what they\'re looking for, they blame

6 themselves, and when you say how satisfied

7 are you with the information, they say, ah,

8 six. Kids, if their teacher says the answers

9 to the worksheet are on the EIA site, and

10 they come and they don\'t find it in two

11 seconds, they give us a one. When I look at

12 my responses, almost every time, when I saw

13 satisfaction one, which is the crummiest

14 response you could get \-- student, one,

15 student, one, student, one. Real people

16 don\'t do that.

17 DR. FORSYTH: Their expectations are

18 high.

19 MS. BLESSING: They get very

20 frustrated very quickly. I think their

21 teachers, the third grade teachers, say the

22 answers are on the EIA site, and I think they

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1 think they\'re going to come and they\'re going to

2 open the screen and there the answers are going

3 to be, and they\'re not there so they take the

4 survey and they blast us. So anyway, that would

5 be a different demographic that we are missing,

6 but that actually we need to hit the 90 percent

7 satisfied or very satisfied, and if we had all

8 students, we would not make that.

9 DR. HILL: Mine do fine because I

10 stand over their shoulders \-- if they say they

11 can\'t find it for those sorts of assignments.

12 For other types of assignments,

13 there are comments about users are

14 unsatisfied if they do not find the material.

15 When I tend not to find material, in the past

16 they were called Bill or Nancys (inaudible)

17 find it that way. He retired at this point,

18 so \--

19 MS. BLESSING: Yes.

20 DR. HILL: Often, I will try to find a

21 telephone number. If that\'s on there, I\'m not

22 sure \-- if there\'s a contact desk, that might be

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1 a possibility, but if you want telephone calls

2 from people.

3 MS. BLESSING: Well, we do have a

4 hotline service, and we do have a frequently

5 asked questions with contact experts, with a

6 telephone number. We\'re sort of trying to

7 promote self-service on the website. We\'re not

8 trying to promote people to call.

9 DR. HILL: Yes.

10 MS. BLESSING: But we do have people

11 who answer the phone both in our hotline and in

12 the agency, that they can \--

13 DR. HILL: Actually, one of the

14 comments was that somebody liked the hotline.

15 You have a list of \-- it wasn\'t on the

16 presentation, in the handout, there\'s a list of

17 comments. One of them was that somebody liked

18 the hotline.

19 MS. BLESSING: We\'re hoping to steer

20 them away from that need, but it\'s still \--

21 DR. HILL: It\'s labor-intensive. I\'m

22 impressed that you have an open-ended question.

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1 That\'s of course exactly what you what. I think

2 that it\'s labor-intensive to go through those.

3 MS. BLESSING: But it\'s true.

4 DR. HILL: That\'s also true. The word

5 \"actionable\" jumped out at me. Barbara used it

6 a couple of times, and you\'ve used it. It seems

7 like a very good term \-- think of something

8 quick, is you\'re trying to evaluate and if

9 necessary change your page which is more

10 (inaudible). Actionable is a powerful word.

11 MS. BLESSING: Yes.

12 DR. HILL: Yes. I read the way that

13 you had recruited people was through people

14 touching one of the higher level pages. It

15 sounds like it\'s a little bit more complicated.

16 That\'s sort of a sampling issue.

17 MS. BLESSING: No, that\'s right. Yes.

18 It is.

19 DR. HILL: And I\'m often tend to

20 compelled to bookmark a page. So I guess I\'ll

21 be missed, or somebody like me will be missed.

22 If that\'s the case, which is fine, if that\'s

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1 what you want.

2 MS. BLESSING: I don\'t actually, but

3 that\'s sort of the mechanics of the way

4 (inaudible).

5 DR. HILL: You probably do not want

6 multiple users \-- that would be duplicative.

7 MS. BLESSING: I don\'t.

8 DR. HILL: You mentioned that \-- my

9 comment is that the sample is non-scientific,

10 which you mentioned in the presentation, which

11 in turn means that it\'s not clear what the

12 percentages really mean. I don\'t know if you

13 want to try to control for that or not. There\'s

14 some demographics that you have, that I suspect

15 you don\'t want to try to take the effort to try

16 to go through all of that. Maybe you do, maybe

17 you don\'t. I suspect it\'s not.

18 My sense was that given the goal is

19 to find actionable information, it\'s not

20 necessary to have a scientific sample. And

21 since you know it\'s not scientific, perhaps

22 that\'s fine.

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1 MS. BLESSING: Mm-hmm.

2 DR. HILL: I don\'t know \-- there\'s no

3 time series in the report, but it\'s sort of

4 implied that you look at some questions over

5 time. Maybe you want to ask the same questions

6 over time, maybe you don\'t. Given that the

7 objective is to find actionable material, maybe

8 the time series isn\'t useful.

9 I often find these where they have

10 samples, election surveys have samples going

11 back now 50 years and that\'s interesting to

12 go back to see what the changes are. Maybe

13 it\'s just \-- you\'ve worried a little bit

14 about the duplicate complaints, noting

15 they\'re all in the same format. I wondered

16 first whether or not the complainer is the

17 same \-- but from your presentation it sounds

18 like you think the complaints are coming from

19 different people.

20 MS. BLESSING: The complaints about

21 getting offered the survey more than once?

22 DR. HILL: I thought you had a number

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1 of complaints \-- it starts out with a positive

2 comment and then a negative comment follows.

3 DR. FORSYTH: It had to do with the

4 negative.

5 DR. HILL: I thought at first the

6 implication was that perhaps it\'s the same

7 person \--

8 MS. BLESSING: Oh, no. I didn\'t mean

9 that.

10 DR. HILL: But then from the

11 presentation \--

12 MS. BLESSING: I\'m sorry, didn\'t mean

13 that. I meant \-- it was so uncanny that the

14 comments were coming from all different people

15 from all over the world, but they were phrasing

16 them very similarly. I know there\'s a lot of

17 good stuff on your site, but I can\'t always find

18 it. I\'ve been here before and I love it, but

19 sometimes the navigation is tricky. It was

20 always positive, comma, negative. I just \-- in

21 the past, people have said \--

22 DR. NEERCHAL: Like society.

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1 MS. BLESSING: You are crummy. I

2 can\'t find anything. I hate you guys. And now

3 the comments have gone more to I love you,

4 but \-- which is a different feel than five years

5 ago.

6 DR. HILL: I\'ve heard a congressional

7 representative say that he gets negative letters

8 and he\'s sure they\'re from different people, but

9 they have the same format along the lines of, I

10 saw you and your wife at the county fair and

11 you\'re lovely, and then the second paragraph is

12 the negative one \-- you\'re the lowest snake in

13 the grass.

14 MS. BLESSING: Yes. Definitely.

15 DR. HILL: And then the third

16 paragraph is like I\'m glad to meet you. Look

17 forward to seeing you again sometime after

18 you\'ve changed your opinion.

19 So it reminds me of that. It\'s

20 like a similar format.

21 MS. BLESSING: I\'m just feeling like

22 people really do like EIA and they don\'t want to

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1 say anything really negative, so they start out

2 with kind of a positive thing, but they still

3 want to get that little jab in there anyway.

4 But so many people chose to do it

5 that way over and over and over again, that I

6 thought it was interesting.

7 DR. HILL: And then, one last quick

8 thing about what I saw on those last pages. So

9 people, it looks like they want the oil data,

10 they want it timely, which actually, there was a

11 presentation Monday which sounded like

12 time \-- oh, you said they want November data in

13 December?

14 MS. BLESSING: No, they want it the

15 other way around. They want December data in

16 November. They want it before the time period\'s

17 even over.

18 DR. HILL: There was a financial

19 analyst on Monday who said essentially they

20 wanted it sort of within hours. If it\'s more

21 than a few hours, it\'s almost old.

22 MS. BLESSING: Well, sometimes

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1 financial \-- sometimes some of the people here,

2 they need it hourly, they need it weekly. If

3 it\'s an annual number, then kind of getting it

4 early might be a month early, but I think it\'s

5 just the expectations of the internet have

6 changed a lot, so it used to be that you got

7 your information in snail mail \-- if you got it

8 within a week, that was fine, if you got it

9 faxed, you got it within the day, and now it\'s

10 if you don\'t get it, you know, immediately,

11 then \-- they\'re not as happy as they might be,

12 but complaints about timeliness have gone down a

13 lot. Probably more than they were 5 or 10 years

14 ago from the customer responses that I\'ve

15 gotten.

16 DR. HILL: There were some comments

17 about, as if you are somehow affecting the price

18 of oil? Are you trying to keep the price up? I

19 saw that a couple times.

20 MS. BLESSING: Yes. There\'s just a

21 couple of people that \-- and I think other

22 people in this room and in EIA do get calls from

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1 people who feel like that, like did we forecast

2 that gasoline prices are going to be \$3.54 this

3 summer, which we just did yesterday, and there\'s

4 some people that think, well, fine then, you\'ve

5 set the price, you\'ve allowed gas stations to

6 raise the price.

7 DR. FEDER: Always doom and gloom,

8 right?

9 MS. BLESSING: It\'s not exactly the

10 way it works, but some people see it that way.

