Right now, energy use is correlated with economic growth.
Energy analysts and experts for both non-commercial and commercial all use models that predict energy demand by looking at economic growth. The higher the economic growth the higher the energyn demand.
Economic growth is such a good indicator that even population growth doesn't match as closely as economic indicators.
Can this be decoupled?
Can economic growth continue without additional energy?
I like to hear your thoughts about this.
PeakOil is You
Can economic growth continue without increasing energy use?
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Can economic growth continue without increasing energy use?
by nth » Tue 19 Jul 2005, 14:24:14
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by Leanan » Tue 19 Jul 2005, 14:47:07
I would say no. At least in the long run.
You can increase efficiency and get economic growth without increased energy use - but only to a point. There's a hard, physical limit on efficiency.
After the '70s oil crisis, we did increase our efficiency. About half of that was not a real increase. It was "outsourcing" - putting an aluminum plant next to a natural gas well in Africa, say, instead of in Pittsburgh. So we import the aluminum, and it took no energy to manufacture. (At least on paper.)
But the rest was real improvement in efficiency. Lower mileage cars, better insulated homes and offices, more energy efficient air conditioners and heaters and appliances, etc.
The bad news is that it will be difficult to repeat this. If the problem is a worldwide oil shortage, more offshoring isn't going to help much. And when it comes to efficiency, we've already picked the low-hanging fruit. Further improvements will be smaller, more difficult, and more expensive. There are things we've slacked on, and can go back to - a 55mph speed limit, enforcing the mileage regulations on SUVs. But to make the kind of efficiency improvements every year, year after year after year, that would be required to keep the economy growing - I don't think it's possible.
You can increase efficiency and get economic growth without increased energy use - but only to a point. There's a hard, physical limit on efficiency.
After the '70s oil crisis, we did increase our efficiency. About half of that was not a real increase. It was "outsourcing" - putting an aluminum plant next to a natural gas well in Africa, say, instead of in Pittsburgh. So we import the aluminum, and it took no energy to manufacture. (At least on paper.)
But the rest was real improvement in efficiency. Lower mileage cars, better insulated homes and offices, more energy efficient air conditioners and heaters and appliances, etc.
The bad news is that it will be difficult to repeat this. If the problem is a worldwide oil shortage, more offshoring isn't going to help much. And when it comes to efficiency, we've already picked the low-hanging fruit. Further improvements will be smaller, more difficult, and more expensive. There are things we've slacked on, and can go back to - a 55mph speed limit, enforcing the mileage regulations on SUVs. But to make the kind of efficiency improvements every year, year after year after year, that would be required to keep the economy growing - I don't think it's possible.
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by nero » Tue 19 Jul 2005, 14:55:32
To avoid increased energy usage while the economy grows, the price of energy has to increase proportionately to the rate of growth of the economy. If the cost of energy remained constant, the growth in the economy would provide increased buying power and people would consume more energy.
Biofuels: The "What else we got to burn?" answer to peak oil.
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nero - Heavy Crude
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by nero » Tue 19 Jul 2005, 15:08:36
$this->bbcode_second_pass_quote('Leanan', 'I') would say no. At least in the long run.
You can increase efficiency and get economic growth without increased energy use - but only to a point. There's a hard, physical limit on efficiency.
After the '70s oil crisis, we did increase our efficiency. About half of that was not a real increase. It was "outsourcing" - putting an aluminum plant next to a natural gas well in Africa, say, instead of in Pittsburgh. So we import the aluminum, and it took no energy to manufacture. (At least on paper.)
But the rest was real improvement in efficiency. Lower mileage cars, better insulated homes and offices, more energy efficient air conditioners and heaters and appliances, etc.
The bad news is that it will be difficult to repeat this. If the problem is a worldwide oil shortage, more offshoring isn't going to help much. And when it comes to efficiency, we've already picked the low-hanging fruit. Further improvements will be smaller, more difficult, and more expensive. There are things we've slacked on, and can go back to - a 55mph speed limit, enforcing the mileage regulations on SUVs. But to make the kind of efficiency improvements every year, year after year after year, that would be required to keep the economy growing - I don't think it's possible.
You can increase efficiency and get economic growth without increased energy use - but only to a point. There's a hard, physical limit on efficiency.
After the '70s oil crisis, we did increase our efficiency. About half of that was not a real increase. It was "outsourcing" - putting an aluminum plant next to a natural gas well in Africa, say, instead of in Pittsburgh. So we import the aluminum, and it took no energy to manufacture. (At least on paper.)
