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04/01/2009

A Whopping Sum of Money


April 15 is the day of financial reckoning for most U.S. taxpayers. That is the day when many of us rush to the post office at the stroke of midnight to send our tax forms to the IRS, typically accompanied by a check for taxes owed (those getting a refund have reason to file much earlier).

On the way, I run through a mental check list of the many programs and services my tax dollars support. I also consider the many programs and services not supported by tax dollars, but rather debt-financing that must be repaid at a future date.

New York Times columnist David Brooks commented in a satirical piece Dec. 11, 2008, that “(in Washington, D.C.) zeros have lost their meanings. The amount of consideration once devoted to a proposal costing $3 billion is now devoted to a proposal costing $300 billion. Americans have entered the age of budgetary infinity.”

That statement contains more than a kernel of truth.

Since the beginning of 2009, President Barack Obama and the 111th Congress have been working on three spending bills:

  • The American Recovery and Reinvestment Act of 2009, better known as the “stimulus bill” ($790 billion).
  • Fiscal year 2009 appropriations (approximately $3.2 trillion).
  • Fiscal year 2010 budget ($3.6 trillion).

These are whopping sums of money.

Depending on political or economic persuasion, you may feel strongly that the money spent is prudent and necessary or frivolous and reckless. There is evidence to support both positions. But the spending choices do reveal much about the president’s energy priorities.

The stimulus bill, signed into law on Feb. 17, makes a large down payment on Obama’s promise to significantly change the nation’s energy sector. In order to have a “stimulating” effect on the economy, most of these funds must be spent over the next 24 months.

The types of programs funded in the stimulus range from building efficiency improvements (creating construction jobs) to the development and building of advanced battery technologies to transform the automotive industry – and the purchase of these vehicles for government fleets.

It also includes funds to retrain workers to succeed in the field of energy efficiency and renewable energy. The power sector sees significant investment with $4.5 billion dedicated to upgrade the nation’s energy grid.

Science receives high priority with $1.6 billion going to that general category, and an additional $400 million designated to launch the Advanced Research Projects Agency – Energy to foster a public-private partnership in achieving energy technology breakthroughs.

A total of $3.4 billion is dedicated to fossil energy R&D, mostly focused on carbon capture and storage.


At the close of the 110th Congress only three of 12 appropriations bills had been signed into law. So Congress passed two continuing resolutions that funded the government through early March at fiscal year 2008 levels. On March 10 they passed a final omnibus bill to fund the government for the remainder of FY2009.

More than half-way through the fiscal year, it was just a matter of getting it done.

The bill includes $20 million for natural gas technologies and $5 million for petroleum-oil technologies at the U.S. Department of Energy, as in FY2008.

Similarly, the geological resources programs at the U.S. Geological Survey received funding at FY2008 levels.


President Obama unveiled his budget for fiscal year 2010 on Feb. 26. Having been in office just over one month, this first budget release outlined high-level numbers and did not include agency specifics. More specific numbers will be released this month.

The new budget fully aligns with energy priorities outlined in the stimulus bill and the president’s statements. For the DOE it calls for a total budget of $26.3 billion, up from $24.1 billion in 2008. The priorities funded include:

  • Increases in basic science funding.
  • Loan programs to stimulate the deployment of green energy projects.
  • Development of low-carbon coal technologies, specifically carbon capture and sequestration.
  • Upgrades to the nation’s electrical grid.
  • Investments in energy efficiency, biofuels and renewable energy.

Again, we do not know how this budget will affect the technology programs in oil and natural gas, which have suffered in years past but are a vital source of scientific advances and new technology. These R&D programs also provide essential research support for the geology and geophysics programs at the nation’s colleges and universities to educate and train the next generation work force.

Even more worrisome to many AAPG members is that, in order to generate revenue to offset many new expenditures, the budget includes a rollback of tax benefits currently available to oil and gas companies. These rollbacks are valued at $31.5 billion over 10 years.

It also repeals the $50 million annually dedicated from offshore mineral receipts to fund ultra-deepwater and unconventional oil and gas research. And it proposes a fee on non-producing leases.

Most of these changes will require Congressional approval, and this typically means they will be altered prior to passage. However, many of these provisions already have passed either the House or Senate during the last Congress, but did not have presidential support. That variable has now changed.


Our guideposts as we communicate with Congress and the administration are the Association’s statements, developed by the DPA Government Affairs Committee, reviewed by the DPA and approved by the Association’s Executive Committee. These statements discuss the importance of access to public lands, prudent tax policy, need for research and development and building the next generation work force, among others.

As our nation’s leaders chart a course toward an energy future that includes dramatic increases in renewable and alternative fuels and reduced reliance on fossil fuels, they must not lose sight of the necessary policies and investment in fossil energy, which remains the foundation of our energy supply today – and, absent a major technology breakthrough, will continue for decades to come.