[BabyPeanut]

$this->bbcode_second_pass_code('', ' 1981 1987 2004
Oil Consumption (gb)----------- 5.86 6.08 7.33
Infl Adj GDP (2004 gigadollars) 5739 7023 11758
population------------- 229 242 290
population adjusted gdp---------- 7267 8416 11758
%useful gdp------------- 0.51 0.48 0.41
Pop Adj Useful gdp ( 2004 billions) 3,706 4,040 4,821
Adj Usfl GDP per barrel of oil $632 $664 $658
Oil Price infl adjusted-------- 34.28 18.35 42.00
$ gdp per $ oil 18.44 36.20 15.67')
use spaces only, no tabs please
$this->bbcode_second_pass_code('', 'Arts, entertainment, and recreation 45.3
Administrative and waste management services 41.8
Finance and insurance 38.6
Professional, scientific, and technical services 34.2
Professional and business services 29.4
Health care and social assistance 28.5
Educational services, health care, and social assistance 28.0
Educational services 24.5
Finance, insurance, real estate, rental, and leasing 15.3
Arts, entertainment, recreation, accommodation, and food services 12.2
Real estate and rental and leasing 4.1
Accommodation and food services 3.6
Management of companies and enterprises 1.3
Other services, except government 0.9
Government -8.5
')

[nero]

Thanks pup55, very useful analysis. One question though did you adjust the barrels of oil by the poulation factor as well? It seems to me that the population factors should cancel out. ((GDP/person) / (barrel/person) = GDP/barrel)

One other factor that you didn't take into account is the movement of economic activity from the domestic to the comercial. It is very hard to quantify but I believe it would be a significant factor in long term analysis like this. That more people are eating at restaurants or eating prepackaged food, more children go to daycare, fewer people do their own car repairs and home renovation all mean that the GDP gets inflated.

Another factor to consider is that child rearing is still primarily an unpaid activity so as people have fewer children the amount of productive effort put towards raising the next generation is going down and the effort put into money making activities (longer work hours) is going up. Hence the basis shouldn't be GDP per person but GDP per hour worked outside the home.

cheers

[pup55]

I thought about that.

Per-capita oil consumption in the US is nearly flat:

$this->bbcode_second_pass_code('', ' 1981 1987 2004
per capita oil cons (bpy) 25.6 25.1 25.3
per capita gross GDP(k) 25.059 29.019 40.545
per capita "useful activity"(k) 12.5 13.9 16.6')

The "gross GDP" adjusted for inflation but not for population increased by 61% during the period, but the per capita "useful activity" only increased by half as much. So, maybe 50% of the "energy efficiency improvements" are due to economic changes toward service-type jobs.

The usefulness of the GDP numbers has been questioned a number of times.

[nero]

So from that we get a different result?


$this->bbcode_second_pass_code('', '
1981 1987 2004
per capita oil cons (bpy) 25.6 25.1 25.3
per capita gross GDP(k) 25.059 29.019 40.545
per capita "useful activity"(k) 12.5 13.9 16.6
infl adj oil price 34.28 18.35 42.00
per capita oil cost (infl adj $) 877 461 1063
$ (useful)GDP per $ oil 14.24 30.24 15.64
')

Which as opposed to original data has 2004 being more efficient at producing real goods than it 1981

[BlisteredWhippet]

$this->bbcode_second_pass_quote('', '
')We shouldn't overstate the case: we're not back to the economic misery of the 1970's. But the fact that we're already experiencing mild stagflation means that there will be no good options if something else goes wrong.

Suppose, for example, that the consumer pullback visible in recent data turns out to be bigger than we now think, and growth stalls. (Not that long ago many economists thought that an oil price in the 50's would cause a recession.) Can the Fed stop raising interest rates and go back to rate cuts without causing the dollar to plunge and inflation to soar?

Or suppose that there's some kind of oil supply disruption - or that warnings about declining production from Saudi oil fields turn out to be right. Suppose that Asian central banks decide that they already have too many dollars. Suppose that the housing bubble bursts. Any of these events could easily turn our mild case of stagflation into something much more serious.

How do we get out of this bind? As the old joke goes, I wouldn't start from here. We should have spent the years of cheap oil encouraging conservation; we should have spent the years of modest growth in medical costs reforming our health care system. Oh, and we'd have a wider range of policy options if the budget weren't so deeply in deficit.

So if any of these things does come to pass, we'll just have to see how well an administration in which political operatives make all economic policy decisions, and the Treasury secretary is only a salesman, handles crises.

[Jack]

$this->bbcode_second_pass_quote('', 'w')e're not back to the economic misery of the 1970's.

