The Effects of the Fiscal Year 1983 Budget, Energy Reorganization, and Program Changes on U.S. Energy Emergency Preparedness

GAO was asked to update its analysis of energy emergency preparedness by looking into the effect of continuing budget and staff reductions at the Department of Energy (DOE). It was also asked to: (1) comment on the implications that the proposed energy reorganization may have on both domestic and international energy emergency preparedness; (2) clarify the United States' obligations under the International Energy Program; and (3) comment on actions which should be taken to ensure adequate preparedness beyond those covered in S. 1503.

Under its proposed budget, the Administration has chosen to reduce energy emergency preparedness efforts. DOE has no plans to: (1) develop a surge oil production capability; (2) develop a strategic petroleum reserve drawdown policy; (3) institute a private oil stock management program; or (4) develop voluntary and mandatory demand restraint programs. Efforts in fuel switching and international emergency preparedness would be substantially curtailed, and few resources would be devoted to studies of emergency tax/rebate systems that could be used to counter oil price increases even though previous oil allocation systems have been discarded. The staff responsible for international preparedness is being reduced by two-thirds. S. 1503 would give the President the authority to act in an energy emergency; however, the government must have sound contingency plans as well. Under the Administration's reorganization proposal, emergency preparedness and the International Energy Program would be transferred to the Department of Commerce. Just how these programs will fit into Commerce's structure has not yet been resolved, and it is unclear if U.S. obligations to the International Energy Agency can be fully discharged under these circumstances. The price controls provided in S. 1503 could be counterproductive. Further congressional action is warranted in the areas of private oil stock management and demand restraint. DOE could take steps to improve readiness in the areas of surge oil production, fuel switching, and international preparedness programs.