Future Unclear for Federal Oil and Gas R&D Funding

Sequestration, the package of automatic spending cuts that’s part of the Budget Control Act, which was passed by Congress in August 2011, would cut non-defense agency budgets by 7.6 percent and defense budgets by 9.1 percent.

Whether this comes to pass or is altered by legislation enacted by the Congress after the November 6 elections is anyone’s guess.  But, if it should take effect, federal R&D will significantly decline.

R&D is considered critical to long-term economic growth.  In the petroleum industry R&D helps lower the costs of exploration, development, and production, which are influenced strongly by the application of new science and technology.  AAPG recognizes the importance of maintaining a strong domestic petroleum industry and supports the need for a continuing effort in research and development to aid in sustaining its economic viability.

Federal R&D also supports graduate and undergraduate geoscience students, who are the future of our industry.  Many Master’s and Ph.D. students depend on research grants from federal agencies including the National Science Foundation.  Faculty members also depend on R&D funding and universities as a whole benefit from the overhead they change on grants.

An obvious question is how important Federal R&D funding is in comparison to other funding sources.  For the US as a whole, about 30 percent of R&D funds come from government and about 60 percent from business. The remainder is from states, academia and non-profit organizations.  In academia, however, only six percent of R&D funding comes from industry. This reflects industry focus on development (business funds about 78 percent of US development).   Note that these figures reflect averages across all industry segments.  Specific figures on the petroleum industry are not available.

Last 5 posts by Edie Allison

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