11 DR. HILL: And there are some

12 complaints about forecasts \-- you want \-- people

13 (inaudible) do forecasting, that\'s what they\'re

14 supposed to be doing?

15 MS. BLESSING: Yes.

16 DR. HILL: And that\'s what you\'re

17 doing? Yeah. I have fewer comments on the

18 website. The main one is that you have customer

19 feedback, so I assume that that\'s what you need

20 to make changes. A colleague in my building has

21 a whole theory about what you\'re supposed to do

22 with websites, which somewhat goes over my head

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1 about what\'s needed, and so it looks like in

2 basic terms, some of that (inaudible) modeling

3 (inaudible) so it looks like that\'s exactly what

4 you want. The page looks fine. If there are no

5 problems in navigation, then that also looks

6 fine. I assume that the surveys which have been

7 used to (inaudible) webpage would be

8 (inaudible).

9 MS. BLESSING: Mm-hmm.

10 DR. NEERCHAL: You went first.

11 DR. FORSYTH: Okay.

12 DR. NEERCHAL: Let\'s go this way.

13 DR. KOKKELENBERG: Very quickly. The

14 question of who you are actually surveying

15 raises its head right away, and that\'s you\'re

16 surveying people who come to your website,

17 you\'re not surveying people who don\'t come to

18 your website. So you have no idea what the

19 people who don\'t come to your website want or

20 don\'t want, and I\'m not sure how you solve that

21 problem, but this is constantly a problem that

22 people have when they conduct surveys.

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1 The group of people you\'re missing

2 who might use you if they knew what you had,

3 or they tried using you and they refuse to

4 use you now because they didn\'t get what they

5 want, for whatever reason, so getting those

6 people into your survey field is something

7 that you could be creative on, but it\'s going

8 to take some resources to do it.

9 A second question I had

10 was \-- well, I have something that I

11 observed. I was on a committee at the

12 university. We were trying to figure out how

13 students do research, and unfortunately, far

14 too many of them, even graduate students, use

15 Google, and they only look at the first two

16 pages.

17 They won\'t go beyond the second

18 page. You could have 13,000 hits and only 8

19 per page, but they\'ll only look at the first

20 16 hits at the most. So that\'s why companies

21 pay to have their stuff hit a lot so that

22 they come by the Google right up to the top.

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1 You can either pay so that you come up at the

2 top a lot, or you\'re going to have to figure

3 out how to deal with that issue that people

4 are not going to be \-- and that\'s your

5 students who are unhappy. They didn\'t find

6 it in the first two lines that you gave, and

7 I don\'t know how to solve that problem

8 either, except perhaps a \-- I forget what

9 they call them. We started installing

10 things. They were little educators. If you

11 want to know how to use this site, you click

12 on here and it shows you maybe a

13 one-minute \--

14 DR. BLAIR: Tutorial.

15 DR. KOKKELENBERG: Course. Tutorial.

16 And I forget what they call them.

17 DR. BLAIR: User guide?

18 DR. KOKKELENBERG: No, they weren\'t

19 called user guides. They were something that

20 had a name like Wikipedia, but they weren\'t

21 Wikipedia. They were a way to show you how to

22 use the library\'s website at SUNY Binghamton.

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1 If you want to look for books or if you want to

2 look for articles, you could perhaps investigate

3 that possibility to help people understand how

4 to use your site better.

5 We found it worked very well at the

6 university for getting the students to go

7 beyond the first two pages of Google.

8 MS. BLESSING: So people actually did

9 go to the tutorial and \--

10 DR. KOKKELENBERG: Oh, yeah. The

11 students go to the tutorial. Sometimes you have

12 to twist their arm and say if you really want to

13 look here, you\'ve got to look at this tutorial

14 first.

15 MS. BLESSING: They did the tutorial

16 because they couldn\'t get to the search, so they

17 did.

18 DR. KOKKELENBERG: That\'s right.

19 Without going through the tutorial and answering

20 questions, right.

21 MS. BLESSING: I see.

22 DR. KOKKELENBERG: There are things

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1 like that. That occurs if you\'re applying for

2 human subjects clearance at the university. You

3 have to go through that tutorial and answer the

4 questions correctly at the end before you can

5 finish filling out that application

6 electronically.

7 Then there\'s one question I have

8 and one suggestion I have. One question is,

9 you say people are \-- 91 percent are

10 satisfied and 5 percent are dissatisfied

11 about the quality of the information. How do

12 they define quality? Do you know how they\'re

13 defining the quality?

14 MS. BLESSING: No, but I don\'t want to

15 define it for them. We\'re okay with the world

16 \"quality,\" but I think one of the ways that my

17 cross-tabs showed they defined quality is that

18 they found what they were looking for.

19 DR. KOKKELENBERG: But I can tell you

20 my forecast for peak oil is in 2025, but I would

21 be beat over the head by everybody at this table

22 and everybody who was here this morning saying,

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1 okay. I gave you a precise number, but that\'s

2 wrong.

3 DR. NEERCHAL: I think the

4 quality \-- I want to make that comment I think

5 since you brought it up. I think that quality

6 is such a \-- first of all, very difficult to

7 define concept, and so since it\'s being

8 interpreted in a different way from each

9 respondent, so this is one of those things about

10 survey data, if you have a question that can be

11 interpreted differently by different

12 respondents, then you really cannot interpret

13 the answers you\'re getting out of that question.

14 DR. FEDER: Yes. It\'s about

15 perception here, and perception of quality and

16 what the quality is, and you have to live with

17 that \--

18 DR. NEERCHAL: Yes.

19 DR. FEDER: Can I just comment on a

20 comment that Walter made?

21 DR. NEERCHAL: Yes.

22 DR. FEDER: He said maybe you should

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1 control for certain demographics, and I think it

2 was done a little bit in the analysis we have

3 seen, because we saw satisfaction by U.S. versus

4 non-U.S., by the questions we\'ve been looking

5 for, for the sector and so on, and because you

6 don\'t have controlled totals that you can

7 actually do rating on and things like that, I

8 think that\'s all you can do, and that was very,

9 actually, informative, too, to see. And that\'s

10 why I suggested before that you ask them if they

11 are likely to come back, because dissatisfaction

12 leading to no longer coming back to the webpage

13 is something that you might want to know.

14 Now, I have one more \-- you may

15 have said it and I may have missed it, but

16 you mentioned that certain searches on Google

17 will lead you to a page for which you will

18 never get to see the survey. People that put

19 together those particular pages might have

20 interest in a survey of their own, just so

21 you embed in that page maybe on a temporary

22 basis anything that triggers the

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1 questionnaire so you know these people are

2 happy with that particular page.

3 MS. BLESSING: Right. And that is

4 what I had said \-- one question surveys \--

5 DR. FEDER: Yes. I think you said it,

6 I wasn\'t sure.

7 MS. BLESSING: In one-question

8 surveys, and I would love to be able to \-- let\'s

9 say it\'s a fourth level report somewhere within

10 the site, I would love to \-- if the person who\'s

11 working on that \-- I would like to post for a

12 week or two, and just say, was this useful to

13 you?

14 DR. FEDER: I think I heard that.

15 MS. BLESSING: At this point, we\'re

16 still looking into opening clearance whether we

17 need it and how we do it \-- to get clearance to

18 do that. We can\'t just go back this afternoon

19 and type that question in there because of the

20 paperwork production.

21 DR. NEERCHAL: I don\'t know if Ed had

22 more?

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1 DR. KOKKELENBERG: Yes. I actually,

2 building on what Moshe just talked about and I

3 have one quick question.

4 Within the survey \-- pardon me,

5 within the Paperwork Reduction Act, could you

6 have a question like \-- that would say if you

7 wanted to answer more questions about this

8 particular thing, and drill down, as it

9 were \--

10 MS. BLESSING: I like that. Do you

11 want to take a longer survey? Click here.

12 DR. KOKKELENBERG: Yes. About this

13 subtopic that you\'re talking about, whatever it

14 is \-- would you like to tell us more about

15 yourself, or would you like to tell us more

16 about the kind of data you were really looking

17 for. Something like that.

18 MS. BLESSING: I think \-- sorry to

19 interrupt. The difficulty with that would have

20 been \-- I think we can still probably get it

21 through OMB \-- you have to estimate the burden,

22 and if everyone decided to answer the longer

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1 survey \--

2 DR. KOKKELENBERG: Then there would be

3 a burden.

4 MS. BLESSING: It would be five

5 minutes, maybe, instead of one minute. And then

6 you multiply by 5,000 respondents and you\'d get

7 a whole different burden.

8 I\'m not sure \-- I don\'t know, but I

9 think we could try that, though. That\'s an

10 interesting possibility. You know?

11 DR. KOKKELENBERG: And then the

12 question I had was this \-- people like Moshe can

13 tell me that this is silly. Survey Monkey.

14 Have you ever tried using Survey Monkey?

15 DR. FEDER: I don\'t even know what it

16 is.

17 MS. BLESSING: Yes, you probably have

18 actually. You probably have. There\'s a lot

19 of \--

20 DR. KOKKELENBERG: Is there any

21 interesting \-- I was just going to suggest that

22 looking at Survey Monkey and seeing if there\'s

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1 some interesting things you can apply for your

2 work there. Because they have some examples and

3 they also have surveys.

