U.S. Participation in the International Energy Agency's Fourth Emergency Sharing System Test

Observations were made on U.S. participation in a recently completed International Energy Agency (IEA) Emergency Sharing Allocation System Test (AST-4). The purpose of the Emergency Sharing System is to facilitate efforts of IEA member nations to reduce the adverse consequences of a serious oil disruption and to promote balanced sharing of the shortfall among members. The members agree to maintain emergency reserves and to establish measures for reducing oil demand during a serious disruption in the supply of oil. To enhance its readiness and efficiency, certain operational features of the system have been tested four times. The latest test involved data collection and processing, oil sharing calculations, and oil company and member government cooperation in simulated oil allocations. AST-4 provided useful training to government, industry, and IEA personnel, and the test showed that a newly acquired computer system and related programs can facilitate the processing of voluntary oil company offers in an emergency. However, the test revealed certain problems which must be addressed if the system is to make a significant contribution. The test focused attention on some of the difficulties that the United States might face in relying exclusively on market forces to fulfill U.S. international obligations under the system and in coping with the economic impacts of a major oil shortage. GAO found that the management of U.S. participation in the test was marked by inadequate preparation, lack of coordination, and failure to resolve disagreements on important test-related issues. In addition, the Department of Energy made several assumptions and decisions which may have unduly reduced the U.S. allocation obligation and inclined companies to make much larger voluntary offers for testing purposes than they would in a real emergency situation, raising questions as to how seriously the United States views the sharing system.