igh oil prices have acted as a brake on an otherwise strong economy—but only a modest brake. The biggest reason is that the economy uses energy, and especially oil, much less intensively than it did before.
c2, i think the writer is too vague and may not understand all that he is talking about. the relation between crude consumption and economic growth can be quantified. in the book A Thousand Barrels a Second, Peter Tertzakian calls this the "oil dependency factor" and quantifies it historically for various countries. simply put, an economy which is in an earlier stage of development uses more incremental oil per unit of GDP growth, while a more mature economy uses less incremental oil for same.
between 1950 and 1979, the US had an ODF of 80. after the second oil shock, from 1983 to 2004, the US' ODF fell to 45. note this is still a positive number. meaning that US economic growth requires more oil consumption. an ODF of 45 is not especially good. the only advanced economies with higher ODFs are Canada (probably because of low population density and bad weather), Taiwan and Singapore. by contrast, France has an ODF of 16 (thanks to all their nukes and good public transport).
the reason the US lowered its ODF so much from the 1950-79 period to the 1983-2004 period is that it stopped using oil for power generation, for the most part. we switched to nuclear, coal, and natural gas. that is a one time, secular improvement that we can't repeat. also, the US ODF is understated because we import so much stuff from countries with REALLY HIGH ODFs: China has an ODF of 90 and India's is 94.
the author makes it sounds like the US can sustainably grow without consuming more oil. not even remotely true. it will be a long and painful path because we are so spread out and car-dependent. it will be a lot more difficult to make a serious dent in our ODF this time around. also, more important than what the US can do is what the world can do: the world is nowhere near an ODF of zero, or negative, where it needs to be. |
