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An Inconvenient Cut?

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Between 1978 and 2005, energy use per U.S. household decreased by 30 percent, thanks to innovations in heating and other efficiency improvements. Coupled with an increase in the number of households nationwide and in the proportion of households that have appliances, total energy use in all U.S. homes decreased slightlyfrom 10.58 quads to 10.55 quads in that period.

As a lover of data and analysis (I may or may not have “liked” the Bureau of Labor Statistics on my Facebook page), I was sad to read last week that the source of such wonderfully detailed information, the Energy Information Administration, is curtailing many of its data collection and analysis projects this year due to April’s budget cuts.

The EIA, by the way, is a government body that provides independent statistics and analysis of various data relating to energy use, production, markets, and retail costs all over the world. It was one of the departments whose appropriations were reduced by the final 2011 budget passed in April – EIA’s took a 14 percent hit. As the cut was made halfway through the fiscal year (which begins October 1 for the federal government), the EIA has to cut 15.2 million dollars from activity it planned for the final six months of the year.

As a result, it announced last week that it would make a slew of cuts to its analysis services, including:

  • Canceling data collection and release on U.S. proved oil and natural gas reserves; Halting updates to its international energy statistics;
  • Reducing data on electricity exports and imports;
  • Suspending further upgrades to the National Energy Modeling System, which is a tool that policymakers and industry members use to examine U.S. energy production, consumption, prices, and technologies in making energy-related decisions; and
  • Halting its preparation of the 2012 edition of the International Energy Outlook.

The EIA will continue many of its collection and publication efforts, including the widely read Weekly Petroleum Status Report and the Weekly National Gas Storage Report.

As R. Neal Elliott, associate director for research at the American Council for an Energy-Efficient Economy, points out, these cuts are alarming, because once the government can’t just go back to collect these data in a year when it’s flush with cash. Production and consumption data are a now-or-never type of proposition. And businesses often rely on these data to make decisions about their potential for increasing energy-efficiency. Policymakers look to the numbers to craft better energy policies. Our pursuit of energy savings and our responsible management of the resources we do have could be negatively affected without the EIA running at full steam.

On the other hand, the agency wasn’t totally defunded, and, let’s face it: Times are tough. The immediate implications of cutting a number-crunching agency are less drastic than cutting, say, federal food aid or the heating oil program we heard so much about when these budget debates were going on in February and March. Without getting into the divisive politics of budget reduction, it comes to this: Congress had to cut something, and, while cutting the EIA’s budget is not a desirable object, it caused less human suffering than cutting from another program that directly affects people in need.

Honestly, I’m torn between these two arguments. While I understand that it’s less harmful to cut from a government think-tank, I also mourn the loss of innovation that may result from fewer and less-detailed reports, innovation that could boost the economy, making that heating oil program a necessary for fewer people.

These are tough times, and they call for tough decisions. What do you think? Should the EIA have been spared cuts? What affect will the reduction in information and analysis have on your industry?

Posted by Laura Williams on May 04, 2011