[Colorado-Valley]

Jack,

My nickname for the last year has been "gloom and doom."

I guess people just don't like to hear that their way of life may be about to change drastically.

My town cop won't even let me ride my electric moped in town, even though it's legal. He takes it as an insult to the American way of life.

I hate to have the cops after me for not using gasoline.

[SF_ENGINEER]

$this->bbcode_second_pass_quote('', 'M')y nickname for the last year has been "gloom and doom."

[gg3]

"Anti-Claus": that's brilliant. Seeds of a new Christmas story, where AntiClaus comes along and tells the kids they aren't going to be drowning in consumer goodies any more, and then organizes them to do something useful in the neighborhood, that turns out to be more satisfying than playing with toys that will just be put aside later.

Town cop & electric scooter: Tell him you're doing it to promote nuclear power, and carry around whatever piece of paper the state motor vehicle department issues that says those scooters are legal.

[heyhoser]

<Copyright material removed> Aaron

Oil's Lesser Role in U.S. Economy Limits Damage From High Prices-NY Times

Subscription Required

Blind optimism or cheerful reality?

[MicroHydro]

Blind optimism.

The airlines, Ford and GM have a much different outlook.

[Tyler_JC]

What do the citizens of a "service economy" eat? or wear? Where do they live? All of these things require physical products. You can't eat the internet. The service economy is great but it doesn't create real products. The prices for real products are rising sharply do to high oil prices. Copper has doubled in price over the last few years. Oil has gone from $12 to $55. This is having an negative effect on economic growth.

We are still growing, the problem is that we are growing using debt. We borrow 1.5 billion dollars from the rest of the world each day in order to "grow" the economy. This puts enormous strain on the dollar. Have you bought anything recently? Prices are heading up and have been for some time. This is hurting the economy and when interest rates start heading up...the pain will be felt everywhere.

[JoeW]

There are two ways to say the same thing...
1) Oil consumption is a much smaller percentage of GDP than it was in the '70's...
2) GDP per barrel of oil consumed has greatly increased since the 1970's...

Statement 1 implies that oil consumption is a smaller part of the economy, and therefore not such a big deal anymore.
Statement 2 implies that we are using oil to create GDP, and any decrease in the oil supply will have a larger impact today than it did in the 1970's.

The statements are the flip-side of the same coin. The question is, which number do you really care about, and why?
GDP/Oil
Oil/GDP
Do either of these numbers actually mean anything in reality, and if so, what?
Maybe a better number to look at would be
(total projected 2005 US oil consumption in dollars)/(projected 2005 GDP growth)
and then look at different average price points.

[Colorado-Valley]

As long as the world keeps lending me cheap money, I don't care how much oil costs. I'm an American.

[RiverRat]

$this->bbcode_second_pass_quote('', 'B')ut today's economy is more efficient than the one of three decades ago. In the early 1980's, households spent an average 8 percent of their income on energy bills, mainly gasoline and home heating oil. It took 102 minutes of labor for the average worker to pay for gasoline for a 100-mile trip back then, and energy costs accounted for 14 percent of the American economy.

Today, thanks to energy-saving measures set off by the oil shocks of the 1970's and 1980's, most of these numbers have been cut in half, according to David Wyss, the chief economist at Standard & Poor's. Households now spend about 5 percent of their income on their energy bills. It takes 42 minutes of work to pay for a 100-mile trip, and energy costs account for 7 percent of the American economy.

[Grimnir]

It's true that US uses less oil in manufacturing than it used to (as a percent of the GDP), but that's because we've shipped all our manufacturing overseas. If all our imports quadruple in price due to an oil spike, we're just as screwed as if we had to buy oil to manufacture the stuff ourselves. More so, in fact, since the stuff has to be transported further.

[Bytesmiths]

$this->bbcode_second_pass_quote('Colorado-Valley', 'A')s long as the world keeps lending me cheap money, I don't care how much oil costs. I'm an American.

[Devilboy]

$this->bbcode_second_pass_quote('Colorado-Valley', 'A')s long as the world keeps lending me cheap money, I don't care how much oil costs. I'm an American.

[NeoPeasant]

$this->bbcode_second_pass_quote('Devilboy', '')$this->bbcode_second_pass_quote('Colorado-Valley', 'A')s long as the world keeps lending me cheap money, I don't care how much oil costs. I'm an American.

[jaws]

Prices aren't all that high right now, adjusted for inflation. Supply is still expanding, it's just slowing down relative to demand growth. Demand is growing very fast, supply is growing much slower, prices go up. They have much higher to go as supply growth continues to fall (and then goes negative), and that will have severe negative economic consequences regardless of how much more efficient our industries have become.