Budget politics to create gap in US reserves data

Bob Tippee

The decision to skip a year’s worth of US reserves estimates recalls long-ago arguments about the superiority of government data over supposedly tainted numbers from the oil and gas industry.

Caught in a budget cross-fire, the US Energy Information Administration won’t produce its annual report of oil and gas reserves for 2011 (OGJ Online, May 2, 2011).

EIA has been the authority on US reserves since 1980, when it took over yearly reporting done for decades by the American Petroleum Institute and American Gas Association.

That change happened partly because politicians didn’t trust numbers about oil and gas from the oil and gas industry and partly because API and AGA wanted it to.

In early 1977, John F. O’Leary, destined to become deputy secretary when the Department of Energy began life later in the year, told Congress that reserves data gathered under the auspices of the industry were not credible.

API and AGA happily yielded to these suspicions, by then widespread in Congress. The year before O’Leary challenged the veracity of industry data, association officials had told the Office of Management and Budget they wanted to transfer reserves reporting to an agency of government.

So in May 1981, the EIA, a semiindependent branch of DOE, published its reserves estimates—for 1979. It didn’t finish the 1980 estimates, the first it made solo, until late-October 1981.

Early problems with timeliness arose because the agency was implementing new estimation procedures and imposing new reporting requirements on oil and gas producers. But EIA’s estimates quickly settled into a midyear publication routine and became the authoritative source for US oil and gas reserves.

Because of last-minute politicking over federal budgets, though, EIA’s widely respected series of reserves reports now will have a conspicuous gap. Government data, it seems, have their own drawbacks.

And the basic numbers still come from the oil and gas industry and will until the government enters the drilling and producing business, a costly endeavor it obviously can’t afford.

(Online May 6, 2011; author’s e-mail: bobt@ogjonline.com)

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