4 DR. FEDER: Can you just clarify what

5 survey monkey is?

6 DR. KOKKELENBERG: It\'s a commercial

7 product that\'s a survey system that we\'ve used

8 at the university to design surveys. Okay?

9 MS. PEARSON: But it\'s hosted

10 externally.

11 DR. KOKKELENBERG: Right. It\'s off

12 campus. But I mean, there may be some ideas

13 that you can take from it. That\'s what I\'m

14 thinking about, not engaging with them.

15 MS. BLESSING: More survey design.

16 DR. KOKKELENBERG: We\'ve used it for

17 survey design.

18 DR. FORSYTH: That\'s why Moshe and I

19 haven\'t ever seen it before. We\'ve got our own

20 products.

21 DR. FEDER: Well, I would only make

22 the comment at the early part of the survey,

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1 would (inaudible).

2 DR. NEERCHAL: Mike?

3 MR. TOMAN: I thought I\'d ask a

4 question or two about the new web directions.

5 If I understood, this \"Energy in Brief\" is a new

6 item that you\'re coming out with?

7 MR. JOHNSON: Yes. That\'s right.

8 MR. TOMAN: Or at least a

9 reformulation of some other efforts to try to

10 share basic understanding.

11 MR. JOHNSON: Actually, I should

12 clarify. It\'s a new way of presenting, but

13 it\'s \--

14 MR. TOMAN: Because some of the FAQs

15 would have covered the same thing.

16 MR. JOHNSON: Yes. It\'s going to

17 actually repackage information that we\'ve

18 already got online, so it\'s not going to be new,

19 unique findings, just a representation of it.

20 MR. TOMAN: You had mentioned that you

21 were hoping to clarify misconceptions other than

22 the idea that EIA\'s announced gasoline prices,

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1 what we\'ll actually pay this summer, are there

2 other examples of kinds of misconceptions that

3 you\'re particularly wanting to knock down?

4 MR. JOHNSON: Yes. Absolutely. Lots

5 of them. A good example might be that we import

6 more oil from Canada than Saudi Arabia, so

7 that\'s just one example. Or that we actually

8 export some petroleum products as well. But

9 there\'s a lot of things that people don\'t

10 necessarily understand about it.

11 MR. TOMAN: The reason I\'m asking is

12 that this oil dependence question has been a

13 research interest of mine, so maybe lamentably

14 you picked one that I was pretty interested in,

15 and reading the text, I think I\'m making it out

16 here, certainly everything you say here is

17 accurate. In another sense, though, what I\'m

18 not reading here is why should we even care.

19 You sort of get at that when you say that as a

20 consumer, you can\'t tell, it\'s all about cost,

21 et cetera, but the most straightforward answer

22 is not only can you not tell, it really doesn\'t

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1 matter. You\'re going to pay the same for

2 gasoline in a world fungible market \-- you know,

3 put it in lay terms, whether it\'s from Venezuela

4 or Saudi Arabia \--

5 MR. JOHNSON: Right.

6 MR. TOMAN: And there is either an

7 untouched misconception that isn\'t being

8 addressed, or even by virtue of highlighting,

9 you may be surprised to discover where your

10 imports come from \-- like it matters. Location

11 is not important, and so I\'m wondering if there

12 are ways you can \-- I don\'t know \-- vet this, or

13 in some other way look for additional

14 opportunities to knock down misconceptions or

15 avoid giving inadvertent credence to some that

16 exist.

17 MR. JOHNSON: Right. So you\'re point

18 is kind of that it\'s a commodity, and that we\'re

19 sort of playing into the misconception that

20 location matters in terms of where oil comes

21 from.

22 Well, we vet the content very

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1 thoroughly, and this one has passed muster.

2 We can definitely \-- that\'s certainly a

3 misconception people have about \-- you know,

4 if we stop purchasing Venezuelan oil, then

5 someone else will purchase \--

6 MR. TOMAN: Chavez will go broke, and

7 you know \-- that\'s not how it is.

8 MR. JOHNSON: Exactly. It\'s a

9 commodity. It doesn\'t matter. But that\'s a

10 good subject.

11 MR. TOMAN: Well, maybe related to

12 this is not so much me picking on this subject

13 because I happen to be interested in it, but I\'m

14 curious about the architecture of this.

15 Understanding energy, like any other subject,

16 has a certain kind of cumulative nature to it

17 and if somebody came to this and didn\'t know

18 anything about basic energy markets, they might

19 not pick that up. Now obviously, you can\'t

20 design a sequential curriculum \-- people click

21 where they click, but are there ways that you

22 can, in doing this, give some additional

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1 opportunities for people to find out more? If

2 you want to know more about basic energy

3 markets, click on this other \"Energy in Brief?\"

4 MR. JOHNSON: Right. Yes. And the

5 other challenge that we face is sometimes people

6 don\'t know that they need to know more, too. So

7 just \-- we\'re going to fill in the gaps as we

8 identify areas that we should educate people on

9 a little bit more. Then we\'ll (inaudible)

10 briefs for those, so I think the one about

11 commodities create supply and demand is just

12 over and above the most misconceived function

13 when it comes to energy markets, but that would

14 be a long endeavor to try to educate people.

15 MR. TOMAN: Well, that\'s why probably

16 I\'m suggesting something that\'s at best

17 impractical and at worst utopian, but I can sort

18 of visualize a tree \-- that if I were teaching

19 an Energy 101 course, I\'d want the topics to

20 sort of follow a certain sequence. If you reach

21 the point where you could actually have that as

22 a page and then somebody could sort of navigate

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1 through that tree and read the boxes in sequence

2 or click the boxes in sequence \-- when the

3 content is available, that would give you the

4 ability to help steer people through things in

5 the right order, in addition to giving them the

6 right information in each box.

7 MR. JOHNSON: Yes. We actually had

8 that idea where we can have this series, instead

9 of just being flat, but Energy 101, Energy 201,

10 Energy 301, or Energy University, where people

11 go through and kind of educate themselves.

12 There was much debate. I think Gina wants to \--

13 DR. NEERCHAL: Please state your name.

14 MS. PEARSON: Gina Pearson, director

15 of National Energy Information Center.

16 Built into the energy briefs

17 themselves are \"did you knows\" and also

18 related information, and those will link to

19 products, related products on the EIA

20 website, but Nicholas also mentioned in

21 passing that one of the next big projects

22 that we\'re taking on is building a new

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1 consumer portal, and we don\'t know that it

2 will necessarily be branded a consumer

3 portal, but that\'s kind of the idea.

4 And we already have a couple of

5 different interfaces products on the website

6 that get to basic energy information, but

7 they\'re not really tied together. They kind

8 of exist separately. And so one of the next

9 big things for us to look at is how to

10 package those all together in a unified,

11 integrated, comprehensive way. Some products

12 may be discontinued and kind of re-emerge as

13 different products, or as \-- you know, we

14 have a lot of existing materials that we can

15 re-release as \"Energy in Brief\" as it makes

16 sense.

17 So we\'re recognizing some of these

18 challenges and we\'re working towards them.

19 We had another idea for

20 energypedia. But we\'ve got a lot of ideas.

21 MR. TOMAN: Bravo. It sounds like a

22 good start.

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1 MR. NEERCHAL: Ed?

2 DR. FEDER: Isn\'t there \--

3 DR. NEERCHAL: Moshe?

4 DR. FEDER: I\'m sorry.

5 DR. NEERCHAL: Go ahead.

6 DR. FEDER: The risk of seen as you\'re

7 vetting information that\'s \-- like remember

8 there were some comments that you are so happy

9 when prices go up, don\'t you have to be careful

10 when you do that kind of promotion of

11 information that you won\'t be seen to be biased

12 in what you are promoting? Like selective

13 presentation of facts.

14 MS. BLESSING: To say like what

15 percentage of where our foreign oil is imported

16 from or how much \-- what fuels are used to

17 generate electricity, those are two pie charts

18 that most Americans don\'t know and understand.

19 That\'s data.

20 DR. FEDER: Frankly, I think

21 everything\'s data. Everything\'s fair game. I\'m

22 just worried about the users who don\'t

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1 understand it, but you report on a new high of

2 oil prices, you are reporting just data.

3 MS. BLESSING: Yes. I guess we

4 haven\'t done \-- for the \"Energy in Briefs\" so

5 far, we haven\'t stepped over into any areas that

6 would be controversial, although the energy

7 supply and demand, the worldwide supply and

8 demand, could be.

9 MR. JOHNSON: I see your point,

10 though. Any choice about what we talk about can

11 introduce some bias or appearance of bias, but

12 we do vet all the choice of content, as well as

13 the content itself. I mean, that\'s kind of the

14 inherent challenge of the EIA is to remain

15 unbiased.

16 DR. FEDER: Don\'t get me wrong, I

17 don\'t think for a minute there\'s any bias here.

18 I\'m talking about perception, not what you\'re

19 saying, what they think you\'re saying. I think

20 it\'s perfectly okay to report to the fact that

21 gas prices have hit a new high. I don\'t think

22 it\'s biased.

