Wednesday, April 11, 2012

Total Energy Consumption vs. Real GDP

Click to enlarge.

As seen in the blue data point on the chart, we actually consumed less total energy in 2010 than we did in 2000. That was also true in 2009 (compared to 1999) and 1983 (compared to 1973).

The bulls might point out that the economy will get better once we return to the red trend line. Natural gas is currently cheap and abundant.

The bears might point out that excessive debt and structural unemployment problems explain why we're so far below the trend line. There may be no going back to it.

This post inspired by the article Exponential Economist Meets Finite Physicist as first seen at Credit Bubble Stocks.

Source Data:
EIA: Total Energy
St. Louis Fed: Real GDP


Troy said...

Energy consumption is a means, not an end -- no sane person gets utility out of consuming energy per se.

And as our economy hopefully continues to virtualize, existing energy sinks like transportation might also prove to have peaked in the 20th century.

Here in Fresno it makes tremendous sense to invest in a solar roof -- since our infernal summers are a dry heat that disappears in the late afternoon, peak insolation matches peak AC need pretty much precisely.

What I'd love to see is a subway system for Fresno as good as Tokyo's. Bedrock is about a mile down so we don't have an engineering issue, just lack of futuristic vision, the usual.

Stagflationary Mark said...


And as our economy hopefully continues to virtualize, existing energy sinks like transportation might also prove to have peaked in the 20th century.

I think that will be true but is also a reason for my bearishness.

It was incredibly energy efficient for me to order an air pump (for my fish tank) through (It was not all that I ordered.)

1. It cost less than half of what Petsmart would charge me.
2. It was shipped to my door for free in a van that no doubt delivered many similar items to my neighbors efficiently.

I can't say it was good for Petsmart though, nor was it good for the retail sales people who work there. It also wasn't all that great for the restaurants sitting near Petsmart nor their workers. It was good for me though. At 50 cents per mile to operate my vehicle, that savings alone paid for the pump in its entirety.

In a perfect world, we should all be prospering from the advancements in efficiency. As you have pointed out on numerous occasions, that's not what's happening though.

The George Jetson model has a serious problem due to the income and wealth disparities. In the present system, few would enjoy life working 9 hour weeks at minimum wage. Sigh.

Stagflationary Mark said...

I should point out once again that we can't count on Amazon to provide many jobs.

Compared to Sears, Amazon is a productivity miracle.

Stagflationary Mark said...

The death of real yields continues.

Sarcastically speaking, big shocker.

Troy said...

Being a programmer is an interesting conflict between the massive wealth creation software affords vs. and being in globalization's crosshairs.

I had no conception back in the 1980s that India would make its move into IT like it did, and I fully expect China too to more fully integrate into our economy (and if you look in the Appstores you'll see a lot of crapware from China so this trend is already apparent).

Back in the 80s there was noise about Japan and its purported '5th Generation' advantage, but -- much like WW2 -- they didn't have the bodies to compete with the US's industrial footprint.

But China and India most certainly have the bodies, and their wage level is 1/5th or less ours.

But counterbalancing that is the fact that Apple sold more iPad 3s in a weekend than all the Apple IIs it sold 1980-85.

As margins compress big-ticket entertainment might be more iffy, but I'd rather make $1 x 1 million units compared to $20 x 50,000.

Troy said...

"We have seen some improvement recently, but demand for housing is likely to pick up only gradually"

I hate economics. What a perversion of thinking.

Stagflationary Mark said...


I hate economics.

Why do pepole hate economics?

People always say (as a class) it's boring. It's hard. I hate it.

I haven't taken that much of it, only HS and I'm taking Principles of Econ in my first semester of college. I'm undecided on a major, but Economics is my number one, if I had to choose right now. So far from my experiences, I love econ classes.

Am I in for in for a rude awakening later on down the line? Does it get horrible in some way? I've never taken a statistics class, but I don't really envision myself hating it. Feel free to respond however as long as it is useful to me.

It was posted "5 years ago". Let's see. That would have been 2007. Rude awakenings for the win, lol. Sigh.

Troy said...

One of the more bizarre economic realizations I've come to is that increasing the down payment minimum for housing would actually increase the cost of housing.

Housing is sold on the bid, the bid is set by the monthly payment, and the higher the down payment, the higher the purchase price for a given monthly payment.


Stagflationary Mark said...


Housing is sold on the bid, the bid is set by the monthly payment...

Car dealerships make every effort to see that it also applies to vehicles.

I remember the day I bought my first new car. I was haggling over the last few hundred dollars. The sales manager said that it only worked out to a few extra dollars per month. I told him that I was currently unemployed and that if I could save a few hundred dollars by haggling for the remainder of the day then it worked just fine for me.

That immediately ended the negotiations. He accepted my price. He could tell I was serious. It was morning. There was therefore a lot of day left. I figured my time was worth no more than $10 an hour to me at the time. Their time was worth somewhat more to them though.

I used that tactic to buy my next car as well (still driving it). Works great. If you honestly believe that you will spend an entire day negotiating then they will begin to believe it too. The best part is that it apparently will never come to that.