The Relationship Between Income and Energy Consumption

To me, the plot of the relationship between a country’s GDP and its energy consumption over time really shows how far the US has to fall as “king of the mountain.” We’re a rich country that uses a lot of energy per person…and as energy becomes more and more expensive, the rest of the world will look at stats like these and say, “hey US, you’re going to have to take it down a notch or ten.” Just one more reason that they’re going to hate us more and more as oil gets more and more expensive. This is the world that a shrinking supply of oil is going to lead us towards, it seems to me.

The problem is that we are in the mindset that everything, including economies, will keep growing. However, it is ONLY BECAUSE OF CHEAP OIL/ENERGY that economies have continually grown. After watching Jared Diamond last night, this becomes even more abundantly clear…it sounds deterministic that geography facilitated societal development, yes…but oil is part of that geographic catalyst. The US, because of its agricultural and natural resource wealth, has had the riches to pay for the oil…at least up until now.

It also seems that, when you take cheap oil out of the equation, and many economic assumptions would seem to no longer hold. We’ve had 100 years of constant growth facilitated by cheap oil. If peak oil is now, with nothing ready to replace the energy margin, the implications are ugly.

More after the jump at The Oil Drum.