But the rest was real improvement in efficiency. Lower mileage cars, better insulated homes and offices, more energy efficient air conditioners and heaters and appliances, etc.
The bad news is that it will be difficult to repeat this. If the problem is a worldwide oil shortage, more offshoring isn't going to help much. And when it comes to efficiency, we've already picked the low-hanging fruit. Further improvements will be smaller, more difficult, and more expensive. There are things we've slacked on, and can go back to - a 55mph speed limit, enforcing the mileage regulations on SUVs. But to make the kind of efficiency improvements every year, year after year after year, that would be required to keep the economy growing - I don't think it's possible.
I think this is the wrong way to look at it. Economic growth when viewed by economists, is all about money. What people actually produce is beside the point. Yes we have to produce real things like alluminum, but the amount of aluminum doesn't have to increase for economic growth. If you just decided to produce a little less aluminum and instead used that electricity to power some servers that distribute pornography, the economists would call that economic growth. Would you call that an increase in efficiency? It certainly isn't what thermodynamics is talking about when it talks about efficiency.
Biofuels: The "What else we got to burn?" answer to peak oil.
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by hull3551 » Tue 19 Jul 2005, 15:57:03
Since energy in one form or anther is an input in production, I think it is commonly viewed as a necessity to correlate usage of energy with growth in economy. And considering that the US has maintained this view will probably relegate the US to second-world status during the next century (imo). But neglecting to embrace non-renewable energy resources is setting countries such as the US up for a precipitous fall.
My economic view has been different:
- Let’s concentrate on producing smaller more fuel efficient automobiles that deliver the same profit margins to manufacturers as the larger vehicles that Detroit currently favours to impact its bottom line. Hybrids are currently selling at a premium; SUV’s are selling at a discount. Once gasoline tops three, four, five dollars a gallon, the US will already be woefully behind the Asian manufacturers and will this lack of long-term foresight (in lieu of short-term earnings) will probably be the final nail in their coffin. Not only do hybrid vehicles use less resources to operate, they also require less resources to produce.
- Technology involving renewable energy is an economic explosion waiting to happen. My limited research indicates the Germans are aware of this and currently most advanced as far as solar and wind generation are concerned. The more the US relies upon oil/NG, the further it will fall behind in global markets.
The world will undeniably run out of oil – whether in 20, 30, 0r 100 years. The US is in a horrible position to absorb this decline (as we all know) and inaction will invariably lead to its demise.
So back to the topic: I agree that increased energy may correlate to increased economic growth, but the shift will ultimate need to be away from fossil fuels feeding this growth, or better yet, by changing this longstanding mentality that increased inputs are required to drive the economic growth. Europe and Asia (imo) are aware of this and are more efficient regarding production; unfortunately the US is not, but it is no longer a industrial economy and evolving into a service or idea (sic) economy.
On the demand side, one it really hits the US (or global) consume in the pocketbook, changes will be necessitated. And this will all be driven by market forces at work. (Not to be ethnocentric but) since the US drives many of the global tastes in consumerism, once the US consumer wakes up and realizes it cannot continue to by wasteful products, but instead must be more environmentally accommodating – maybe this will impact the other markets.
I personally try to buy organic, locally grown and produced products – often at a premium. There is also significantly higher profitability in these earth-friendly products (which is why huge corporations are clamoring to enter these markets). My point is that as PO drives up the price of everything from fertilizer to vegetables grown in Argentina to pharmaceuticals to plastic packaging, people will begin to reassess their buying habits.
I hope this makes some sense.
My economic view has been different:
- Let’s concentrate on producing smaller more fuel efficient automobiles that deliver the same profit margins to manufacturers as the larger vehicles that Detroit currently favours to impact its bottom line. Hybrids are currently selling at a premium; SUV’s are selling at a discount. Once gasoline tops three, four, five dollars a gallon, the US will already be woefully behind the Asian manufacturers and will this lack of long-term foresight (in lieu of short-term earnings) will probably be the final nail in their coffin. Not only do hybrid vehicles use less resources to operate, they also require less resources to produce.
- Technology involving renewable energy is an economic explosion waiting to happen. My limited research indicates the Germans are aware of this and currently most advanced as far as solar and wind generation are concerned. The more the US relies upon oil/NG, the further it will fall behind in global markets.
The world will undeniably run out of oil – whether in 20, 30, 0r 100 years. The US is in a horrible position to absorb this decline (as we all know) and inaction will invariably lead to its demise.
So back to the topic: I agree that increased energy may correlate to increased economic growth, but the shift will ultimate need to be away from fossil fuels feeding this growth, or better yet, by changing this longstanding mentality that increased inputs are required to drive the economic growth. Europe and Asia (imo) are aware of this and are more efficient regarding production; unfortunately the US is not, but it is no longer a industrial economy and evolving into a service or idea (sic) economy.