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1 DR. NEERCHAL: I think we\'ll go to Ed,

2 and I think we need to come to \-- you have

3 forgotten what you wanted to say now?

4 DR. BLAIR: Ed Blair. In the interest

5 of time I\'ll just make a couple points. One is,

6 going back to the idea that since you\'ve got a

7 sample of visits, not visitors, high frequency

8 visitors are oversampling as a result. There

9 are some duplicates in the sample framework.

10 If you look at your chart on how

11 often do you visit EIA\'s site, and you back

12 out the implied sampling rates, then you have

13 what\'s not at all an uncommon situation. It

14 appears that the bulk of your visits are

15 coming from power users, but the bulk of your

16 visitors are light users. And this is a

17 very, very common situation \-- majority of

18 users.

19 I found it interesting the comment

20 that you\'re building out a consumer portal,

21 because one clear implication is that you

22 would take your results and separate them by

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1 group and say what does it look like, what

2 are the power users saying and what are the

3 light users saying, because odds are they

4 have very different needs. And in many

5 commercial situations, you might blow off the

6 light users, but if your mission is to

7 promote use of EIA data in the public and to

8 inform the public and to address public

9 misconceptions, then it sounds like you have

10 information objectives that are centered on

11 the light user, not on the power user.

12 The other point I would make is

13 that in looking through this of what people

14 were looking for, I was struck by the fact

15 that basically people were saying I was

16 looking for price, I was looking for supply,

17 I was looking for demand. And you see no

18 inventory productions, supply issues, and the

19 website\'s organized by fuel type. And as

20 just as sort of fun AB test sometime, you

21 might try organization by price information,

22 supply information, demand information,

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1 (inaudible) and seeing if people like that

2 better and find it easier to manage it. That

3 I think would be a possible implication of

4 what you\'re finding here.

5 I\'ll actually stick on one extra

6 point, sort of an obvious one, and in doing a

7 survey, basically, as you said Colleen, the

8 implicit question is how well are we serving

9 you; you this particular user. Separate

10 question is how well are we serving our

11 objectives, and I have a regular and various

12 mentions of web analytics being used. The

13 broader question, obviously, is how well is

14 the website serving EIA\'s objectives, and in

15 that sense the survey, is a very limited

16 device for those purposes.

17 I\'ll stop there. Thank you.

18 DR. NEERCHAL: Yes. Thank you.

19 MR. GIELECKI: Thank you. Yes. I\'m

20 Mark Gielecki of EIA. I wanted to make one

21 comment. This I think has nothing to do with

22 statistics, per se; however, in how well we\'re

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1 doing, something that Nicholas didn\'t mention,

2 the \"Energy in Brief,\" another part of it is, an

3 audio slide presentation, and I think that\'s

4 going to serve a broader base.

5 The idea with \-- we all deal, the

6 staff always deals with a lot of requests for

7 information, and that\'s really, really good.

8 It\'s very visual \-- people learn differently,

9 and this is one way I think we\'re going to

10 get a lot of new audience even.

11 DR. BLAIR: Just to another real quick

12 things. Ed Blair again. One is that in the

13 questionnaire, you\'re questioning anything else

14 you\'d like to tell us. Normally what you would

15 do there is, can you give us one idea how to

16 improve the site? Or some version of that. The

17 kudos \-- I mean, it\'s great to get the kudos,

18 but it\'s like you\'re 90 percent satisfied, you

19 know, you designed the question to get

20 90 percent satisfaction. There\'s not a lot of

21 information value there. And the people who

22 were telling you, hey, you\'re doing a great job,

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1 that\'s not really as useful to you as getting

2 them to give you an idea on how to improve the

3 site.

4 And along the general ideas that

5 the way you\'d make meaning of the information

6 as the benchmark, a benchmark on yourself, a

7 benchmark on others \-- you know, I just came

8 off the Census Advisory Board, they\'ve been

9 through website design kinds of issues. I

10 don\'t know if you\'re already doing this, but

11 an idea that they had is that their FAQs,

12 they\'ve got the dynamic FAQs where the

13 frequency of the hit rolls the question

14 higher in sequence, and if you don\'t see your

15 question, if you\'ll enter it, the system also

16 becomes a dynamic way of updating the FAQs.

17 DR. NEERCHAL: I just want to make a

18 final remark as the chair. I think that \-- you

19 know, I understand you\'re commenting that EIA

20 doesn\'t want to appear biased as an independent

21 agency, but I think sometimes it will be very

22 subtle. Going back to Mike\'s comment, you know,

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1 if you rephrase that same question, how

2 dependent are we on foreign oil, instead you

3 just say, where does our oil come from? I think

4 that the emphasis is totally different.

5 When you say how dependent, somehow

6 being dependent is bad.

7 MS. BLESSING: It\'s implied.

8 DR. NEERCHAL: Whereas if you just say

9 where does it come from, it becomes a very

10 informative question. I think it\'s very subtle

11 and difficult to deal with, but I think \--

12 MR. JOHNSON: Right. Yes. That\'s a

13 good point. We\'re also up against the challenge

14 that we have to interest people in it, and if we

15 use their language, even if their language is

16 not exactly as objective as possible, then we\'ll

17 draw more people there to be educated about the

18 issue.

19 MS. BLESSING: We were thinking that

20 was the phrasing that customers use. Also in

21 the press, you hear a lot about energy

22 independence and dependence on foreign oil, so

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1 we wanted to use the phrasing that we thought

2 that the public used.

3 But you\'re right \--

4 DR. NEERCHAL: When you are in the

5 business of teaching, using exactly what your

6 students want to use is not necessarily the

7 right thing to do if you want to set them right.

8 Sometimes you have to be on a soap

9 box. So with that, I think we\'ll actually

10 move to the next session without a break.

11 I\'m tempted to because we don\'t want to get

12 caught in the bad traffic, I think. I\'m

13 getting worried about it. So we\'ll be

14 running a half an hour break, so eating up

15 the break probably is a good idea.

16 Why don\'t we just give ourselves

17 maybe two, three minutes to go grab a cup of

18 coffee.

19 (Recess)

20 DR. NEERCHAL: In fact we had \-- some

21 of us \-- a summary of the EIA conference that

22 some of us missed, but thanks for volunteering

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1 on short notice.

2 DR. TSENG: Thanks. Good afternoon

3 members of the ASA Energy Committee, Stephanie

4 and my EIA colleagues. My name is Philip Tseng.

5 I will report the session about challenges for

6 long-term energy modeling. I basically would

7 give a summary. I was the facilitator to the

8 session. So my involvement is basically helping

9 the speakers explaining what they thought about

10 the challenges and some of the suggestions.

11 The outline of session yesterday

12 was moderator \-- who was Andy Kydes. He

13 started a summary of the challenges in

14 long-term modeling and he has many years of

15 experience doing that. And our speakers \--

16 actually, Jim Sweeney, John Weyant, they both

17 are professors at Stanford University, and

18 professor Bill Hogan, who is a professor at

19 Harvard University.

20 So the way we interpreted the

21 coordination between Andy Kydes and I was

22 Andy Kydes was the moderator and I was the

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1 facilitator. Actually, I was the only

2 facilitator to the whole EIA

3 conference \-- there was only one, and part of

4 the reason, we kind of joke around is because

5 we have three heavyweights and we need two

6 people to help them.

7 So first, Andy Kydes raised some

8 questions what do we mean by long-term. When

9 we talk about long-term modeling, the

10 important thing is the time frame varies. It

11 really depends on the users and depends on

12 the subject matter. Like energy commodity

13 traders will think maybe one day is important

14 and then two days is too long. I heard

15 comments. So it\'s very important to look at

16 what the customers \-- and for the electric

17 and gas utility planners, it\'s 10 to 15

18 years, even more, because the initial capital

19 investment is very high.

20 And for Energy Information

21 Administration and commercial forecasters,

22 we\'re talking about 10 to 25 years, but for

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1 R&D investment, decisionmakers, we\'re talking

2 a much longer time, because R&D payback takes

3 a long time, and the probability and

4 uncertainty involved in R&D is also very

5 uncertain. So for climate change interest,

6 we\'re talking about 50 or 100 years. So here

7 when we talk about the time frame long-term

8 or short-term, there are some issues here.

9 And the next thing I\'ll be talking

10 about is the challenges. So what are the

11 challenges? First is data availability and

12 quality, and I heard some comments at a

13 conference. Most people emphasize the

14 importance of EIA data quality, and some

15 people say, well if you don\'t have good data,

16 it\'s garbage in, garbage out, even though you

17 have a very good model, but the parameters

18 are all wrong. It\'s not relevant if you

19 don\'t have good data input.

20 So data availability and quality

21 are the challenges. Developing a good

22 starting point for the projection is

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1 important. Consumer preferences or choices

2 for technologies and efficiency. We need to

3 understand using historical data to

4 understand these elements. And technological

5 progress and how it might progress \-- is

6 there evidence of a relationship between

7 specific R&D and specific progress? So there

8 are a lot of issues when we look at the

9 longer term list.

10 How about the elements and how do

11 we moderate and how do we use the historical

12 data to establish the best case? Also,

13 market barriers and market hurdles and how

14 they affect efficiency adoptions.

