Natural Gas Data Needs in a Changing Regulatory Environment (1985) / Chapter Skim
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ASSESSING DATA NEEDS
ASSESSING DATA NEEDS
Pages 29-60
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From page 29... ...
When some com mod i t ies are not prope r ly pr iced by mar kets , the not ion that there i s a way to construct an appropr iate pr ice for them depends on the costles s f low of i nformation about product ion and consumpt ion oppor tun i t ies . Obv iously , a set of techn iques grounded on assumpt ions of a costles s i n format ion f low may turn out to be unusable or unhelpful when appl ied to valu ing an act iv ity that , l i ke stat ist ical prog rams , bas the obj ec t ive of produc ing an information f low .
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From page 30... ...
I f cos t-benef i t analys i s of government prog r ams i s analogous to a pr i vate f i rm ' s prof i tab i l i ty analys is of an investment proj ect or a pro duc t ion ac t iv i ty , cost-benef i t analys is of data prog rams i s ak in to a ttempt ing to analyze the pro f i tab i l i ty of a f i rm ' s informat ion gather ing and d i s seminat ion prog rams -- its account ing depar tment and long-term r esearch and deve lopment . And f i rms do not a ttempt to determine the prof i tab i l i ty of the i r account ing departments or apply the same k ind of prof i tab i l i ty calculat ions to long-term r esearch and development as they do for expend i tures on plant and equ ipment .
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From page 31... ...
Ye t EIA ' s c r it ics have emphas ized attempt ing to sur vey representat ive samples of user s rather than inter v iewing informally selected groups of users or d iscuss ing prog r ams w i th adv isory commi ttees . W e bel ieve th is emphas i s i s motivated in par t by the mistaken be l ief that evaluat ion prog rams that do not produce quant i tative results are inadequate and that a formal sample survey might be c apable of producing quantitat ive measures of data usefulness .
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From page 32... ...
In the case of data on r eserves , an BIA progr am has d is placed a s imilar pr ivate sector prog r am , and we do not r ecommend tha t the prog ram r eve r t to the pr ivate sec tor . The fact that informat ion does not behave l ike an ordinary com mod i ty , which makes cost-benef i t analysis inappl icable to data programs , also implies that pr ivate sector prof i tab i l i ty cr i ter ia are inappropr i a te for data programs .
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From page 33... ...
The Profess ional Aud i t Rev iew Team ( PART) , establ i shed by the Energy Co nservat ion and Produc t ion Act o f 1976 ( P .
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From page 34... ...
The PART r ecomme nded that as par t of the development of the Nat iona l Energy Informat ion System , ( Profess ional Audi t Rev iew Team , 1 9 80 : 5 5 ) : • [ EIA should )
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From page 35... ...
The s tud ies should also i nd icate the trade-offs wh ich should b e cons idered be tween t imely data and ver i f icat ion and identify a r eas where E IA could r educe collect ion e f for ts through the cur ta i lmen t of data r eques ts . The PART team r ecogn ized that E IA had i n i t iated several ef for t s to de f ine the usefulness of its data and publ icat ions , bu t i t concluded that •despi te these e f for ts , none of the s tud ies or proj ects provide an inc i s ive assessmen t of the immed iate or future needs of BIA data and publ ica tions• ( Profess ional Aud i t Rev iew Team , 1 9 8 2 : 2 6 )
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From page 36... ...
The PART teams are also ignor ing the pr actical impos s ib i l i ty of identify ing the populat ion of data users -- and ther efore of construc t i ng a representative sample from i t -- and the fact that the bene f ic iar ies o f data use are not only those who use i t d i r ectly but also those who use i t ind irectly . Formal Requ ir ements Rev iews The mos t formally structured ef for t by EIA to determine the needs o f data user s was to conduct r equ irements r ev iews .
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From page 37... ...
These r equ ir ements r ev iews used d i f ferent methodolog ies to iden ti fy data needs : evaluat ing legal requ irements , regulat ions or leg i s l ative h i s tory i s usually one s tep i n the process , other steps may include ma i l surveys or interv iews w i th data user s . Ma il Surveys The f ir s t r equ irements r ev i ew that we iden t i f ied was conducted by ma i l by inser ting a quest ionna ire w i th one month ' s distr ibut ion of th e Monthly Energy Rev iew .
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From page 38... ...
Th i s assoc iation of issues and data was an impor tant f ir s t s tep i n determining data needs , al though the ar b i tr ary procedur es that the r ev iew later used to ass ign costs and benef i ts produced r esults that we do not bel ieve to be valid . Contract ing for Requ irements Rev iews Much o f the bene f i t of a r equ irements r ev iew der ives f r om contact w i th data user s .
