PeakOil is You
The Myth of energy and GDP
by Aaron » Mon 18 Apr 2005, 18:13:21
$this->bbcode_second_pass_quote('Wildwell', 'H')o hum, never said *no* energy or energy was unimportant. And I get accused of not reading!
<Sigh>
$this->bbcode_second_pass_quote('', 'i')t is clear that economies can grow using the same or less energy
The problem is, of course, that not only is economics bankrupt, but it has always been nothing more than politics in disguise... economics is a form of brain damage.
Hazel Henderson
Hazel Henderson
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Aaron - Resting in Peace
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by Wildwell » Mon 18 Apr 2005, 18:39:45
$this->bbcode_second_pass_quote('Ludi', '')$this->bbcode_second_pass_quote('Wildwell', 'T')he more energy you have the more likely it is you waste, hence less productivity, not more – that would be illogical and contrary to basic economic theory.
I'm sorry, I'm easily confused by economics. Are you saying that a society which has less energy available to it is more productive than one with more energy available to it? How is that productivity measured?
It depends. I’m saying there is not a linear relationship between energy and GDP. It has been argued that is has on the basis that in some places the GDP graph follows the energy graph. The reality is most of this is our love of modern gadgets and travel when we have disposable income. Some of which creates growth, some generates negative effects such as balance of trade problems.
The law of diminishing returns states: The more you have, the smaller is the extra benefit you get from having more. Productivity increases if people have less capital. Productivity is the relationship between input and output.
To say that the more capital (energy) you have the more you gain is nonsensical.
Anyway, this is all rather simplistic for a number of reasons. But let’s take cars.
First in any transport system there as a throughput you get before you start getting congestion and creating less throughput and productivity. This applies to any transport system. We can accept there finite amounts of land and certain patterns of urban development and pressures for land development. In northern Europe is it is now very difficult to find places to park cars and build roads, for example. The maths simply doesn’t add up.
Now, the more cheap fuel, the more growth in cars – assuming the rest of the economy is growing. Initially the cost of providing the roads is not beneficially to providing those roads – the cars do not meet costs. And, at later stage, as growth improves in cars, you get to optimum levels of flow. There are various ways to calculate this. But let’s use a ball park figure of 70%. After 80% is becomes quite clear the cars are impeding the progress of the other cars on the road and you get congestion – which costs valuable time, lost energy and so on. So already, we can see applying too much cheap energy can become counter productive.
Next we have to look at the cars that are providing benefit. How many are necessary journeys? How many people are living a long way from their workplace on the basis on fuel cost? What is the effect of things like the school run? What is the effect of offices and factories opening and closing at the same time providing peak flow, thus going over that 80% flow limit? So again, we can see too much cheap energy is actually unproductive. What would be the effect of raising the price of fuel or road pricing? Well, some people wouldn’t travel unless they had to, some people might take more fuel efficient forms of transport or walk, some people may move closer to work. Hence the throughput and necessary journeys quota improves and productivity and GDP improves because of less delay, less stress, less work and free time lost, and less energy used.
There’s loads more examples but that’s something to chew on.
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Wildwell - Heavy Crude
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