15 On the modeling side, the

16 challenges are uncertainties in forecasting.

17 For example, changes to the demand for energy

18 services is very hard to predict, and how

19 they respond to changes in prices and

20 policies. For example, right now we look at

21 the gasoline price at the pump. What happens

22 in the past, even the climate change models

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1 when they were doing their modeling, they

2 look at carbon taxes. They say, well if you

3 raised gasoline price to \$2.50 or \$3 a

4 gallon, you will see people shifting. We

5 haven\'t seen a significant drop in gasoline

6 demand. Right now, we observe a slight

7 change in demand, and it could be because of

8 the economic conditions. It\'s not because of

9 the prices. So there are a lot of elements

10 we need to understand from the data and then

11 incorporate those assumptions in our modeling

12 analysis.

13 And also we need to be able to

14 capture the availability, corrector and

15 prices of future and domestic supplies, and

16 in addition, the technological progress

17 through R&D and technology learning need to

18 be incorporated in the analysis.

19 And another element is maybe

20 innovations in technologies, breakthroughs,

21 and how do we model those breakthroughs. I

22 think at the peak oil analysis, some of the

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1 assumptions almost involved like

2 nanotechnologies which is new right now, and

3 they may take years or even decades to see

4 its impact on, say, oil recovery. So the new

5 elements are kind of speculative and very

6 uncertain.

7 And another element is

8 technological adoption. Can we project

9 changes in consumer behavior and preferences

10 from historical patterns? How would

11 consumers change behavior?

12 Actually, the first speaker raised

13 some very interesting questions. Professor

14 Jim Sweeney said really we need models. In

15 order to have a useful model, we have to ask

16 what other questions, because there are

17 different models for different questions.

18 And so the designer of a model must know how

19 the model will be used. If we don\'t know how

20 the model will be used, the model itself is

21 not very useful.

22 And for professor Sweeney\'s

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1 presentation, he basically indicated \-- he

2 actually got a \$35 million grant from

3 Stanford University alumni to do energy

4 efficiency studies. So he\'s a lucky guy.

5 And he was very happy to brag about it, so he

6 said now he\'s looking at many different

7 aspects of energy efficiency, especially in

8 the building sector.

9 And so he said for him or his

10 stakeholders, it\'s very interesting energy

11 efficiency policy, and how energy efficiency

12 policy could change consumer behavior. And

13 high energy prices, how consumers will react

14 to price, and we look at transportation

15 sectors since like really we don\'t \-- we

16 haven\'t observed a very significant consumer

17 responses to energy prices.

18 Technological progress, that\'s

19 another element. And the last element is

20 changes in consumer behavior due to changes

21 in social norm. And professor Sweeney\'s

22 example is, if you look back 15 or 20 years

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1 ago, recycling was unthinkable, and now

2 almost everybody\'s doing it. So that\'s

3 basically the social norm changes, people\'s

4 perception changes, so sometimes the behavior

5 change is gradual, but eventually it becomes

6 very significant.

7 In the building sector, Sweeney

8 suggested more detail structures are needed

9 for efficiency analysis. I think now he has

10 enough resources so he is interested in

11 understanding more, and because building

12 sector is so diverse, you can look at the

13 lighting possibility, look at the heating and

14 cooling and the water heating, so there are

15 so many different aspects, and also the

16 building design, building code enforcements,

17 standards and all can have impact on building

18 efficiency.

19 So he suggested in the building

20 sector more detailed structures are needed

21 for efficiency analysis. And the implication

22 is the more we understand how technologies

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1 are deployed and how consumers adopt

2 technologies, then effective policy can be

3 developed to actually help the energy system

4 improve the energy efficiency.

5 Also, technology representation

6 must capture technology learning. This is

7 another thing \-- I think for people who are

8 not familiar with technology learning, this

9 term is basically, as a new technology

10 penetrates the market, more people understand

11 how the technology functions, and more people

12 understand the benefit of the technology.

13 The scale of adoption can actually lower the

14 cost of production, so the unit cost of

15 technology will decline, and that would help

16 actually the adoption.

17 So there\'s a relationship between

18 the cumulative adoption of the technology and

19 the cost of the technology. That\'s what he

20 meant. So initially, for example, when we

21 look at compact fluorescent light, fifteen

22 years ago, back in the late \'80s and early

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1 \'90s, people just think it\'s too expensive,

2 it\'s not reliable, but now I think in 15

3 years, we will not see incandescent light

4 bulbs, because the technology eventually

5 penetrates the market and becomes more.

6 But that kind of analysis is pretty

7 long-term \-- even for light bulbs, you can

8 see it takes a long time to see the

9 technology penetrate a market, and other

10 technologies will be probably even more

11 difficult to predict.

12 And also, he suggested stochastic

13 approach should be used to model uncertainty,

14 because we don\'t really know what will happen

15 in the future, but we know probably a range

16 of possibilities. And so that\'s a stochastic

17 approach. And he didn\'t think scenario

18 approach would be appropriate for certain

19 types of analysis, and that\'s going to be a

20 challenge to the EIA approach.

21 And I think in the morning

22 everybody heard we had run 36 side cases

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1 besides the reference case, and then the

2 question is if you run a stochastic case, how

3 many cases do you have to run.

4 And additional comments from other

5 speakers include, for climate change then

6 we\'re talking about really long-term, and so

7 for really long-term models, there are three

8 elements. The first is, what is the base

9 case? So we have to develop a base case, and

10 also, we have to represent technologies

11 because we\'re looking at 50 years or 100

12 years, then R&D plays a very important role,

13 so how do you evaluate the returns to R&D,

14 and how do you capture technical progress and

15 how do you capture spillover effect?

16 And that spillover effect is very

17 important. For example, in the oil industry,

18 it benefits from actually several other

19 industries \-- one is computing technology.

20 When we look at 3D seismic, if we don\'t have

21 cheap computers, there\'s no way small

22 drillers can actually conduct drilling

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1 activities, because of computing technology.

2 And the other one is the drilling actually

3 has information \-- can process information

4 underground. That\'s based on the medical

5 scanning technology.

6 So the oil industry actually did

7 not invent those technologies, they simply

8 benefit from the development of those

9 technologies. And so this is the spillover

10 effect, and how do you capture that when we

11 look at really long-term effect?

12 Another element is the treatment of

13 uncertainty, and that has something to do

14 with policymakers. Do we assume economic

15 agents represented in a model myopic or would

16 believe they have rational expectation? And

17 the question will be, nobody knows what will

18 happen in the next 50 years, not mentioning

19 100 years, but how far does a standard

20 economic agent look beyond the present time?

21 That\'s another element that needs to be

22 addressed.

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1 But all the speakers agree the

2 important thing in modeling is a model must

3 be able to provide insight. What are we

4 looking for? And what do we learn from the

5 modeling exercise?

6 So we all like to have a crystal

7 ball for long-term forecasting, because if we

8 know the future, it\'s easier to do the

9 forecasting. But most of the time, the ball

10 is not very clear. And we have only limited

11 means to penetrate the barriers of

12 uncertainty in the future. So what we have

13 is actually a trade-off. We must strike a

14 balance between model usability, model

15 complexity, data availability, demand for EIA

16 products, and financial resources for

17 analysis and modeling.

18 With that we\'d, like to get

19 comments from the ASA committee.

20 DR. FEDER: Thank you. Just a

21 request. Is it possible to get those

22 presentations?

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1 DR. TSENG: Yes. Sure. We will post

2 it on the web and we can send it to you too.

3 DR. KOKKELENBERG: That would be very

4 good. Thanks.

5 DR. NEERCHAL: Looks like I missed a

6 very good session, obviously.

7 DR. KOKKELENBERG: I have one

8 observation. You listed five different users,

9 the commodity trader up to the climate change

10 people, and you have two products now to

11 short-term energy (inaudible)

12 DR. TSENG: Yes. Right.

13 DR. KOKKELENBERG: Which tries to

14 cover that range of people with two forecasts.

15 And then there was some talk about integrating

16 the international with the annual energy

17 outlook. And there was some question about how

18 to make sure that the short-term energy outlook

19 and the long-term energy outlook are coherent.

20 DR. TSENG: Right.

21 DR. KOKKELENBERG: Is there any talk

22 about trying to do some of these more

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1 specifically targeted products like utility

2 planners versus commodity traders or something

3 like that?

4 DR. TSENG: Well, right now, the range

5 of EIA products can serve some of the

6 stakeholders \-- like product traders, we have

7 weekly inventory report, oil report, on

8 Wednesday and on Thursday, you have the natural

9 gas inventory. And this serves the short-term

10 traders. They look at the numbers and they try

11 to interpret it. And then on top of that is

12 Short Term Energy Outlook provides kind of a

13 little bit longer-term outlook of the energy

14 market. But we\'re looking at 18 months. But I

15 believe the users mostly look at the next six

16 months, and so that\'s a short-term \-- a

17 short-term model actually goes 24 months beyond

18 the current month and so the energy outlook

19 people, they try to adopt the assumptions used

20 by the short-term people.

21 But the AEO only looks at every

22 five interval \-- even though AEO is sold

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1 annually, but the reporting is actually only

2 five years.

3 So that kind of reduces the burden

4 in making sure the numbers are consistent.

