IRAQ - EIA Data Questioned.

The quality of EIA's data and analyses, however, were on May 12 questioned by top US energy analysts including representatives of ratings agencies. They met with US Energy Secretary Samuel Bodman and told him they were concerned that government under-funding of the EIA, the Energy Department's statistics unit, was jeopardising the quality of data which can regularly influence oil prices and be used as a basis for OPEC production decisions.

Diane DeVaul, policy director of the Northeast-Midwest Institute, was among the group who asked Bodman for more funding for the EIA. An energy department spokeswoman confirmed the meeting took place. "We are very reliant on the data and very concerned about the cutbacks because we have used the data over the years. The quality is not what it used to be", said DeVaul, whose institute provides public policy analysis for a coalition of senators and congressmen from the 18 north-east and mid-west states.

(According to its Website, the EIA provides policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy and its inter-action with the US economy and the environment).

DeVaul said the EIA needed an annual budget close to $125m, adjusted for inflation, to produce timely data and objective analysis. The Bush administration requested less than $86m for the EIA for fiscal 2006.

(Data the EIA releases each week on US crude and refined product supply, demand and inventories and natural gas storage play a major influence on oil market sentiment and rarely fail to move prices. Analysts from key producing countries, inside and outside OPEC and major oil companies consult the data when making their own supply-demand forecasts).

Bob McNally, who served as special assistant to the president on the National Economic Council and National Security Council from 2001-2003, said under-funding the EIA was "one of the most startling mismatches I saw during my time" with the government. He added: "I think of no greater policy bang for taxpayer buck than to improve the quality of energy data and modeling".

McNally said: "It is startling to me that given the magnitude of problems we faced in the past three years in terms of energy security and the economic challenges that we are cutting EIA budgets". He said he relied on EIA data and analysis almost every day when he served in the White House to help shape US energy and environmental policy as well as cope with a variety of geo-political crises which affected oil supplies.

Energy consultant Matt Simmons likened the EIA to a "31-year-old house that hadn't been remodeled". Simmons cited a shortage of information about oil production, depletion rates and "very fuzzy" proven reserves figures as some of the EIA weaknesses.

The White House wants to see oil prices fall by about half to around $25/b, though reaching that goal may take time, President Bush's top economic adviser Allan Hubbard said on May 11. Hubbard, director of the White House National Economic Council, said in an interview with Reuters as WTI hovered around $50: "We would like to see the price get back to around $25 a barrel, somewhere around there". Hubbard acknowledged: "It's going to take a while for the world energy supply to expand so prices can drop".

The Bush administration has shied away in the past from giving a preferred target for oil prices. An administration official later said Hubbard was speaking "theoretically about a goal, but the White House is well aware that markets set the price for oil".

Bush campaigned in 2000 with a promise to "jawbone" OPEC and Hubbard said Bush has been pressing Saudi Arabia "and I'm sure others" to try to get prices down. Asked what can be done now to push oil towards $25/b, Hubbard gave few specifics other than conservation, encouraging Americans to buy hybrid vehicles and the long-standing proposal to open the Arctic National Wildlife Refuge to drilling.