Lester Lave, professor of economics at Carnegie Mellon University's Tepper School of Business, notes that since the oil shock of the early 1980s, America has halved its energy use per unit of gross domestic product. The economy is less dependent on manufacturing, and car, plane and truck engine technology has improved, letting consumers and businesses get farther on less fuel. Efficiency has also been gained in areas such as home heating.
We continue to use as much oil as we ever did per person. We continue to use more and more electricity per person. It is quite clear in the charts below. In my opinion, to speak as if we have become far less reliant on energy is to miss the big picture.
We have shifted from energy intensive goods manufacturing to energy efficient and innovative financial product manufacturing. Perhaps the good professor can explain to me how that will work long-term. I'd really like to know.
The good news is that $700 billion in losses due to the credit crisis would require very little oil I suppose. That could be handled extremely efficiently with one stroke of a pen.
See Also:
Calculated Risk: Barclays: Losses May Reach $700 Billion
Electric Infrastructure
Source Data:
EIA: Petroleum
EIA: Electricity
St. Louis Fed: Population: Mid-Month
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