On the demand side, one it really hits the US (or global) consume in the pocketbook, changes will be necessitated. And this will all be driven by market forces at work. (Not to be ethnocentric but) since the US drives many of the global tastes in consumerism, once the US consumer wakes up and realizes it cannot continue to by wasteful products, but instead must be more environmentally accommodating – maybe this will impact the other markets.
I personally try to buy organic, locally grown and produced products – often at a premium. There is also significantly higher profitability in these earth-friendly products (which is why huge corporations are clamoring to enter these markets). My point is that as PO drives up the price of everything from fertilizer to vegetables grown in Argentina to pharmaceuticals to plastic packaging, people will begin to reassess their buying habits.
I hope this makes some sense.
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by nth » Tue 19 Jul 2005, 16:31:10
$this->bbcode_second_pass_quote('nero', 'T')o avoid increased energy usage while the economy grows, the price of energy has to increase proportionately to the rate of growth of the economy. If the cost of energy remained constant, the growth in the economy would provide increased buying power and people would consume more energy.
Very interesting idea.
Just to point out something- if energy costs increases with economic growth, then there is no economic growth as it is all eaten up by inflation. Please note I am talking about energy costs and not energy price. The difference is that costs mean that people have to do more work to get same amount of energy, while price increase can be increasing profit for the energy companies who can invest it or give the money to shareholders to invest in other industries.
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by nth » Tue 19 Jul 2005, 16:45:02
$this->bbcode_second_pass_quote('nero', '')$this->bbcode_second_pass_quote('Leanan', 'I') would say no. At least in the long run.
You can increase efficiency and get economic growth without increased energy use - but only to a point. There's a hard, physical limit on efficiency.
After the '70s oil crisis, we did increase our efficiency. About half of that was not a real increase. It was "outsourcing" - putting an aluminum plant next to a natural gas well in Africa, say, instead of in Pittsburgh. So we import the aluminum, and it took no energy to manufacture. (At least on paper.)
But the rest was real improvement in efficiency. Lower mileage cars, better insulated homes and offices, more energy efficient air conditioners and heaters and appliances, etc.
The bad news is that it will be difficult to repeat this. If the problem is a worldwide oil shortage, more offshoring isn't going to help much. And when it comes to efficiency, we've already picked the low-hanging fruit. Further improvements will be smaller, more difficult, and more expensive. There are things we've slacked on, and can go back to - a 55mph speed limit, enforcing the mileage regulations on SUVs. But to make the kind of efficiency improvements every year, year after year after year, that would be required to keep the economy growing - I don't think it's possible.
You can increase efficiency and get economic growth without increased energy use - but only to a point. There's a hard, physical limit on efficiency.
After the '70s oil crisis, we did increase our efficiency. About half of that was not a real increase. It was "outsourcing" - putting an aluminum plant next to a natural gas well in Africa, say, instead of in Pittsburgh. So we import the aluminum, and it took no energy to manufacture. (At least on paper.)
But the rest was real improvement in efficiency. Lower mileage cars, better insulated homes and offices, more energy efficient air conditioners and heaters and appliances, etc.
The bad news is that it will be difficult to repeat this. If the problem is a worldwide oil shortage, more offshoring isn't going to help much. And when it comes to efficiency, we've already picked the low-hanging fruit. Further improvements will be smaller, more difficult, and more expensive. There are things we've slacked on, and can go back to - a 55mph speed limit, enforcing the mileage regulations on SUVs. But to make the kind of efficiency improvements every year, year after year after year, that would be required to keep the economy growing - I don't think it's possible.
I think this is the wrong way to look at it. Economic growth when viewed by economists, is all about money. What people actually produce is beside the point. Yes we have to produce real things like alluminum, but the amount of aluminum doesn't have to increase for economic growth. If you just decided to produce a little less aluminum and instead used that electricity to power some servers that distribute pornography, the economists would call that economic growth. Would you call that an increase in efficiency? It certainly isn't what thermodynamics is talking about when it talks about efficiency.
nero, you just pointed to one big thing. When talking about micro economics, you don't need energy in the form of fossil fuels, biofuels, electricity, etc to have economic growth. People can start non-energy required businesses like storytelling or psychic readings where people have to walk up to you to do business with you- this is economic contribution.
But my question is can this be translated to macro economics?
There is no evidence that this can in today's economy.
There is no theory that energy is required for economic growth, but energy is required for modern day living standards.
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