5 DR. KOKKELENBERG: Okay.

6 DR. TSENG: But in general, in an

7 accounting sense, they are consistent.

8 MR. TOMAN: Mike Toman here. Can you

9 go back a couple of slides to \-- yeah, maybe

10 that. I mean, several of these are good, but

11 that\'s a good one for \-- the one you had before.

12 DR. TSENG: Okay. Right.

13 MR. TOMAN: Yes. That\'s fine. Just

14 to maybe remind us of the challenges as they

15 were identified in the discussion.

16 I think it was really interesting

17 the way you recounted some of Jim Sweeney\'s

18 ideas about what to do in understanding

19 energy efficiency. I think if I had a \$35

20 million research program, I would probably be

21 saying exactly the same things, but EIA

22 doesn\'t have that, and its mission is not

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1 university research, so I guess I would not

2 be overly influenced by what Jim is saying,

3 despite the fact that I think as a fellow

4 economist, I would agree with him in a

5 disciplinary sense.

6 I would think that your most

7 important stakeholders for your long-term

8 modeling have very little to do with

9 commodity traders, as others have already

10 pointed out.

11 DR. TSENG: Yes.

12 MR. TOMAN: They\'re the folks that

13 request service reports because they want to

14 know something \-- so it\'s Congress, and its

15 people that are interested in kind of the

16 storylines, to borrow an IPCC expression, that

17 comes out of the work that EIA does.

18 And that may help to kind of shape

19 the way you set priorities over some of these

20 things.

21 It seems to me worrying about the

22 precision of a projection is not going to be

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1 a winning strategy, and so whether compact

2 fluorescents penetrate in 8 years or 11 may

3 not be very important.

4 What seems important to me \-- maybe

5 I\'m all wrong on this \-- but what seems to be

6 important are the key points of sensitivity

7 or surprise or unanticipated change. The

8 priority that you\'d want to set it seems is

9 based on some notion of what\'s the value of

10 information. The value of information in

11 this context is related to where something

12 that you didn\'t anticipate or something which

13 maybe you did anticipate but by doing the

14 modeling you get a better idea of the

15 circumstances under which it occurs, those

16 kind of new insights about how things might

17 not go according to a certain path, have a

18 difference for decisionmaking, whether it\'s

19 government or private decisionmaking. So if

20 that\'s even approximately right, and then one

21 looks at these key challenges, maybe it\'s

22 possible to try to stick some priorities on

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1 them though I must confess having just seen

2 this, I don\'t know exactly what they would

3 be.

4 Specific rate of adoption for the

5 technology could matter if you\'re interested

6 in market outcomes over a five to ten-year

7 period, but if you\'re interested in what

8 greenhouse gas emissions will be like over

9 the next 50 to 100 years, it may be more

10 important to understand what the long-term

11 rate of progress in de-carbonization would

12 be, and what\'s realistic to presume under

13 different circumstances, and where key

14 surprises or policy drivers could affect

15 that.

16 Would we care to first order if we

17 replaced oil with liquefied coal and then

18 stored the CO2 or went to an alcohol gasoline

19 blend that had the same CO2 or full-cycle

20 emissions, not from a CO2 point of view?

21 So maybe the fine details about the

22 rates at which cost curves shift in or

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1 adoptions occur on the demand side is less

2 important than getting kind of a big picture

3 of what are the most significant drivers,

4 because normally it would be in a global

5 petroleum market, how rapidly the demand for

6 oil and gas grows in the developing world,

7 because that\'s really the big tail that\'s

8 going to wag the small dog. For carbon, it

9 would be the same thing. For the cost of

10 providing energy services and doing it under

11 a low-carbon future, it would be what are the

12 key areas in which technology could advance?

13 I\'m suggesting a deliberately more

14 coarse-grained strategy as opposed to trying

15 to better understand the microeconomic

16 details of the penetration of specific

17 technologies, because I think a simpler, more

18 transparent framework that lets you highlight

19 five key things which \-- after you do the

20 analysis, you could go items one, two, and

21 five, geez, when we ran some scenarios, we

22 got some very different outcomes depending on

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1 assumptions. So this really is going to take

2 some judgment and some discussion. The other

3 two didn\'t really seem to matter very much.

4 But you can\'t get that kind of

5 insight if it\'s getting lost in the

6 fine-grained details of the parameterization.

7 In some sense, it seems to be less is more

8 here, and that doesn\'t actually suggest

9 anything real precise about the priorities,

10 but maybe you need to figure out what are the

11 things that are going to be the most

12 important changes in the whole evolution of

13 the energy economy system and put more

14 attention on those.

15 DR. TSENG: Right. And at a

16 conference, some of the questions are related

17 to \-- especially when we talk about climate

18 changes, what is the cost of reducing carbon

19 emissions, and some speakers actually used the

20 MacKenzie study and say well, actually, there

21 are low-hanging fruits, but nobody\'s picking it.

22 And so what is the true cost and how do you

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1 actually encourage consumers to adopt those

2 technologies even though the cost is a negative.

3 So there are some issues as to exactly how

4 consumers behave and what are the factors

5 affecting consumer decisions? So that\'s kind of

6 Jim Sweeney\'s point, is sometimes you have to

7 look deeper to understand it, but in terms of

8 looking at interaction between demand and supply

9 and getting insight out, if we get into too much

10 detail, we\'ll probably get lost.

11 MR. TOMAN: Let me take your example,

12 take it one step further. Obviously \-- I say

13 obviously \-- you know better than certainly

14 almost everybody else here that a discussion

15 about what drives energy efficiency decisions is

16 an almost religious discussion in some cases,

17 but most studies suggest that it\'s somewhere

18 between a negative cost and a modest positive

19 cost. There aren\'t very many studies I know of

20 which suggest that improvements in energy

21 efficiency would be the equivalent of destroying

22 the economy.

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1 So perhaps, whether it\'s some

2 psychological barrier that makes people not

3 want to be the first adopters, whether it\'s

4 first cost issues, that whole literature on

5 barriers, while we don\'t understand the

6 barriers, we might feel somewhat confident in

7 saying some mixture of incentives through,

8 you know, by the energy crisis go up in

9 direct regulation like appliance efficiency

10 standards will work, there isn\'t any evidence

11 that that\'s going to create huge dislocating

12 costs in the economy.

13 So if it\'s a public policy goal, we

14 want to improve energy efficiency, we can

15 sort of skip over some of those fine-grained

16 details, and if people aren\'t adopting,

17 regulate it. I mean, that\'s sort of a

18 heretical statement for an economist to make,

19 but it might be the thing that we want to

20 focus on.

21 We have a policy to enormously

22 expand the use of alcohol-based

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1 transportation fuels. To me, that\'s a

2 completely different story, because we don\'t

3 have any idea how we\'re going to produce

4 that. Not one single idea. We\'re either

5 going to absorb most of the world\'s corn

6 crop, or we\'re going to use a technology that

7 isn\'t even out of the laboratory yet.

8 That would be a case in which it

9 would seem very, very important to get into

10 some of the details about technology and its

11 rate of advance and the realism. I mean,

12 this isn\'t an adoption question, it\'s a first

13 principles question about engineering and

14 science.

15 And so yes, I understand that we

16 need to look deeper into these things, but

17 still, when you\'ve got limited resources,

18 what are the things from a policy point of

19 view you have to look more deeply into? The

20 places we seem to be really good at screwing

21 up in the energy system for decades now have

22 been large, sweeping, regulatory mandates or

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1 large expenditure programs built on weak

2 analytic and scientific foundations, and as

3 well, completely missing the point about how

4 markets evolve in the big picture of things.

5 Nobody anticipated in the mid-\'70s

6 that we could have economic growth and really

7 not have any growth in energy use because

8 prices would drive efficiency. And not too

9 many people in the mid-\'90s anticipated how

10 this rocketing growth in Asian energy demand

11 would change global markets. Those are the

12 big turning points we seem to not do a very

13 good job of addressing. So I would put my

14 emphasis there and not worry so much about

15 when people buy light bulbs.

16 It\'s important. I\'m not

17 trivializing it. But you all have to make

18 very hard decisions with very limited

19 resources, as Guy Caruso pointed out. I

20 would look for those things that sort of can

21 make big differences depending on how they

22 turn out.

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1 DR. TSENG: thanks. And how about

2 time frame? There\'s apparently now people

3 pushing for 2050, for example. In the peak oil

4 study, EIA actually extended the time frame to

5 beyond 2100, because sometimes you really have

6 to kind of stay back and look at the big picture

7 and see exactly what\'s happening in the

8 marketplace. Is there any comments on the time

9 frame of the analysis?

10 MR. TOMAN: I\'m not sure anything past

11 2015 is anything more than descriptive anyway.

12 I think 2050 is a good thing to do if the focus

13 of the model is being descriptive ultimately and

14 not the numbers themselves for different

15 storylines. If you\'re going beyond that because

16 you want to check out whether there are any end

17 effects going on that could alter your pre-2050

18 results, I think that makes a lot of sense.

19 I\'m not a big fan of reporting

20 results past 2050 unless you have to because

21 it\'s the IPCC or something.

