As part of its overall accounting of expenditures, the Bureau of Economic Analysis (BEA) collects data specifically on government spending, which can be broken down further into finer categories. FRED has time series of these data to help users explore the evolution of government spending. That evolution can be hard to interpret, so today we take a closer look at one of these series.
The FRED graph above tracks real federal energy expenditures from 1960 to 2022 using an index, which provides annual values relative to the level in 1976. Most of these expenditures come from activities by the Department of Energy (DOE).
During the 1960s and early 1970s, energy expenditures were much lower, ranging from around 10% to 40% of their 1976 level. Starting around 1974, energy expenditures climbed sharply, which coincided with the 1973 oil crisis and subsequent founding of the DOE in 1977.
Since the 1980s, energy expenditures have roughly kept pace with inflation but have varied widely year to year: Expenditures peaked at around twice their 1976 level in the early 1980s and again in 2010. By 2021, real energy expenditures were back to about the same level as they were in 1976.
In 2022, energy expenditures actually become negative for the first time since reporting began in 1959. The FRED graph below zooms in on that time period and shows the year-over-year percent change in real energy expenditures since 2012. In a typical year, energy expenditures change by as much as 20%. But in 2022, energy expenditures declined by 115%. Why?
Just like the jump in spending during the 1970s, the drop in 2022 can be explained by policy responses related to events in global oil and gas markets.
The US stores a constant back-up supply of crude oil called the Strategic Petroleum Reserve (SPR). Within a typical year, very little of this store is released, but the US president can authorize drawdowns from the SPR during emergencies or shortages. For example, then-President Obama authorized a large release of oil from the SPR in response to the war in Libya in 2011. After Russia’s 2022 invasion of Ukraine disrupted oil markets, President Biden authorized a large “emergency drawdown” of the SPR in coordination with the International Energy Agency’s International Energy Program.
Over the course of 2022, this drawdown added around 180 million barrels. For context, the last two emergency drawdowns in 2011 and 2005 were around 30 and 20 million barrels, respectively. (For more discussion of petroleum reserves, check this May 2024 FRED Blog post.)
When the government releases oil from the SPR, it does so through competitive sales, which are accounted for in current expenditures as net outlays and are negative values. In 2022, SPR-related outlays were large enough to dwarf other energy-related spending, resulting in negative total expenditures.
How these graphs were created: First graph: Search FRED for series “G160551A027NBEA.” Using the date selector above the graph, set the date range to 1960-01-01 to 2022-01-01. From the “Edit Graph” panel under the “Edit Line 1” tab, use the “Customize Data” section to search for and select the series “CPIAUCSL” to add to the graph. Apply the formula a/b. Under “units” at the bottom, convert your new combined series to an index and set 1976-01-01 as the custom date. Second graph: Switch the final units of the first graph from an index to percent change from a year ago. Use the date selector to change the date range to 2012-01-01 to 2022-01-01.
Suggested by Bill Dupor and Marie Hogan.
