A new report from the Government Accountability Office (GAO) finds that a shortage of talent in government positions is holding back the oil and gas industry. The U.S. Department of Interior, responsible for permitting oil and gas projects, is suffering from inadequate hiring as well as difficulty retaining key staff.

The report finds that Interior struggles with a brain drain for two reasons: lower salaries relative to its peers in private industry; and a slow hiring process compared to private companies. In particular, the GAO report concludes that Interior has “ongoing difficulties filling vacancies, particularly for petroleum engineers and geologists.” And with the huge gap in salary between what a petroleum engineer can earn as a government regulator compared to what he or she can earn working for an oil company, many staff leave for the industry.

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For fiscal year 2012, GAO finds that the attrition rate for petroleum engineers at the Bureau of Land Management (a key office inside Interior) was 20%, more than double the average for offices across the government.

The personnel problem, GAO concludes, makes it difficult for Interior staff to carry out oversight activities. For example, without enough people, government inspectors have carried out fewer inspections of drilling sites. The problem is acute in certain field offices in busy areas, such as North Dakota. The offices cannot keep up with permit applications and inspections, which can lead to delays.

Congress has given authorization to Interior to pay higher salaries for certain technical positions like petroleum engineers. However, Interior has not received any additional funding to make that possible. Therefore, the problem does not seem likely to go away. Congress is unlikely to single out Interior for more funding, and so it will be difficult to substantially raise salaries for regulators.

By Joao Peixe of Oilprice.com