22 DR. HILL: Some (inaudible) after 2100

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1 just to see if the model made sense.

2 DR. BLAIR: Yes.

3 Mr. KOKKELENBERG: Well, just on that,

4 I would agree, Michael, going past 2015 probably

5 kind of \-- except for end effects \-- not a very

6 useful exercise, because if in 1800 you were

7 doing forecasts out to the year 2000, you would

8 probably be worried about the efficiency of

9 whale oil and lighting and its replacement with

10 maybe something else. One thing that \-- you

11 mentioned that consumers are not responding to

12 higher gasoline prices, and I have just two

13 observations. I don\'t know quite what happened

14 in 1973 when the real price of gasoline really

15 went up, but it seemed to me that between

16 Congress reacting with the CAFE standards and

17 have consumers moving towards lighter vehicles

18 and more efficient vehicles, some kind of

19 response.

20 It takes a long time to wear out a

21 car, and that\'s the big expenditure

22 associated with travel is the depreciation

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1 and the maintenance of a car rather than the

2 cost of fuel for it, which brings up the

3 point a little bit more detail. If you look

4 at the energy consumption as a percentage of

5 disposable income of most families in this

6 country, I\'ll bet you\'re going to find it\'s

7 under 5 percent, probably under 3 percent and

8 that includes heating, lighting and

9 transportation. Now, that\'s direct energy

10 consumption. I\'m not counting the stuff

11 that\'s in their bag of grapes that you\'ve got

12 that was flown up from Chile.

13 Given that, a 10 percent increase

14 in the cost of energy is less than half a

15 percent change in your disposable income.

16 And therefore, to build on what Michael said,

17 perhaps you should look at things which are

18 very big in terms of the consumer budget,

19 when you\'re making a decision of your coarse

20 graining, which I like his idea of coarse

21 grain analysis, because you do get bogged

22 down in what are you going to do with the

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1 mercury in the fluorescent light bulb issues,

2 which \-- our economists would like to say the

3 market will take care of changing the light

4 bulb, as it were.

5 That is consistent with that

6 conference that was here that Andy Kydes had

7 last December.

8 DR. TSENG: Yes.

9 DR. KOKKELENBERG: Where people were

10 saying firms do not make their decisions based

11 on what you\'re going to charge us for energy.

12 We\'re looking at the net present value of the

13 overall project, and energy is just one of the

14 many costs associated with running the project.

15 And that\'s what they make their decisions on.

16 DR. TSENG: Thanks. They\'re almost

17 like supporting Mike\'s argument is \-- if others

18 believe the social cost for doing certain things

19 negative, does that justify regulation? And

20 then it\'s easy to model, because we can say, for

21 example, the vehicle efficiency by 2020 will be

22 35 MPG, and then we will see demand for

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1 transportation fuel drop because that\'s policy.

2 DR. NEERCHAL: Any other comments?

3 Thank you.

4 So we are doing okay. We should

5 probably \-- we are in the home stretch, I

6 think. Committee\'s additions for topics for

7 the fall meeting? Anything that comes up,

8 that you should probably make a note of? I

9 think Alethea sent an e-mail out asking for

10 possible dates, right? Sometime soon. And

11 we\'ll probably have one or two new members

12 for fall.

13 MS. JENNINGS: Hopefully we will have

14 a new member in place by the fall meeting.

15 DR. NEERCHAL: Okay.

16 MS. JENNINGS: As far as the

17 response \-- there were some responses that did

18 come in favoring toward the end of October for

19 our meeting. I would like to \-- before we

20 confirm that, I would like to hear from the

21 committee members and how they responded. And I

22 will just remind (inaudible) and then I\'ll try

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1 to get some information out to you about the

2 date that we selected as soon as possible.

3 DR. NEERCHAL: And we have a volunteer

4 for vice chair, but I think it needs to be

5 really coming from the ASA President, so I think

6 you\'ll probably hear that appointment hopefully

7 from the President to one of us and then forward

8 it to the committee. So October we should have

9 a vice chair. From the spring meeting,

10 actually, because I\'m rotating out in October.

11 DR. FEDER: Actually, following that

12 appointment too has to come from the ASA

13 President.

14 DR. NEERCHAL: Yes. Yes.

15 DR. FEDER: The vice chair

16 (inaudible).

17 MS. JENNINGS: Actually, I did want to

18 share with you just a few ideas for topics.

19 DR. NEERCHAL: I think one thing that

20 maybe I can specifically ask whether you \-- we

21 saw three presentations today, do you want any

22 of them to be coming back to those topics?

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1 I think some (inaudible) again. It

2 looks like the peak oil thing was a very

3 intensely discussed session, so something

4 related to that might be a useful thing.

5 DR. BLAIR: Having said that, Nagaraj,

6 I\'m sure most of the committee thinks EIA is not

7 here to serve us, we\'re here to serve EIA. The

8 questions \--

9 DR. NEERCHAL: You want to answer

10 this. This is an input for Stephanie, actually.

11 You use us anyway you feel.

12 MS. BROWN: Right.

13 DR. NEERCHAL: I think one of the \-- a

14 couple of years ago, there was instruction from

15 somebody to EIA to use as part of the external

16 review, so I think that Nancy, she brought that

17 idea to here so (inaudible) review can be

18 conducted and came up with additions for outside

19 (inaudible) so I think it gave a little bit more

20 credence to her choice of analysts, so I think

21 that is a good example of how you can use us.

22 MS. BROWN: Well, having been here for

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1 only a month, it\'s a little soon for me to say

2 from my perspective what might be good for your

3 input, but over the next couple of months, I\'ll

4 probably have a better feel for what we could

5 use your advice on and I\'ll get back to the

6 committee on that.

7 DR. NEERCHAL: So this is a

8 reactionary committee?

9 DR. KOKKELENBERG: Years ago, and I

10 don\'t know how many years ago, the EIA did a

11 bunch of the analysis itself. In the last 10

12 years, there\'s been a really heavy use of

13 contractors to do much of the analysis, and the

14 OIR set up a huge set of standards which under

15 Yvonne Bishop, they really pounded peoples\' head

16 on trying to get the statistical reliability and

17 statistical practices engrained in the EIA

18 people. And I think they did a tremendous job

19 of it. The way the EIA information comes

20 forward now is exemplary.

21 I don\'t know if there\'s any concern

22 about fine-tuning factors or how you hold

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1 contractors to those kinds of requirements

2 for sophisticated and thorough statistics,

3 and if there\'s any need for this committee to

4 even consider that. But it\'s a thought.

5 MS. BROWN: I\'m not sure about that.

6 The only other thing I could think of as my

7 brain was functioning here, I know that there

8 was some discussion on the topic about

9 disclosure; right, Renee? When we thought about

10 having on the agenda, that this time, for a

11 variety of reasons didn\'t get on there, so

12 perhaps for the next time that\'s a topic, and

13 we\'ll certainly consider about the standards for

14 contractors.

15 DR. NEERCHAL: Well, we did send an

16 e-mail about the \-- do you want to pick it up?

17 DR. HILL: Oh sure. It\'s not so much

18 for our next meeting. There was a (inaudible)

19 Michael Larson to \-- it may have gone to all of

20 us, about the possibility of producing an

21 article for Chance magazine. So if you get a

22 chance, (inaudible) a piece in that. It\'s a

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1 relatively well-known magazine for

2 statisticians. It would give a sense of what

3 the committee\'s doing and would give some sense

4 about what the energy agency is doing through

5 such an article.

6 DR. NEERCHAL: I think that there are

7 two or three places where such an article can

8 go. One place I can think of right away is

9 Amstat News. I think that a committee

10 report \-- I think that \-- yeah, it\'s a question

11 of \--

12 DR. KOKKELENBERG: One short article,

13 because they don\'t want it to be more than a

14 page. You probably could get away with a half

15 page article. For Chance, you probably want a

16 much more thorough analysis of what the

17 committee has done over the history, but

18 picking \--

19 DR. HILL: Not a historical article.

20 I\'ve been on the committee for a couple of years

21 so \--

22 DR. KOKKELENBERG: Well, a topic,

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1 making it topical \-- I mean, you could have a

2 bit of both. You could say, the committee\'s got

3 this really hot topic it\'s been wrestling with

4 like updating the national \-- whatever. But

5 here\'s the history of the committee, too. A

6 good newspaper article does that sort of thing.

7 It does bring in some of the history. And

8 Chance to me is \-- it\'s not highly technical,

9 but it\'s technical enough that bringing in some

10 of the technical issues that we\'ve dealt with

11 historically is \--

12 MS. BROWN: Two more thoughts and I\'m

13 going to \-- Stan, you\'re back there, right? Is

14 there anything that the committee could give us

15 some guidance on with the new bulk terminal

16 survey?

17 MR. FREEDMAN: I think that EIA is in

18 the midst now of potentially revising some of

19 the petroleum supply surveys to take into

20 account new actors in the production of motor

21 gasoline and other finished products. The issue

22 right now, today, is is there going to be

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1 funding to do that.