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From page 39... ...
and oak Ridg e Other Re f inery Feedstocks Na tional Labor atory Rev iew of Requ irements Feb . 1 9 8 0 Analys i s o f DOE ; oth e r EIA Only DOE da ta for Domes tic O i l and Ga s leg islation fede r a l agenc ies ; needs wer e Reserves and Produc t ion and congress trade assoc ia cons ider ed I n for ma t ion s ional r ec t ions ; publ ic ords inter e s t g r oups Rev iew of Requ i r ements Apr .
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From page 40... ...
, and Rev ised Petroleu m leg islation ; as soc iations ; Oak Ridge Na t iona l Product Sales i n terv iews ; No r th eas t-Midwe s t LAboratory Informat ion Sys tem user mee ting s ; cong ress ional q uestionna i r es ; coa l i tion ; 3 7 E I A s ta te s tates con ference s ; publ ic hear ing ; r ev i ew of NE I C r ecor d s Rev iew of Pe troleum Sept . 1 9 8 2 Cos t-benef i t Fede r a l agencies ; Oak Ridge Na tional In forma tion analys i s s ta te government ; LAboratory , Hystad Requ i r ements corpor a t ions and Assoc i a tes , Inc .
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From page 41... ...
We do not agree w i th the sta f f evaluat ion of th i s i ssue . Contr ac tor s conduc t ing surveys , requ irements rev iews , and forms clear ance activ i t ies for E IA are acquir ing exper ience and k nowledge f r om d i scus s ions w i th respondents and data user s .
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From page 42... ...
All of the other s tatistical agenc ies ma inta ins r egular contacts w i th gover nment pol icy maker s and othe r data user s in the gov e r nment , both in the i r own and other agenc ies , but do not have formal mechan i sms for obta ining the ir input . Both Census and BLS made use of the s tatistical subcommittee of the Economic Pol icy Group that was establ ished to prov ide senior level advice to the Pres ident .
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From page 43... ...
I t i s c lear that Cong r es s a s an inst i tu t ion and i ts i nd iv idual member s exe r t enormous influence over s ta t i s t ical act i v i t ies . Adv i sory Commi ttees In add i t ion to the inpu t rece ived from gover nment pol icy maker s , Ce nsus , BLS , and NCES have well-de f ined adv isory committees to a id i n evaluat ing sta t i s t ical programs and in se tt ing s tat is t ical pr ior it ie s .
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From page 44... ...
to rev iew data needs , repor tab i l i ty of informat ion , plans for the futur e , e tc • • Bu reau of Mine s BOM does not have adv isory committees . I t depends instead on i ts commod i ty spec ialists to stay in touch w i th data use r s and r eporter s and to deve lop the overall s tatis tical program for each commod i ty .
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From page 45... ...
In that r espect E IA has developed a valu able tool tha t is not used by othe r s ta t i s t ical agenc ies in shaping the i r pr og r ams . An impor tan t po int to note i s that none of the s tatistical agenc ies we cons idered place any emphas i s on formal cost-bene f i t analys i s or data user sur veys as a means of setting s tatistical pr ior it ies .
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From page 46... ...
Th i s PART membe r defended the not ion of putt ing •EIA ' s fee t to the f ir e • on the g r ounds that E IA had been proh i b i ted f rom sett ing up adv isory commi ttees s imilar to those at Census and BLS , thus l imi t ing EIA ' s a b i l i ty to obta in data user adv ice v i a the adv isory committee r oute , • E IA has not had a long h istory of contacts w i th data user s and thus doesn ' t have the s taf f expe r t i se tha t the othe r s tatist ical agenc ies h ave J and E IA ' s r e l iance on contr actor s has inh ib i ted the g rowth o f an ins t i tut ional memory tha t would normally a id the agency in shaping i ts s tatist ical prog r am . Th e th ird member interv iewed s tr essed that there a r e and w ill con t inue to be a w ide rang e of energy i ssues fac ing the nat ion .
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From page 47... ...
Moreove r , the broad-based v iews of such commi ttees would ensure that they do no t evolve into ins ider groups w i th poss ible oppor tun i t ies for manipulat ing s tatist ical pr og r ams . F i nally , we should point out that the use of adv isory commi ttees i s cos t-e f fect ive t o the gover nment .
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From page 48... ...
We repeat our conclus ion that an a ttempt to impose cost-bene f i t calculations on evaluation o f s tatist ical budgets is mor e than impract ical : it is log ically incoherent . The r emainder of the r epor t prov ides an i ssue-or iented evaluation of the na tural gas data sys tem , consistent with the cr i ter ia laid ou t i n th is chapter .
