NCPA - National Center for Policy Analysis

Energy Research Has Declined, Report Warns

October 15, 2001

Spending on research to create new sources of energy has dropped over the past two decades, according to University of California-Berkeley analyst Antonia Herzog. She says that as a result, innovation in the energy sector has also declined. However, her figures include spending on such fruitless federal projects as the development of synthetic petroleum fuels -- a legacy of the Carter-era energy shortages.

  • Public and private spending on all energy research peaked at more than $12 billion in 1980 -- but has since fallen to less than $4 billion.
  • Energy patents -- which economists see as an indicator of innovation -- have declined in "lock step" with the spending decline.
  • In 1994, patents bottomed out at a low of 54 -- from a high of 228 in 1981.
  • Only 0.4 percent of net energy sales are spent on research -- not counting exploration for new oil fields as "research" -- according to National Science Foundation figures -- which compares to 10.2 percent of net sales spending on research in the drugs and medicine sector.

Herzog cites as causes for the spending decline the return of more balanced energy markets following the crises of the 1970s and the government's reduction in energy research spending. She also theorizes that energy deregulation discouraged private research efforts. (Or, some would say, deregulation made such expenditures unnecessary.)

Source: Dan Vergano, "Energy Research Drop-Off: Less Spending, Fewer Advances," USA Today, October 15, 2001.


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