2 I think if the funding comes

3 through and these surveys do get revised,

4 October might be a good time frame to get

5 input from the committee to explain how we\'re

6 going to redesign those surveys, who the new

7 actors are in the market, the bulk terminals

8 are now actually doing blending of product

9 that they weren\'t doing before, so how do we

10 get a frame established. There will be a new

11 survey. It may have been tested already, but

12 we can talk about the results of that testing

13 and things could come back, but that is very

14 much \-- talking to the people in petroleum

15 supply who are going to be responsible fro

16 this, I still think there\'s some negotiation

17 going on with Howard as to how much funding

18 is going to be applied to doing that

19 activity. So if funding is forthcoming, I

20 think October would time to talk about that

21 depending on what stage we are in design and

22 development, or maybe we\'ll be a little past

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1 that and we can talk about how we display the

2 results and discuss interruptions in the time

3 series data. There\'s a number of things we

4 could do but it\'s all going to be very

5 dependent on funding. So it\'s a good

6 suggestion, a good topic. We should know in

7 maybe a few weeks if we\'re going to go

8 forward with that because if we are, we have

9 to go through the clearance process and that

10 kind of thing, but it\'s the kind of thing we

11 can use the committee\'s advice on and have in

12 the past used their advice on new surveys or

13 redesigned surveys.

14 MS. BROWN: One more thing, one more

15 comment that\'s jumping in my mind. Having only

16 been here for three or four weeks now, what

17 about anything on the internet data collection

18 and data quality issues on the new collection

19 instrument, the web collection instrument.

20 Anything with that?

21 MR. FREEDMAN: I\'ll have to think

22 about that. We talked several meetings ago

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1 about the effort at EIA to build an

2 enterprise-wide system for collecting

3 information over the internet and that\'s in

4 process now. I just came from a meeting this

5 afternoon where we were talking about scope

6 creep and things like that, because this thing

7 has kind of expanded beyond the collection tool

8 and has kind of moved in the processing and that

9 kind of thing, so certainly a status report as

10 to where we are might be interesting for the

11 committee. I\'m not sure where we will be in the

12 small \"p\" political sense in terms of

13 decisionmaking, but I think a status

14 report \-- because we did talk about that I think

15 a couple of meetings ago, and that

16 effort \-- Renee\'s shaking her head. She has

17 much better memories for these topics than I do,

18 but I think I was here talking about what we

19 were doing in terms of design.

20 And we\'re working on an authoring

21 tool so survey managers can do their own

22 survey design and not have to turn it over to

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1 programmers. And we\'re hoping, without

2 revealing too much \-- we\'re hoping any day

3 now to get that tool finished up so we can

4 take it out and do some usability testing

5 with respondents, so I think there will be

6 something to talk about in terms of a status

7 report. That\'s another possibility.

8 Ed, I will say one thing. You

9 mentioned that you heard that more analysis

10 is being done by contractors?

11 DR. KOKKELENBERG: I thought more work

12 was being done by contractors than let\'s say 15

13 or 20 years ago.

14 MR. FREEDMAN: I\'m not sure that

15 that\'s the case.

16 DR. KOKKELENBERG: Oh, okay.

17 MR. FREEDMAN: And possibly even the

18 opposite.

19 DR. KOKKELENBERG: Okay.

20 MR. FREEDMAN: We may want to

21 investigate that and find out if that\'s the

22 case, but I do know that even as \--

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1 DR. KOKKELENBERG: No, that was the

2 sense I got when Bill told me he was managing 28

3 contractors.

4 MR. FREEDMAN: What he was managing

5 was the independent expert reviews for that work

6 and that work, essentially is getting done

7 in-house as far as I know.

8 DR. KOKKELENBERG: Oh. Okay.

9 MR. FREEDMAN: But it\'s worthwhile

10 asking a couple questions and finding out if

11 that\'s the case. I just don\'t think it is.

12 DR. KOKKELENBERG: Okay.

13 MR. FREEDMAN: So those are two

14 possible topics that we could talk about, and

15 the two that Stephanie suggested are definitely

16 possible topics.

17 MS. BROWN: And just so I give

18 Renee \-- anything on the data side of this

19 (inaudible) that you think might be worthwhile

20 bringing up for the next \-- thinking about the

21 next session?

22 MS. MILLER: I think Alethea has a

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1 list.

2 MS. BROWN: Oh, you have \-- that\'s

3 good.

4 MS. JENNINGS: I wanted to hear from

5 everybody.

6 MS. BROWN: There\'s some overlap, I

7 hope?

8 MS. JENNINGS: Actually, no. There

9 were three areas that we were considering

10 bringing to you in the fall and one you\'ve seen

11 something similar before with Dr. Lady\'s

12 presentation. It would be another aspect of

13 using regression to evaluate NEMS and one of the

14 possible presenters just walked out \-- so I will

15 leave that topic on the table and not discuss it

16 since it\'s not mine to present.

17 But that\'s one of them. The other

18 one we\'re considering presenting the impact

19 of using survey incentives with RECS, which

20 is our Residential Energy Consumption Survey.

21 The people who actually run that survey are

22 interested in presenting in the fall and

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1 getting some feedback from you and giving you

2 some of the results that they will have at

3 that time. They weren\'t prepared for this

4 meeting.

5 The other thing is, we have an

6 office that is exploring new ways to use the

7 GIS, the Geographic Information System, and

8 that\'s our coal office, so they are planning

9 a presentation for us in the fall on that as

10 well. So those are three areas that we think

11 we will be presenting to you.

12 DR. KOKKELENBERG: I want to raise one

13 more \-- and Stan might want to comment on this.

14 I read somewhere that one of the reasons that

15 the price of gasoline in this country is so low

16 relative to the price of diesel fuel, is that

17 diesel is being used more and more in Europe and

18 the refineries are shipping extra gasoline to

19 us.

20 It\'s not clear to me that you\'re

21 not covering this in your current surveys of

22 imported petroleum products, rather than

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1 crude oils. Is there anything in the current

2 surveys of petroleum imports that might

3 corroborate that? I\'m not even sure my basis

4 is correct.

5 MR. FREEDMAN: I\'m glad to say that I

6 know very little about the imports of petroleum

7 products or why motor gasoline prices are high.

8 I do know that we get some of our data on

9 imports from census. Renee, do we collect

10 imports on any of the petroleum supply surveys

11 or is it all from census?

12 MS. MILLER: No, we collect it.

13 MR. FREEDMAN: Okay, so that\'s

14 possible.

15 DR. KOKKELENBERG: And I don\'t know if

16 there\'s anything here for this committee to be

17 concerned about.

18 MR. FREEDMAN: I don\'t.

19 DR. KOKKELENBERG: And if there is a

20 changing \-- or if there\'s a movement to much

21 more petroleum product imports \--

22 MR. FREEDMAN: I think in general, and

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1 this could be a sort of a continuing topic

2 maybe, there is interest in the petroleum

3 division of doing revisions to their surveys to

4 keep pace with the industry. That\'s happened in

5 natural gas, it\'s happened in electricity. And

6 20 years ago it happened to petroleum and it

7 kind of needs to be done again and that\'s why

8 they\'re thinking about bulk terminal survey and

9 doing that other kind of thing, so that may be a

10 piece of the larger picture of redesigning EIA\'s

11 petroleum activities. But again, I think Steve

12 Harvey would be a good one for us to talk to

13 about that to see what the game plans are

14 because I know that\'s very tied up in the

15 funding that he didn\'t get from Congress this

16 year.

17 DR. KOKKELENBERG: Okay. Thank you.

18 MR. FREEDMAN: But it\'s a good

19 thought, Ed.

20 DR. NEERCHAL: So we have plenty of

21 possible topics so we should be okay for fall.

22 We are in business for fall, Alethea.

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1 MS. BROWN: Yes. And we won\'t cancel

2 the committee right.

3 DR. NEERCHAL: I need to invite the

4 public for comments. Is there any public left?

5 MR. JOHNSON: I don\'t know if I\'m part

6 of the public, but I would like to congratulate

7 Alethea on her first meeting.

8 MS. JENNINGS: Thank you. I

9 appreciate it.

10 DR. NEERCHAL: So with that, I think I

11 can entertain a movement to adjourn.

12 DR. KOKKELENBERG: So moved.

13 DR. BLAIR: Second.

14 MS. BROWN: I want to thank \-- it\'s

15 been a pleasure meeting all of you for the first

16 time. I look forward to many \-- well, for some

17 of you, two or three more years, for some of you

18 only one, but I look forward to working with you

19 in the future. It\'s been fun. It\'s been very

20 informative for me. Thank you.

21 MS. JENNINGS: I have one comment

22 before all of you leave which I forgot to do.

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1 On behalf of everyone in EIA, there are a few

2 members who made the effort and succeeded in

3 attended the EIA conference. We really do

4 appreciate that and we know some of you tried,

5 some of you intended to come and couldn\'t make

6 it, so we appreciate those. I think there were

7 several who attended the conference as well as

8 this meeting. I think Dr. Brown was at the

9 conference but couldn\'t make this meeting. So

10 thank you for that. Thank you for your efforts.

11 We appreciate it.

12 DR. NEERCHAL: Thank you.

13 (Whereupon, at approximately 4:25

14 p.m., the PROCEEDINGS were

15 adjourned.)

16 \* \* \* \* \*

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