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From page 49... ...
Many of the gover nment ' s and EIA ' s mos t impor tant s ta t i s tical programs involve collec t ing and d i sseminat ing informat ion abou t pr ices . Th e s tandard techn iques of cos t-benef i t analys i s must f a i l in analyz ing such a prog r am .
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From page 50... ...
To determine the e f fects of a s tatistical progr am one has to analyze the deg ree of imper fect ion of nonmarket allocation mechan isms , wh ich is a more d i f f icult task than valu ing a l i st of commod i t ies and a qualita tively d i f ferent one . The foregoing argument does not apply to pr ice information a lone , it extends to any data program that collects informat ion from economi cally act ive agents and d isseminates it to other s who f ind i t relevant to the i r economic dec i s ions .
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From page 51... ...
5 The r a t ional expectat ions equ i l ib r ium r esult i s that an EIA data d isseminat ion prog r am could not improve the r esource allocat ion ach ieved by markets in th i s ideal wor ld . Bu t contingent commod ity mar kets are r ar e , so a burner owner mus t e s t U8a te for h imsel f the l ikely supply and demand s i tuat ions in the event o f d is r upt ion .
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From page 52... ...
• In th i s case i t should be clear that determin ing the e f fects o f d ata d isseminat ion i s i tself a n analytic problem of major d imens ions , and in fact would r equ i r e mor e data collect ion , at a f iner level o f d e ta i l , than the data program whose e f fects were be ing measur ed . When Cost-Bene f i t Techn ique s Can Be Use ful for Data Programs Th er e are c i rcums tances in wh ich the techn iques of cost-benef i t analys i s can , a t leas t in pr inc iple , b e helpful i n evaluat ing data pro g r ams .
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From page 53... ...
Budget dec i s ions must b e made , and they a r e bound to be based on cos t-bene f i t analysis , e i ther expl icitly or impl ic i tly . Our v iew that cos t-bene f i t analys is does not apply to mos t data prog rams assume s tha t •cost-bene f i t analys i s • is not a mer e label for any sor t of r ational dec i s ion mak ing , but instead is a par t icular ana lyt ical approach .
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From page 54... ...
With informat ion d isseminat ion progr ams , th i s analyt ica l framewor k i s not helpful . Techn ical analysts can determine some of the pol i t ica l and economic dec is ions to wh ich the information i s relevant , and they can look for alternat ive pa thways through wh ich the informat ion might f low if the program wer e reduced or el iminated .
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From page 55... ...
The idea o f us ing standar d me thods to value infor mation at the level of one dec i s ion maker and then sumaing over all s imi lar deci s ion maker s does not apply to data disseminat ion progr ams because of the d i f f iculty of defin ing , at the ind iv idual level , the informat ion tha t dec is ion theory could value . Because i nd iv iduals w i l l not necessar ily k now what i n formation i n the economy i s inf luenc ing the i r behav ior , ther e w i l l b e no way o f i nter rogating them to determine the e f fect o f a n add i t ional piece of informat ion on the i r behav ior .
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From page 56... ...
Therefor e , why does our argument make cost-bene f i t analys i s any mor e inappl icable to information programs than to any other program? The assumpt ion tha t informat ion f low i s free i s cr i tical to cos t b ene f i t analys is o f any prog r am .
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From page 57... ...
Solv ing th i s plann ing problem would be d i f f icult indeed , bu t a t least in th is case , unl ike the case of i nformation d issemination , the techn ique of treat ing the market mechan ism as mimick ing the solu t io n o f an optimi zation problem doe s apply . S imilar ly , a cost-benef i t analys i s of an informat ion dissemination program could be done if the prog ram appl ied to a nar row sec tor of the economy and the per formance of the sector could be measured d i r ec tly w i th and w i thou t the pr ogram.
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From page 58... ...
We th ink it is impor tant to unde r s tand that cos t-bene f i t analys is of data generat ion progr ams , whe ther practical or not , can avoid a hos t o f problems that beset such analys is for d i ssemi nat ion prog r ams and tha t ar e by themselves su f f ic ient to make cos t bene f i t analys i s of d i sseminat ion prog r ams gener ally useless . REFERENCES Energy Informat ion Admin istrat ion 1980 A Rev iew of Requ ir ements for Natural Ga s Da ta .
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From page 59... ...
Profess iona l Aud i t Rev iew Team 1 977 Act iv i t ies of the Energy In formation Administration , Depar tment o f Energy. Repor t to the Pres ident and Congress .
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From page 60... ...
These other substances mus t generally be r emoved befor e the gas i s mar ketable . Natural gas ( and cr ude o i l )
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