Walter Measday is the chief staff economist for the Senate Subcommittee on Antitrust and Monopoly. He has contributed to numerous publications, including Walter Adams, ed. The Structure of American Industry and David J. Teece, R and D in Energy, Implications for Petroleum Industry Reorganization. He holds a Ph.D. in economics from the Massachusetts Institute of Technology.
The Energy Information Administration and, in particular, Arthur Andersen of the Financial Reporting System, are to be commended for holding this conference. But I am afraid the agency will find itself between the proverbial rock and a hard place if it tries to satisfy everybody.
To ask an economist what sort of data he needs in any particular area is like asking a six-year old to write to the Birthday Elf. The economist's reply will almost certainly be in the same ballpark as, "I want a two-wheel bike, and a cowboy pony, and a real fire engine ..." on down to his utmost desire.
On the other side, there are some very real obstacles to filling the economist's wish list. Not the least of these is the Office of Management and the Budget, which has a long, bipartisan history of whittling down agency requests for information. If a proposed report form survives OMB intact, or nearly so, there is still the prospect of litigation. The more complex the form, the more likely it is that a court will find it "burdensome". At best, litigation causes delay—the FTC, for example, now has high hopes of getting its 1974 line-of-business data out before the end of 1979. This is a program which had its inception a decade ago.
I have never been impressed with the cries of pain from business about the enormous costs of complying with government data requests. Usually what is asked for are data which the company needs to run its business in any case. On the other hand, even here information is not a free good. It involves some cost, and it may involve a lot of cost if any large amount of data must be assembled in a uniform manner which differs from the firm's own accounting procedure. More than this, a reasonable request is more likely to meet with some degree of industry cooperation than a complex one. And any long-term reporting program will benefit from this.
There is very little argument among those of us here from outside the pipeline industry as to the type of information we would like to see. (And I will reserve a "but" for a later point.)
We would all agree that the present system of overall financial reporting is inadequate where a single pipeline subsidiary may encompass an oil company's gathering systems, crude and product trunk links, and undivided interests in lines shared with others. A single ARCO Pipe Line Company report, for example, tells us very little about Atlantic Richfield's operations in the TAPS, Basin, Cushing-Chicago, or Rancho systems.
Again, it would be useful to have segment information on major lines. For example, Colonial, a year or so back, had a 48¢/barrel rate from Baton Rouge to Linden, compared to 32¢ for half the distance, from Baton Rouge to Atlanta. Does this indicate any kind of discrimination against the shorter haul? This is an interesting economic question.
One can multiply the desirable information almost at will. I, personally, am interested in the control of crude oil. I would like to see a lot more data on ownership of gathering lines, field by field. Do trunk lines ship crude oil for any shipper, or do they take title to any oil shipped, with or without an agreement to resell at the destination points?
On product lines, it would be nice to know the concentration of ownership in products shipped. The aggregate figures would not mean too much, of course, so it would have to be based on shipments of each product—gasoline of different grades, No. 2, Diesel fuels, etc.—into each of the markets served off a line. This could get complicated. A Colonial spokesman has told me that the line now moves a variety of products from six origin points to 250 terminals, from 51 shippers to 80 consignees.
This is where I return to the "but" which I mentioned earlier. We are talking about a great deal of pipeline information which most economists would agree is useful for our analyses. But the pipeline segment is only one part of the present FRS form designed to provide summary information on all operations of petroleum companies.
If the FRS people were to say to me, "Measday, we'll put in everything you want on pipelines. Is that satisfactory?" My answer would have to be, "Not entirely." After all, we need to know a great deal more about domestic refining activities than the information provided in the form. Give me what I want on domestic refining, and there is still the question of foreign operations, which are pretty skimpily treated from the standpoint of what an economist might like to see.
(Parenthetically, let me say that I am not exaggerating here. I have attended meetings where Congressional staffers present insisted that nothing less than country-by-country data on foreign operations would be acceptable.)
In short, what we would like to see in the way of pipeline information has to be balanced within the context of the entire FRS report form. The question is, how much information on each of a variety of operations can be collected from a number of companies whom we want to report promptly on a regular schedule? I want my information on a timely basis, not several years late.
Let me suggest a modest approach. Let us get started, without further delays, on the basis of the present form. Make additions over time, where they are felt to be truly essential. But above all, keep to the principle that this form is intended to provide a set of summary data on overall oil company operations.
Meanwhile, in specific areas, let us see what can be done to utilize other reporting forms more effectively. In the case of pipelines, the old Form P is still around. The ICC never published more than a fraction of the information on pipelines that would have been possible just from the Form P. The material published by the Federal Power Commission (FPC) on electric utilities, gas utilities, gas pipelines, is an example of what ICC could have accomplished.
To the extent we really need more information on pipelines for public policy, such as detail on individual line operations within an overall pipeline subsidiary, it should be relatively simple to modify or expand the Form P. If this does not work, perhaps additional pipeline forms are needed—though I devoutly pray they are not. But let us not try to squeeze everything into the FRS form under present consideration.
One final remark. Some of you, with whom I have talked before about the petroleum industry, may wonder about my new-found concern with imposing an excessive reporting burden on the oil companies. The fact is, I promised Arthur Andersen that I would comment on the pipeline reporting segment of the FRS form, and not preach about divestiture. Given the structure of the industry, I think this form is an excellent accomplishment. I cannot help suggesting, though, that many of the pipeline data problems would be minimized if pipeline companies were separated from petroleum operations.