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Sequester Cuts Could Hinder Growth of Energy Industry

energy-industry-growthThe country watched Sequester Day come and go, and most citizens haven’t felt any terrible effects just yet.  President Obama promised to develop the energy industry and battle climate change in his second Inaugural Address and his State of the Union speech earlier this year, but the $85.3 billion in federal budget cuts may prevent him from keeping these promises.

Ordered by the Budget Control Act of 2011, the sequestration is a series of budget cuts that went into effect March 1 of this year.  These immense budget cuts were supposed to appear so detrimental that Democrats and Republicans would be compelled to reach a compromise, but that did not work.  The $85 billion budget cut will be rolled out over the next seven months, and by 2021, these cuts are scheduled to reach $1.2 trillion.

Secretary of Energy Steven Chu explained to a U.S. Senate committee how the sequestration could potentially affect the energy sector, “Under sequestration, funding reductions would decelerate the nation’s transition into a clean energy economy, and could weaken efforts to become more energy independent and energy secure.”

Oil and gas projects are one area that will most likely feel the weight of the sequester.  Outgoing Interior Secretary Ken Salazar predicts that about 300 onshore oil and gas leases will be delayed in western states, as well as nearly 550 offshore projects in the Gulf of Mexico.

According to a report from the White House, the nation will certainly feel the repercussions of cuts to environmental funding.  The National Science Foundation will be required to cut about 1,000 research grants and awards which fund nearly 12,000 students and scientists for scientific development, including research directly related to climate change.

Clean energy development is also among the areas facing potentially large cutbacks.  “Automatic budget cuts implemented per the sequester threatens the ability of the Department to plan for and issue permits for new development projects, conduct environmental reviews, and lease new federal lands for future development,” stated Salazar.  Chu agreed that these cuts “would also hinder U.S. innovation as global markets for solar energy continue to grow rapidly and become more competitive.”  Unfortunately, wind and solar plants on federal land are two entities that may not develop as quickly as many predicted.

Other energy areas that can expect to be affected by the sequester include Hurricane Sandy relief efforts (as well as funding to other FEMA projects), studies that turn public land into clean energy zones, offshore wind energy development, and efforts that will regulate the fracking industry,

Of course, the energy industry is not the only area that will be affected by the sequester.  Cutbacks will cause thousands of people to lose their jobs, many children to lose their place in Obama’s Head Start program, and families to lose nutrition assistance.  The sequester is a policy that could affect the entire nation.  If your business would like to do its part in helping the energy industry, please click here and learn how an energy consultant can assist you in this process.

Sarah Battaglia
Energy Curtailment Specialists, Inc.

Sarah can be found on LinkedIn and Google+.

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