U.S. Hits Record Energy Efficiency

The chart above (click to enlarge) shows the increasing energy efficiency of the U.S. economy, using data from the Energy Information Administration, updated recently through 2008.

As recently as 1970, it required 18,000 BTUs of energy for each real dollar of GDP produced, and by 2008 the energy required per dollar of real GDP has been reduced by more than 50%, to only 8,520 BTUs per real dollar of GDP. So the U.S. economy has more than doubled its overall energy efficiency in only 38 years.

Bottom Line: The U.S. economy has never been more energy efficient than it is today, and it just keeps getting more and more efficient every year as we find ways to produce more and more output with less and less energy. Amid all of the gloom and doom, this seems like something to celebrate. Over time, we're not becoming energy gluttons, we're actually becoming energy misers.

Comments

[Davewmart:]

There have been some real gains, but a lot of American consumption has simply been offshored to China etc so that the energy costs of manufacturing are incurred there.

Jul 19 07:55 AM

[Lok Sang Ho:]

The financial tsunami is beginning to change commuting habits and forging a more energy efficient economy. But as Davewnmart says, much of the energy consumption and the pollution associated with American consumption has been offshored, to China in particular. We need to have an estimate of the energy efficiency for the goods consumed in America. Energy efficiency per $ of GDP produced is not very meaningful. GDP per capita tells us what we claim. A super-rich man sitting on prime land who reaps a lot of land rent claims high GDP. His lifestyle however may be extremely wasteful: huge mansions using up a lot of energy for heating and airconditioning; fancy yachts and private jets using up a lot of energy; etc.

Jul 19 08:38 AM

[Davewmart:]

We should see further 'improvements' as more and more of the unemployed loose any benefits, and are consequently unable to afford to heat or cool their houses and do not consume energy at the jobs they no longer have, or drive cars.
Energy use ought to fall at a faster rate than nominal GDP, with the likes of GS making on paper vast profits by financial manipulation.
This is more oozing puss than green shoots.

Jul 19 08:41 AM

[SubsidyEye:]

The reduction in energy consumption per real dollar of GDP is no doubt a combination of greater energy efficiency AND the offshoring of energy-intensive manufacturing. There have certainly been big gains in energy efficiency in cement manufacturing, power generation and air transport. And the share of GDP accounted for by services -- which are generally less energy-intensive than manufacturing -- continues to grow. On the other hand, some of the heavy manufacturing that used to take place in the United States has moved offshore, which gives the appearance that we are now using considerably less energy per unit of GDP.

Jul 19 09:11 AM

[The Greates...:]

A de-facto tax cut for American motorists. Each $1 per barrel drop in oil increases U.S. GDP by $100 billion per year and every 1 cent decline in gasoline increases U.S. consumer disposable income by $600 million per year.
Just a little FYI:
The last 20 years have been characterized by rising U.S. oil consumption, but now
"www.eia.doe.gov/oiaf/a..."
the U.S. Energy Information Agency
, incorporating the most-recent changes in U.S. consumer behavior, says there will be no appreciable growth in U.S. oil consumption between now and 2030, with biofuels accounting for all of the growth in liquid fuels.

Jul 19 09:35 AM

[Davewmart:]

Unfortunately if you look at oil availability and price then you have to take IEA projections seriously.
According to their recent report due to the growth in demand in the Bric countries we need to find an develop several new Saudi Arabia's worth of oil in the next few years.
To do that vast financial resources are needed.
In an even more recent analysis they point out that in the present financial situation with relatively low oil prices this investment is just not happening.
According to them this means that given some return to economic growth that shortages and a price spike is going to occur by 2014.
The more prices fall now the less investment in oil infrastructure will take place and so the greater the coming shortages.
This argument applies in particular to resources such as oil sands, which are very expensive in financial, ecological and energy cost terms - you need to burn a lot of natural gas to extract the oil.
If growth is sluggish you might push back the 2014 date by a couple of years, but any real recovery whenever it does come will be knocked on the head by rising oil prices.
Actually the situation is worse than the IEA says, as they appear to take little account of the very rapid growth in oil consumption in the oil exporters such as Saudi Arabia, which will leave less and less for export.
To get a preview, check out the collapse in oil production in Mexico.

Jul 19 10:07 AM

[jeandit75:]

lol, let's give Perry a nomination for the comedy awards quick!

Jul 19 01:21 PM

[md6888:]

My dentist charged me $395 to fill 2 crack lines, in about 10 min. That led me to agree with the author on 'energy efficiency' if my $ was counted towards 09 GDP. I forgot to count and could not tell how many items were made in US.

Jul 19 05:21 PM

[TinyTim:]

Mark-
Much as I'd like to believe the EIA has a real handle on energy consumed (I'm sure I'm paying big bucks for that number, whatever it is), I surely don't believe the "Real Dollar of GDP" figure.
This latter get massaged and manipulated so much, it's become just a SWAG (engineering term).

So to combine the two stats and expect anyone to take them seriously is a real stretch. Skipping that offshoring is reflected in GDP, if a high energy, low dollar industry goes to Mexico (CEMEX), it would tend to artificially skew this efficiency stat.

Jul 19 06:25 PM

[Advill:]

The comment if true in its own data is hidden the real fact OTHER COUNTRIES ARE MUCH MORE EFFICIENT THAN US IN THIS INDEX, Germany or Japan, Korea or Spain they are more efficient.
USA lacks efficiency en many areas;

1. A proper mixture of diesel engines in private cars.
2. An adecuate proportion of nuclear energy
3. Renovable energy in proportion to US economy.
4. Lack of incentives for changes in the driving habits (using a truck 400HP, 7,000 pounds for buying milk in Walmart)

Autocomplacency and biased analysis is always dangerous.
Regards.

Jul 19 10:08 PM

[CLH:]

Everyone seems to be negative from the comments. Keep trying Dr Perry but its a tough road to make losers into winners.

Jul 19 10:39 PM

[danno:]

If he thinks Energy Efficiency in America is impressive, he's out to lunch. We are still in the stone age compared to Northern Europe and Japan.

Aug 24 12:12 AM