As world oil prices are moving up, I think it’s worth revisiting a point that’s often overlooked: when it comes to energy, North America has a big, structural weakness relative to our main economic competitors.
Here’s a look at how much energy use is embedded in the US economy:
Americans require more energy than our competitors to generate a dollar of wealth, and we divert a much larger share of our wealth to pay for energy.
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Yet the US is hardly the most energy intensive economy on earth. Here’s a more comprehensive cross-national look at energy intensity:
Looked at this way, it’s easy to see why some governments relentlessly sand-bag carbon pricing or other policies that effectively raise the price of energy. In North America, our systems depend on low-cost energy in a way that just isn’t true for most other middle- and high-income countries.
Yet this sort of policy behavior is negatively self-reinforcing. The more we avoid energy pricing, the more dependent we become on cheap energy. That works okay economically until we end up hitched to global energy markets with rising prices, which is just what we’re seeing with oil. And then our energy -dependent economies end up in a much more precarious position than those in Europe or the wealthier parts of Asia.
Notes: If you detect some discrepancies between the two charts, it’s because the first one uses market exchange rates for equalizing currencies, while the second one uses purchasing power parity. All data are derived from US Energy Information Administration figures and represent averages of energy intensity from 2005 to 2009.
Great charts Eric, thanks. This is exactly the kind of metric that future prosperity depends upon but is rarely discussed.Here are a few more observations:1) The kind of energy used is critical to the economic threat. The USA gets most of its energy from oil. As we know oil is the most expensive of the fossil fuels and the least in our nation’s control. At $90 per barrel the average American spends $1000 a year to buy imported oil. This money siphon—$1.3t over last four years—now represents about half our trade deficit. USA is getting pwned by twin problems of high-energy-per-GDP and the fact that so much of that is foreign and expensive oil. 2) from a climate standpoint the key metric is GDP per tCO2.So if you use less energy per dollar and you use clean energy you can create a lot of wealth per tCO2. In a future of shrinking tCO2 available to every economy the wealthy will be the ones with most GDP to tCO2. Here are some EIA stats on $GDP per tCO2:$8,800 Switzerland$8,000 Norway$7,500 Sweden$5,500 France$4,400 UK$4,000 Japan$3,700 Germany$2,500 Brazil$2,400 USA$2,100 Canada $900 Indonesia $700 India $450 ChinaClearly the USA and Canada have a lot of de-carbonizing to do if they want to thrive in lower-carbon future. Also interesting to note that in 1990 both USA and Canada produced $1,600/tCO2. But in the last couple decades the USA and done a much better job cleaning up its economy compared to Canada. The result of this is that now with both USA and Canada having the same per-capita footprint of 22tCO2, the average American makes about $5,000 more per year than the average Canadian. The race for future prosperity in a lower-carbon-pollution world is one to maximize jobs and wealth per tCO2. On this measure, Canada has been falling steadily behind even USA.