The Energy Information Administration is ramping up its efforts in understanding what drives energy prices through a new Energy and Financial Markets Initiative, spearheaded by Dr. Richard Newell, the agency's new administrator.
(The EIA is part of the U.S. Department of Energy.)

"EIA's traditional coverage of 'fundamentals' such as energy consumption, production, inventories, spare production capacity, and geopolitical risks is essential, but moving forward EIA must also assess other influences, such as speculation, hedging, investment, and exchange rates, as we seek to fully understand energy price movements," Newell said. "The initiative I am launching today will help improve energy market transparency, support sound policy and efficient markets, and increase public understanding-activities that are central to EIA's mission."

The new initiative will expand the EIA's role in four main areas, including collecting critical information on factors affecting energy prices, analysis through in-depth studies of energy market behavior, soliciting feedback from energy and financial experts, and coordination with other federal agencies involved with energy market analysis.

To improve market transparency moving forward, the EIA now plans to collect data to better understand the relationships between physical inventories, prices and market activity. It will also expand its collection of commercial oil and refined products storage capacity data in early 2010.

In its effort to find ways to improve its data, EIA will seek input from other federal agencies, including the Commodity Futures Trading Commission, the Department of the Treasury, the Federal Energy Regulatory Commission, the Federal Reserve, the Federal Trade Commission, the Securities and Exchange Commission, and other offices in the Department of Energy.

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